¡¡¡¡¡¡¡¡¡¡¡¡Economic Research Journal (Monthly)Vol.43 No.2 February, 2008

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

Trends and Theoretical Issues of Globalization of Services

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

Path to Richness:A Unified Theory for Long Run Economic Growth

ª«¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­..Chen Kunting and Zhou Yanª« (ª©19ªª)

The Nature of Inflation Inertia in China and Its Implications on Monetary Policy

¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­ª«Zhang Chengsiª« (ª©33ªª)

Policy Burdens and Long\|run Soft Budget Constraint

ª«¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­.Gong Qiang and Xu Zhaoyangª« (ª©44ªª)

Fiscal Motivation for Property Restructurings of Public Enterprises in China

ª«¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­...Han Chaohua and Jean Qiª« (ª©56ªª)

Investor Protection,Agency Cost and Corporate Performance

ª«¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­Wang Pengª« (ª©68ªª)

Rural Land System,Land Fragmentation and Farmer's Income Inequality:Evidence from China

ª«¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­Xu Qing, Tian Shichao,Xu Zhigang and Shao Ting(ª©83ªª)

The Coordination of Industrial Gorwth with Environment and Resource

ª«¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­.Tu Zhenggeª« (ª©93ªª)

Dynamics of Factor Payment:Evidence from China

ª«¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­Xu Xianxiang and Wang Haigangª« (ª©106ªª)

The Flucturation and Regional Difference of the Strength of Precautionary SavingMotive

ª«¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­Yi Xingjian,Wang Junhai and Yi Junjianª« (ª©119ªª)

Does Contractural Incompleteness Necessarily Lead to Inefficient Specific Investment?

ª«¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­Nie Huihuaª« (ª©132ªª)

Language as Human Capital,Public Good and Institution:A Basic Analytical Framework of

Language and Economics

ª«¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­.Zhang Weiguoª« (ª©144ªª)

A Summary of the International Forum of Service Inudstry and Innovation

ª«¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­Zhao Dehai and Zhang Yongshanª« (ª©155ªª)

A Summary of the Forum of Service Outsourcing and Upgrading Inudstry

ª«¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­Yuan Xiaoneng and Shi Qiª« (ª©158ªª)

Trends and Theoretical Issues of Globalization of Services

Jiang Xiaojuan

(Research Office of State Council; Graduate School, Chinese Aca

demy of Social Sciences)

Abstract:

In this paper, we analyze the status and trends of globalization of services, and explore theoretic issues. Firstly, we describe the status and characteristics of globalization of services, showing that it has been one of important parts and latest characteristics of economic globalization. Secondly, we put forward main factors influencing the globalization of services, emphasize that these factors will be available and promote the process in the long term. Besides,we distinguish the ¡°nominal growth" and ¡°real growth" of services and globalization of services. Thirdly, we discuss the applicability of the classical labor division theory, pointing out that comparative advantage theory and factor endowment theory are applicable to the services division globally. Further more, we bring out the viewpoint of reverting goods and services to combination of factors to extend the application of the theory. We illuminate four traits of globalization of services, which are the importance of human capital, labor virtual flowing across countries, knowledgeª²intense producer services and nonª²economic influence. The conclusion is that globalization of services benefits the world economicgrowth and solving global problems, China should utilize this chance to promoteits development, and related research should be reinforced and deepened.

Key Words:Services; Globalization; Openingª²up

JEL Classification:F140£¬F490

Path to Richness: A Unified Theory for Long Run Economic Growth

Chen Kunting   and   Zhou Yan

(Center for Economic Research£¬Shandong University)

Abstract:

The unified theory of long run economic growth has become a new research field. However, existing researches on this field focus mostly on model structure, but they didn't integrate most enough factors into their model, which are usually believed to be very important in explanation of the modern economic growth, especially the factor of social ambience. This paper establishes a multiª²factor model on unified theory to explain the evolvement process of both modern growth and the Great Divergence. Some suggestions based our model are given for the development of undeveloped and developing countries. We claim that: any one factor was not enough to trigger the Great Divergence; the common present of the mercantilism motivated by Renaissance and the exploitation of the New World became a sufficient condition for the Industrial Revolution in Europe, which formed the Great Divergence increasingly.

Key Words:Industrial Revolution; Great Divergence; Unified Theory

JEL Classification:O11,O40

The Nature of Inflation Inertia in China and Its

Implications on Monetary Policy

Zhang Chengsi

(Renmin University of China)

Abstract:

Inflation inertia is closely related to effects of monetary policy. This article employs gridª²bootstrap unbiased estimator and unknown structural break test to analyze the nature of inflation inertia in China over 1980¡ª2007. Empirical results show that inflation maintains high inertia even in the low inflation environment, which indicates that the lag effect of monetary policy in China is remarkable and the response of inflation to monetary policy change is relatively slow. The numerical results also show that the central bank should take actions at least one year prior to the emergence of inflation pressure in order to cope with this lag effect. Therefore, the central bank should be cautious not only to the rising inflation but also to the effect of high inflation inertia on monetary policy.

