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¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡ CONTENTS

Determinants and Trends of China's Export Goods Structure Upgrading

ª«¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­Jiang Xiaojuanª« (ª©4ªª)

International Trade and the Real Business Cycle of China

¡ª¡ªA Comparative RBC Study in a Closed vs. an Open Economy

ª«¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­Li Hao, Hu Yonggang and Ma Zhiyao ª« (ª©17ªª)

An Algorithm of the Desirable Appreciation Scale of RMB£º

A Comment on RMB Equilibriumª²Exchangeª²Rate Study

ª«¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­Wang Xi and Cai Guoweiª« (ª©27ªª)

Study on the Disparities of Regional Financial Development in China:

Based on the Theory of Division of Labor and Decomposition Method of Shapley

Value

ª«¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­Li Jing, Ran Guanghe and Wan Guanghua ª« (ª©42ªª)

Central Sinking, Financial Weakening and Studies on Realizing the Central Rising

 by Financial Support

ª«¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­Yang Shenggang and  Zhu Hong ª« (ª©55ªª)

Feedback and Spillover Effects between Coastal and Nonª²coastal Regions of China

¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­ª«Pan Wenqing and Li Zinaiª« (ª©68ªª)

Returns on Chinese Venture Capital Investment and Its Determinants

ª«¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­Qian Ping and Zhang Weiª« (ª©78ªª)

Technical Efficiency, Technical Progress and Eastª²Asian Economic Growth

¡ª¡ªEmpirical Analysis Based on APEC's View

¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­ª«Wang Bing and Yan Pengfeiª« (ª©91ªª)

Political Patronage and Privatization:

Evidence from China's Collectivelyª²Owned Enterprises

ª«¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­Yang Zhi, Lu Jiangyong and  Tao Zhigang ª« (ª©104ªª)

Ownership Structure, Selfish Effort, and the Holdup Problem

ª«¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­Pi Jiancaiª« (ª©115ªª)

Firm Size, Market Concentration and Innovation: A Survey

ª«¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­Wu Yanbingª« (ª©125ªª)

The Status, Roles and Limitations of Econometrics

ª«¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­Hong Yongmiaoª« (ª©139ªª)

A Summary for Workshop of Industrial Cluster, Family Firm, and Entrepreneurship

ª«¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­Zhang Shujun,Wang Jun,Li Xinchun and Qiu Haixiongª«(ª©154ªª)

Determinants and Trends of China's Export

Goods Structure Upgrading

Jiang Xiaojuan

(Graduate School, Chinese Academy of Social Science)

Abstract:By establishing an analytic framework including mainfacts and factors, the author made a forecast on the trends of export growth and goods structure upgrading. Firstly, the author identified 8 critical factors affecting the structure changes of export goods, specified variables, establishedan analytic model and tested the model with historical data. Secondly, the author screened out some types of goods with higher technologic and valueª²added content and greater export potential, with the factors got from the model, analyzed and forecasted the growth trend. The main conclusion is that comparative advantage, domestic industrial foundation and domestic market structure, as well as extent participating into global labor division are the main three types of factors determining the trade growth and structure. China has all the three favorable factors. In the near future, export competitiveness of laborª²intensive products will be maintained, and the export of those goods with comparatively higher technologic and valueª²added content will grow rapidly, which will continuously promote the upgrading of export goods structure. The research shows that there are objective rules in the export goods structure upgrading, and export promoting policy can get better effects only when complying with market rules.

Key Words:International Trade; Export Goods Structure; Globalization

JEL Classification:F130£¬F180£¬F400

International Trade and the Real Business Cycle of China

¡ª¡ªA Comparative RBC Study in a Closed vs. an Open Economy

Li Hao, Hu Yonggang and Ma Zhiyao

(Faculty of Business at Ningbo University; Shanghai University of Finance and Ec

onomics; Xiangtan University)

Abstract:This thesis first displays the stylized facts of China's macroeconomicfluctuations: its consumption is highly correlated with GDP, investment fluctuates more than output, and net export is countercyclical. It constructs 3 RBC models of a closed economy, a small open economy and a small open economy with government sector. Our simulation results from these models show that  the first model of closed economy explains about 48ª±26%, 24ª±39% and 98ª±50% of real fluctuations in output, consumption and investment respectively; results from a small open

economy are 69ª±51%, 68ª±70%, 98ª±50% with a tradeª²balanceª²toª²GDP ratio of 97

42%; the best results come from a small open economy with government purchase, they are 83ª±91£¥¡¢81ª±95£¥¡¢99ª±63£¥ with a tradeª²balanceª²toª²GDP ratio of 209ª±68£¥.Overall, openª²economy model performs better than closed ones and an open economy with government purchase shock performs better than an open economy without it. The introduction of government purchase shock into the model greatly improves simulation results.

