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

On the Development with Betterª²Fast Growth

ª«¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­Liu Shuchengª« (ª©4ªª)

Anatomy of High Saving Rate of China: Analysis Based upon Flow of Funds Account

of China from 1992 to 2003

ª«¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­Li Yang and Yin Jianfengª« (ª©14ªª)

The Nonlinearity between Credit Market and Macroeconomic Fluctuations in China:

An Empirical Research from the Perspective of Financial Accelerator

ª«¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­Zhao Zhenquan, Yu Zhen and Liu Miaoª« (ª©27ªª)

Fund Performance and Investors' Choice

¡ª¡ªAnalysis on the Redemption Puzzle of Openª²end Fund Market in China

ª«¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­Lu Rong, Chen Baizhu, Xu Longbing and Xie Xinhouª« (ª©39ªª)

Size of Government, Rule of Law, and the Development of Services Sector

ª«¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­Wang Dehua, Zhang Zaijin and Bai Chongen ª« (ª©51ªª)

Consumers' Trust in Government and its Impact on Their Acceptance toward Genetic

ally Modified Food

ª«¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­Qiu Huanguang, Huang Jikun and Yang Junª« (ª©65ªª)

Dynamic PPP Theory: Concept, Evidence and Application

ª«¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­Zheng Chaoyu, Zhu Nansong and Zhang Yaoª« (ª©75ªª)

Market Competition, Host Country's FDI Policies and MNC's Technology Transfer

ª«Xie Jianguoª« (ª©87ªª)

Trade Liberalization, Biased Learning Effect and Wage Inequality in Developing C

ountries

ª«¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­Pan Shiyuanª« (ª©98ªª)

An Analysis on Technology Progress and Spatial Diffusion among China's Provinces

:1980¡ª2004

ª«¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­Shu Yuan and Cai Guoweiª« (ª©106ªª)

Return to Education and Its Distribution in Urban China

ª«¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­Luo Chuliangª« (ª©119ªª)

An Evaluation of Employment Elasticity Based on Disguised Unemployment in China

ª«¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­Jian Xinhua and Yu Jiangª« (ª©131ªª)

Natural Resource and Economic Growth£ºResource Bottleneck and its Solution

ª«¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­Luo Haoª« (ª©142ªª)

A Summary for the Workshop of Development and Innovation of Marxist Economics

ª«¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­Yu Jinfu and Xu Xiangjunª« (ª©154ªª)

Understanding Correctly Institutional Arrangements in China's Modernization

¡ª¡ªReviewing on ª«Informal Institutions and Rural Development in China ª«

ª«¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­Carsten Herrmannª²Pillathª« (ª©157ªª)

On the Development with Betterª²Fast Growth

Liu Shucheng

(Institute of Economics, Chinese Academy of Social Sciences)

Abstract:

The policy of better and fast growth embodies the essential requirements of the thought of scientific development and its implementation. The article recalls firstly the exploration of a suitable growth route in early period of New China when a policy of moreª²fastª²betterª²economizing growth was produced in the General Route of Socialist Construction, and then the great achievements of economy under the policy of fastª²better growth since the beginning of reform and openingª²up policy. It focuses on why China needs to change its route from thefastª²better growth into the betterª²fast growth, and how it realizes such a growth.

Key Words:Development of Chinese Economy; Policy of Moreª²Fastª²Betterª²Economizing Growth; Policy of Fastª²Better Growth; Policy of Betterª²Fast Growth

JEL Classification:O11, P20

Anatomy of High Saving Rate of China: Analysis Based upon

 Flow of Funds Account of China from 1992 to 2003

Li Yang and Yin Jianfeng

(Institute of Finance & Banking, CASS)

Abstract:In order to find out the causes of the high saving rate of China, we analyze the savings of household, enterprise and government sector respecitvely byemploying flow of funds account of China from 1992 to 2003. We find the increase of national saving rate since 2000 is largely due to government sector, even though the househould is the largest contributor to high national saving  and the saving rate of enterprise also much high in fact. Then we investigate the reasons of sectoral pattern of savings from two aspects: propensity to save and distribution of national income among domestic sectors. The findings may be striking. As to the causes of increase of govenrment saving, we find the propensity of government to save rise significantly stimulated by government investment, and the ratio of government disposable income to national income goes up evidently. As to household saving, we find saving rate of this sector decreased actually because

of adverse income distribution while its propensity to save exhibiting clear procyclical pattern. As to high enterprise saving, it results from decrease of expenditure on wage and interest to household sector, not from increase of earningsas many people think. All these findings give us a strong policy implication: improvement of income distribution is the key to reducing national saving and accordingly stimulating consumption, and fiscal policy may be the pivotal to achieve this object.

