Agriculture Reference
In-Depth Information
Development of rural industries slowed in the late 1990s, due mainly to
greater market competition, the unfavourable location of rural enterprises,
difficulties in accessing external finance and lack of infrastructure, technical
inputs and human resources. Meanwhile, urbanisation accelerated and larger
numbers of rural labourers moved to urban areas in search of jobs. In 2001,
the urbansaton rate (the rato of urban to total populaton) n Chna reached
38 per cent, compared with 26 per cent in 1990 and 19 per cent in 1980.
Restrctons on mgraton
In spite of the acceleration of urban development, the urbanisation rate in
China is, on average, 10-20 percentage points lower than in other countries
at a similar income level—even allowing for the so-called 'floating population'
(Wang and Xia 1999). In particular, there are relatively few medium and large
cities. In 2001, 121 million people—only 9.6 per cent of the population—lived
in cities of more than 500,000 people. In the less-developed western region,
only 5.6 per cent of the populaton lved n ctes of that sze. If Chna had
an urbansaton rate smlar to that of other countres of a smlar ncome
level, an additional 120-240 million people would be living in urban areas.
Ths number can be thought of as the excess number of people n the rural
economy (see Wang and Duncan, Chapter 4).
Wang and Duncan (Chapter 4) note that there are postve correlatons
between rural industrialisation (measured as the share of TVE employment
n rural labour) and rural ncomes and between the urbansaton rate and
rural ncomes. They therefore undertook a causalty test of the relatonshp
between urbansaton and regonal economc growth. Because urbansaton
and rural incomes could be a function of economic growth, the causality test
was carred out wthn an endogenous growth model. The results from the
modellng ndcate that each percentage pont ncrease n the urbansaton
rate increases provincial economic growth by 0.37 percentage points above
the already high 7-10 per cent growth rate—that is, urbanisation has a long-
run impact on economic growth. When regional dummies are introduced,
there are seen to be significant impacts from urbanisation on economic
growth in the eastern and central regions, but the impact is insignificant in
the western regon. There could be two reasons for ths last result: the rate