Key Words:Real Business Cycle; Small Open Economy; Dynamic General Equilibrium; Productivity Shock

JEL Classification:E32£¬F47£¬D58£¬E23

An Algorithm of the Desirable Appreciation Scale of RMB£º

a Comment on RMB Equilibriumª²Exchangeª²Rate Study

Wang Xi and Cai Guowei

£¨Lingnan College at the Sun Yatª²sen University£©

Abstract:

After commenting on the rationale and feasibility of current RMB equilibriumª²exchangeª²rate research, the paper concludes that current approaches fail in calculating the desirable appreciation scale of RMB. In view of this, we design a new algorithm to calculate exchangeª²rate misalignment. We aim at utilizingefficiently the information embodied in forward exchange rate market by applying rational expectation technique under the framework of equilibriumª²exchangeª²rate reverting mechanism. A new pricing formula is then derived and empirically, by

constructing the external real effective exchange rate index and using RMB NDF data, we show that RMB should be appreciated by 4ª±39% by the end of June in 2005.

Key Words:Appreciation Scale; RMB; Algorithm; Equilibrium Exchange Rate

JEL Classification:F310, F320, E580

Study on the Disparities of Regional Financial Development in China:

Based on the Theory of Division of Labor and

Decomposition Method of Shapley Value

Li Jing, Ran Guanghe and Wan Guanghua

(College of Trade and Administration, Chongqing University; School of Economics, Fudan University)

Abstract:

This paper has established a model of financial development based on the theory of division of labor and estimated a cointegration equation based on the interª²provincial panel data from 1992 to 2004. And then the inequality of regional financial development is decomposed by Shapley value decomposition method. It is found that the disparities of regional financial development is mainly dueto the different conditions of economy, locations and policies of central government which contribution average rate is 39ª±78%,because of the first advantage and effect of the pilot, the more active period in the reform of finance, the more significant impact. The average years of education is the second largest contributor to the regional financial disparities which contribution average rate is 36 23%.The transaction efficiency of commodity and the efficiency of financial transactions are also important contributors to regional financial disparities.

Key Words:Regional Financial Development; Division of Labor; Shapley Value; Disparities Decomposition

JEL Classification:G100£¬O180£¬C400

Central Sinking, Financial Weakening and Studies on Realizing

the Central Rising by Financial Support

Yang Shenggang and Zhu Hong

(Finance College of Hunan University)

Abstract:

Based on the analysis of current situation in the central region we explores the relationship between the bottleneck of the economic growth as well asfinancial weakening. Then we use provincial data of six provinces in central and use panel data unit root test, the coª²integration test and error correction model to analyze whether financial development can improve economy, industrial structure as well as the level of urbanization in both long and short periods. The results show that there is a longª²term equilibrium between financial developmentand economic growth, and financial development can support the economic growth, while in the short term there isn't any significant relationship. Lastly, based on the conclusions in the research above, we discuss the coordinate financial development approach to realize the central rising and put forward some advice.

Key Words:Central Sinking; Financial Weakening; Central Rising; Panel Data

JEL Classification:O160,O420,R110

Feedback and Spillover Effects between Coastal

 and Nonª²coastal Regions of China

Pan Wenqing and Li Zinai

(School of Economics & Management, Tsinghua University)

Abstract:

Based on the Inputª²Output approach, this paper discusses the economicmeanings of the three important measures of the intraª²region multiple effect, the interª²regional spillover effects and feedback effect. By making the relationship among the three measures clearer, this paper further discusses the accordanceof their decomposition both on multiplicative and additive ways, and then puts forward a standardized measure to calculate these three effects according to the final use. Based on the first China's 8 regions multiregional IOT, this paper studies on the effects of the spillover and feedback between coastal and nonª²coastregions of China. The result shows that the development of the coastal regions has small spillover effect to the nonª²coastal regions of China, even smaller thanthat of the nonª²coastal to the costal. This reason is also account for the smaller feedback effects of the nonª²coastal regions than that of the coastal regions.

Key Words:Regional Economy; Feedback Effects; Spillover Effects; Coastal Regions; Nonª²coastal Regions

JEL Classification:O18,R10,R15

Returns on Chinese Venture Capital Investment and Its Determinants

Qian Pingª¬1 and Zhang Weiª¬2

(1.Institute of Accountancy, Tsinghua University; 2. School of Economics and

Management, Tsinghua University)

Abstract:

This paper analyses the relationship between the returns on venture capital investment of local venture capital (VC) firms in China and their determinants. It empirically assesses the significance of these factors using data from 1999 to 2003 with robust multinomial regression models. The result shows that the returns of stateª²owned VC firms are lower than those of private VC firms.Furthermore, the returns of the VC firms located in Shanghai and Shenzhen are higherthan those in other regions. The capital scale of VC firms also negatively affects the returns. The above results give some insights into the development of venture capital industry in China. Some policy suggestions are provided.

