A TWO REGION MODEL APPLIED TO CHINA NATIONAL ACCOUNTS: TOWARDS VITAL POLICIES FOR SUSTAINABLE GROWTH

摘要

Is it possible for a country to maintain a sustainable growth? A sustainable growth implies that the rate of technological progress under convergence is continuously stable. This rate is essential in economic growth and based on human capital, yet how can this rate be measured? And, what are the conditions for sustainable growth? These conditions must be the upper limit of the capital-output ratio, the maximum difference of the rate of technological progress between seashore and inland regions, and a consistency of real assets with the role of financial assets or a permitted range of imbalance between real assets and the financial assets related to the central bank interest rate. This paper intends to analyze the national accounts in China by region and clarifies vital requirements for sustainable growth which are hitherto unknown, not to repeat a similar misleading as seen in the Japanese economy after the 1990s. For this purpose, I develop a two region model, supported by the method for measuring capital (stock) and the method for neutralizing the relationship between real and financial assets. A two region model, which is the main issue in this paper, is based on my endogenous growth model under the current and convergence situations. I find that my endogenous growth model is applicable to each capital-goods and consumer-goods in the two region model by assuming that seashore region manufactures capital-goods and the inland region consumer-goods. I denote the H-region for capital-goods and the F-region for consumer goods. If the difference of the rate of technological progress between these two regions is beyond a permitted magnitude, it is difficult to maintain sustainable growth since a soft-landing convergence cannot be guaranteed at a bubbled stage. In other words, any country, not only China but also India, Brazil, and Russia, cannot maintain its sustainable growth in the long-term unless it does not enlarge or do neutralize the above difference. In a word, poor people must be faster educated. For a two region model applied to China, I need to confirm the theories of international trade between countries, in particular the Heckscher-Ohlin model, Rybczynski, the Stolper and Samuelson, and even Leontief paradox. I find a similarity for each framework of two regions, two commodities, two sectors, two countries, and world model, in particular, for the treatment of redistribution of resources including the balance between saving and investment. The two region model, for simplicity, assumes that total resources are fixed, where capital or labor of one region is shifted to that of the other region.