Key Words:Saving Rate; Flow of Funds; Income Distribution

JEL Classification:E21,E01,E64

The Nonlinearity between Credit Market and Macroeconomic

Fluctuations in China: An Empirical Research from the

 Perspective of Financial Accelerator

Zhao Zhenquan, Yu Zhen and Liu Miao

(Jilin University Quantitative Research Center of Economics; Business School of Jilin University)

Abstract:Using theory of the financial accelerator for guidance, this paper applies threshold vector autoregression model to verify the nonlinear nexus between credit market and macroeconomic fluctuations in China in macro level. The results from nonlinear impulse response function show that there exist remarkable financial accelerator effects during the period of 1990.1¡ª2006.5 in China, which behaves that the same alternative shocks have substantially larger effects on output growth when system is in the tight-credit regime. Moreover, credit shock is more effective on controlling the credit market condition than the others. Money supply shock and price shock are in the next place, and actual shock is the last. Further test results prove that credit market is an important source of shocks and also acts as a nonlinear propagator of shocks to macroeconomic fluctuations. Moreover, adopting financial accelerator in the analysis of characters of macroeconomic fluctuations in China will be very helpful for better understanding. At last, the paper presents some suggestion for the political application of the conclusion and direction in future research.

Key Words:Credit Market; Macroeconomic Fluctuations; Financial Accelerator; Nonlinearity; TVAR Model

JEL Classification:E30£¬E32

Fund Performance and Investors' Choice

¡ª¡ªAnalysis on the Redemption Puzzle of Openª²end Fund Market

in China

Lu Rongª¬1Chen Baizhuª¬2, Xu Longbingª¬1 and Xie Xinhouª¬1

(1.Shanghai University of Finance and Economics; 2.University of Southern California, USA)

Abstract:We examine the performanceª²flow relationship in China openª²end fund market and find that the PFR is negative and concave. The shape of PFR indicates investors' choice doesn't pose an incentive mechanism on fund managers: the better an openª²end fund performs, the higher the net redemption rate is. We argue that return volatility, dividend, and fund scale are also important factors on investors' choice making. Such results are valuable for fund management to reduce investors' adverse choice.

Key Words:Openª²end Fund; Fund Performance; Cash Flow; Redemption Puzzle

JEL Classification:G230, G110, D810, G140

Size of Government, Rule of Law, and the Development

 of Services Sector

Wang Dehua, Zhang Zaijin and Bai Chongen

(Tsinghua University)

Abstract£ºThis paper examines the impact of the size of government, the level of rule of law on the share of services sector by using multinational crossª²section data. We found a significant positive correlation between the quality of contracting institution measured by the level of rule of law with the share of services sector, a significant negatively correlation between the size of government with the share of services sector. Furthermore, the rule of law is more important in lowª² and middleª²income countries. Apart from this, Further testing showed that the size of government expenditure and government investment has a negative impact on the service industry, but the property rights institution has not a significant impact.

Key Words£º Services Development; Size of Government; Rule of Law; Contracting Institution

JEL Classification£ºD23, L80, O14

Consumers¬ð Trust in Government and its Impact on Their Acceptance

toward Genetically Modified Food

Qiu Huanguang, Huang Jikun and Yang Jun

(Centre for Chinese Agricultural Policy, Chinese Academy of Sciences)

Abstract£º

Understanding the determinants of consumers¬ð acceptance towards genetically modified food (GMF) is critically important for the biotechnology industry. Based on a unique data set collected by the authors in 2002 and 2003 in 11 cities of China, an econometric model of consumers¬ð acceptance of GMF is estimated. The results show that consumers¬ð acceptance of GMF is high in urban China andconsumers¬ð trust in government has a significantly positive effect on consumersacceptance of GMF. Our study also shows that failure to consider the endogeneity of consumers¬ð trust in government will lead to serious underestimation of its impacts on consumers¬ð acceptance of GMF. This is, to the best of our knowledge, the first study on the impact of consumers¬ð trust in government with consideration of the endogenous problems that often are encountered in consumer perception studies.

Key Words£º Trust in Government; Genetically Modified Food; Consumers¬ð Acceptance

JEL Classification£ºQ13£¬ Q18£¬ O13

Dynamic PPP Theory: Concept, Evidence and Application

Zheng Chaoyu

(School of Economics, Renmin University of China) Zhu Nansong

(Shanghai Zendai Investment Management Co., Ltd.)

Zhang Yao

(Bureau of Comprehensive Planning, China Development Bank)

Abstract£ºBy modeling structural factors such as the marketization and openness of national economy and the integration of international economy, this paper attempted to build an analytical framework of the dynamic PPP theory, characterizing the systemic deviation of practical exchange rate from traditional PPP level and its evolutional dynamics. The econometric analysis with international intersection data, estimated the benchmark structure of the dynamic PPP theory and its computable version, and then implemented the scenario forecasting of the appreciation trend for Renminbi exchange rate during 2006¡ª2010, so as to offer the numerical reference for the equilibrating adjustment of Renminbi exchange rate in the future.

