Unbalance for Growth——The Cause and Transition of Unbalanced Development in China
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| Title | Unbalance for Growth——The Cause and Transition of Unbalanced Development in China
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| Author | Fu Caihui and Wang Dan |
| Organization | School of Economics, Xiamen University |
| Email | fucaihui@yahoo.cn，948326550@qq.com |
| Key Words | Economic Growth; Structure Unbalance; Policy Inclination; Transition |
| Abstract | Economic growth accompanied by structural unbalance has long been a characteristic fact of China's economy. Structural unbalance has become a major dilemma in China's development, thus it is of great significance to study on its causes and its transition. This paper assumes that the fact is the Achilles' heel of the government-led economic growth. Government expenditure has external effects and marginal product of capital or labor will not decrease due to it, so the government-led economy could get to be endogenous growth. If government implements equality policy, economic structure will not be unbalance. However, government will implement tilted tax and expenditure policies on different departments in order to achieve higher overall growth. It is the tilted policies have caused the structure unbalance. The findings that this paper analyzes the experience data of dual economic structure in China between 1952-2008 support this theory, especially that the policy inclination in fiscal expenditure level will more likely to cause structural unbalance, and inherent heterogeneity of economy would inhibit structure unbalance. To equalize the already tilted fiscal policy is the primary entry point for development and transformation to govern structure unbalance. |
| Serial Number | WP391 |
| Time | 2012-12-07 |
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