Key Words:Venture Capital; Local Venture Capital Firms; Exit; Returns on Investment

JEL Classification:G39, G19, C15, C25

Technical Efficiency, Technical Progress and Eastª²Asian EconomicGrowth

¡ª¡ªEmpirical Analysis Based on APEC's View

Wang Bing and Yan Pengfei

(Economics School, Jinan University£»Economics and Management School, Wuhan Univ

ersity)

Abstract:

Applying contemporaneous DEA and sequential DEA£¬this paper measures the technical efficiency£¬the technical progress and Malmquist productivity indexes in 17 countries and districts in APEC from 1960 to 2004£»It has also testified empirically its convergence effect of economic growth. The major conclusions are as follows: In 1980s, the growth of TFP in the East Asian countries has exceeded those in the other APEC countries on average, but what it contributes to labor productivity growth is less than in the developed countries. There was a significant convergence in the levels of labor productivity over the whole period. Capital accumulation was the most important source of convergence. TFP was a significant source of divergence. Sequential DEA eliminates the possibility of technical regress, and provides a more adequate measure technical progress than contemporaneous DEA.

Key Words:

Technical Efficiency£»Technical Progress£»Total Factor Productivity£»

Contemporaneous DEA£»Sequential DEA

JEL Classification:C43£¬D24

Political Patronage and Privatization: Evidence from

China¬ðs Collectivelyª²Owned Enterprises

Yang Zhiª¬a Lu Jiangyongª¬b Tao Zhigangª¬c

(a: School of Business, The University of Hong Kong£»b: Department of Business Strategy and Public Policy, and Center for China in the World Economy, Tsinghua University£»c: Faculty of Business and Economics, The University of Hong Kong)

Abstract£º

Political patronage theory of public ownership is based on the premise that governments or government of ficials derive political benefits (local employment, taxes and profits, and private benefits) from the continuing existence of public ownership entities. This theory has predictions on the types of public ownership entities to be privatized first. Using a large sample of China¬ðs collectivelyª²owned enterprises from 1998 to 2003, we test the predictions of the political patronage theory regarding the causes of privatization. We find that privatization is less likely for those collectively owned enterprises that offer higher political benefits to governments¬ð officials, havemore reliance on governments for inputs and sales, and enjoy relatively higher positions in the local economy, lending strong support to the political patronage theory and have implications for policy making and implementation.

Key Words£º Political Patronage; Collectivelyª²Owned Enterprise;Transitional Economy; Privatization

JEL Classification£ºD23, L51, P21, P23

Ownership Structure, Selfish Effort, and the Holdup Problem

Pi Jiancai

(China Center for Economic Research, Peking University)

Abstract£º

This paper discusses the holdup problem of selfish effort, cooperative effort and relationshipª²specific investment under different ownership structures, and then conducts an economic analysis on the primary ¡°internal struggle¡± (¡°neihao¡±) of SOEs and the primary ¡°internal fight¡± (¡°neipin¡±) of local governments, which is different form traditional explanations. We also provide some policy suggestions during the course of comparison and discussion.

Key Words£º Holdup Problem; Selfish Effort; Primary ¡°Internal S

truggle¡±; Primary ¡°Internal Fight¡±

JEL Classification£ºD23, L22, L33

Firm Size, Market Concentration and Innovation: A Survey

Wu Yanbing

(Institute of Economics, Chinese Academy of Social Sciences)

Abstract:

The relationship between market structure and innovation has always been one of the hot topics in the field of innovation economics since Schumpeter put forward the theory of innovation. The paper reviews the theoretical and empirical literatures of Schumpeterian Hypotheses. In the review of empirical literatures, the research methodologies, sample and main conclusions of each paper are especially emphasized according to logical relationships of the literatures. Theresearches on Chinese innovation are also introduced in this paper.

Key Words:Schumpeterian Hypotheses; Firm Size; Market Concentration; Innovation

JEL Classification:N010, O320

The Status, Roles and Limitations of Econometrics

Hong Yongmiao

(Wang Ya'nan Institute for Studies in Economics, Xiamen University; Department of Economics, Cornell University)

Abstract:

Econometrics, microeconomics and macroeconomics now constitute three core courses in modern economics. In China, there has been increasing interest ineconometrics, with wide applications of econometric models, methods and tools in empirical studies on the Chinese economy. In this paper, I discuss the basic ideas and methodologies of econometrics, its status, roles and limitations in modern economics, and its differences from mathematical economics, mathematical statistics, and economic statistics. A variety of economic and financial examples illustrate how econometrics can be used in empirical studies.

Key Words:Econometrics£»Empirical Study£»Modern Economics

JEL Classification:B41, C01