Key Words£º Purchasing Power Parity; Dynamic Approach; Renminbi Exchange Rate

JEL Classification£ºF31, E17

Market Competition, Host Country's FDI Policies and MNC's Technology Transfer

Xie Jianguo

(Nanjing University)

Abstract:

MNC's technology transfer and host country's investment policies are examined with a two stage Cournot competition model in this paper. Results show market competition, transfer cost and local factory imitation capacity all take effect on MNC's technology transfer. Foreign direct investment will hurt host country when local factory's imitation capacity was low. We also investigate the tr

adeª²off between market competition and MNC's technology transfer, results show that competition don't always increase MNC technology transfer, in contrast, because of lowing return, Multiª²MNC competition reduce technology transfer to subsidiary.

Key Words:Market Competition; Investment Policies; MNC; Technology Transfer

JEL Classification:F210£¬F230

Trade Liberalization, Biased Learning Effect and Wage Inequality

 in Developing Countries

Pan Shiyuan

(Zhejiang University)

Abstract:In this paper, a model is developed to study the impact of trade liberalization on the wage inequality, so as to explain the puzzle of skill premium in developing countries. Developing countries come into contact with relatively more skillª²biased technology knowledge, hence, the productivity of skillª²complementary technology production increases relatively faster than the one of unskillª²complementary technology production. That is, learning effect is biased. Because technology knowledge production is skillª²intensive, the learning effect increasesthe demand for skilled labor and the wage inequality. Moreover the biased learning effect leads to more skillª²biased technology change, therefore, in favor of skilled labor and raising skill premium.

Key Words:Trade Liberalization£» Learning Effect£» Skill Premium

JEL Classification:F160, O410, J310

An Analysis on Technology Progress and Spatial Diffusion

 among China's Provinces: 1980¡ª2004

Shu Yuan and Cai Guowei

(Lingnan College, Sun Yatª²sen University)

Abstract:We first differentiate the contribution of SOE and NSOE's employment, build up the comparableness between the provincial data, and then measure the TFP, efficiency and technical change indexes by DEA. We find that China's TFP is promoted mainly by the technology progress after the economic transition. While using the Nonlinear EGLS, we find a spatial diffusion mechanism from Beijing, Shanghai and Guangdong to other provinces, which depends on the spatial distance. The technology progress in advanced areas by investment in human resource, specialization and industrial structure adjustment can be diffused and promote the technology progress in other provinces.

Key Words:Technology Progress; Spatial Diffusion; Nonlinear EGLS; Spatial Distance

JEL Classification:O47, O33, R12

Return to Education and Its Distribution in Urban China

Luo Chuliang

(Center for Study of Income Distribution and Poverty, Beijing Normal University;

 Institute of Economics, CASS)

Abstract:Based on CHIPs 2002, the paper discussed the relation between return to education and the quantiles of income distribution. The findings in this paper show that the return to education is lower for the higher quantiles; while the estimators also depend on the choice of control variables. In methodology, the quantile regression might be a choice to correct the ability bias in the estimati

on on return to education. The policy implication from the paper shows the education expansion will be benefit to the income growth for those who are in lower quantiles. Additionally, the return to education is also affected by the employment significantly, which might indicate the segmentation in labor market.

Key Words:

Return to Education; Quantile Regression; Income Distribution

JEL Classification:I210, C120, D310

An Evaluation of Employment Elasticity Based on

Disguised Unemployment in China

Jian Xinhua and Yu Jiang

£¨Center for Economic Development Research, Center for Population,

Resource and Environment Economic Research, Wuhan University£©

Abstract:

Due to the Disguised Unemployment in the enterprises of China, it is necessary to consider the influence of excessive employment. Therefore the authors build a model to analyse the influence of excessive employment on employment elasticity. Based on the model, the authors reª²evaluate the employment elasticity of china from 1980 to 2002 by relative statistics. The conclusion shows the employment elasticity of China since 1995 doesn't reduce.

Key WordsDisguised Unemployment; Employment Elasticity; Economic Growth

JEL Classification:J210,J630

Natural Resource and Economic Growth£º

Resource Bottleneck and its Solution

Luo Hao

£¨Nanjing University£©

Abstract:

This paper tries to recover the classical economics tradition of economic growth being restricted by natural resource in the frame of neoª²classical economics, and analyses the possible way to overcome the resource bottleneck. Firstly, the paper gives a new model based on Solow model to prove that under a given technology condition, the economic growth can be stagnant at last because of the limited natural resource supply. Next, two kinds of mechanism to solve the resource bottleneck are explored. One is industrial transfer. Under open economic condition, once local enterprises feel the restrict of natural resource, they will utilize natural resources of other regions through shifting capital and labor to those places, thus giving impetus to the economic growth there. The other is technical progress. Under closed economic condition, local enterprises will put a part of output into R&D to continuously develop the technology of saving present resource or discovering new resource, thus pushing another longª²term local economic growth.

Key Words:Constraint of Resources; Economic Growth; Industrial Transfer; Technical Progress

JEL Classification:O410, Q010, R110