Key Words: Inflation; Inflation Inertia; Monetary Policy

JEL Classification:E310£¬E580

Policy Burdens and Longª²run Soft Budget Constraint

Gong Qiang and Xu Zhaoyang

(China Center for Economic Research, Peking University)

Abstract:

The traditional theories about SBC implicitly assume that the lender and debtor play the game only once. When we relax this assumption and consider the longª²run relationship between the lender and debtor, SBC and moral hazard problem will be greatly alleviated. In this paper, we originate the concept of longrun SBC and construct a more general framework in which both traditional SBC and longª²run SBC can be incorporated. Under the general framework, we discuss the effect of policy burdens on SBC, and demonstrate the tradeª²off between them. The reason that the SBC problem is severer in less developed country than in developed countries might be attributed to more policy burdens. 

Key Words:Repeated Games, Policy Burdens, SBC, Moral Hazard

JEL Classification:G310

Fiscal Motivation for Property Restructurings of Public Enterprises in China

Han Chaohua and Jean Oi

(Institute of Economics, Chinese Academy of Social Sciences;The Department of Po

litical Science, Stanford University)

Abstract:

Governmental preference to maximizing of fiscal utilities tends to be one of promoting factors in property restructurings of public enterprises. Relevant study on this issue, however, has not been sufficient, especially lacking positive analysis basing on enterprise data. This paper fills the gap by testing the impacts of the property restructurings on fiscal revenues through the surveysof 145 industrial firms in China. We find that property restructurings of public enterprises actually raise the levels of taxª²paying in restructured firms, which is consistent with the hypothesis on governmental nature to maximize fiscal utilities. And we also find that the impact of the property restructurings on level of taxª²paying varies nonlinearly over years after the restructurings. This is worthy to note in future approach.

Key Words:Privatization; Fiscal Motivation; Level of Taxª²paying

JEL Classification:H71£¬P31£¬P35

Investor Protection, Agency Cost and Corporate PerformanceWang Peng

(Institute of Finance, People's Bank of China)

Abstract:

Based on a constructed index for investor's protection in 2000¡ª2004, this paper examines the effect of investor's protection on corporate performance.We find that corporate performance is positively associated with the degree of investor's protection, and this association becomes strengthened for state controlling listed companies. We also find that a higher degree of investor's protection tends to reduce the negative effect of controlling shareholding on corporateperformance, limit the funds appropriation by controlling shareholders, and lower the demand for outside auditing.

Key Words:Investor Protection; Corporate Performance; Agency Cost

JEL Classification:K220, G320

Rural Land System, Land Fragmentation and Farmer's Income Inequality

Xu Qing£¬ Tian Shichao£¬ Xu Zhigang and  Shao Ting

(Shanghai University of Finance and Economics,  Fudan University;

Chinese Academy of Sciences)

Abstract:

In this paper, land fragmentation incurred by present China's rural land system, i.e., Household Responsibility System (HRS) will be investigated through empirical studies. After the founding of mechanism of land fragmentation affecting farmer's income, an econometrical model is established to find that impacts of land fragmentation on farmer's income are positive. Then a regression based approach, i.e., Shapleyª²value decomposition procedure is employed to find that land fragmentation could reduce the farmer's income inequality. Based on the empirical results, it could be derived that the existence of land fragmentation isstill rational, and on the other hand, sustaining the rural land system is essential to increase famer's income and reduce famer's income inequality.

Key Words:Rural Land System;  Land Fragmentation;  Farmer's Income Inequality;  Shapley Value

JEL Classification:D31, Q15, R14

The Coordination of Industrial Growth with Environment and Resource

Tu Zhengge

(School of Economics, Huazhong Normal University)

Abstract£º

To resolve the environmental problem of China, we must proceed from reality and consider the industrial growth, resource conservation and environmental protection comprehensively. The paper calculates local efficiency of environmental technology to evaluate the coordination of environment and industrial growth and makes regressive analysis on the difference of environmental technologicalefficiency based on the data of inputs of elements and resources, industrial outputs and emissions of our 30 provinces, cities and areas. The study finds that:(1) the interª²regional coordination of the environment and industry is highly unbalanced. The industrial development and environment of eastern coastal areas coordinate better. However, the environmental technological efficiency of the central and western regions is poorer, and the relationship between industry and environment of five regions, Shaanxi, Shanxi, Guangxi, Gansu and Ningxia, is seriously unbalanced. (2) to achieve the coordinated development of environment and industry, we must accelerate the pace of upgrading of the industrial economic structure, deepen the reform of the structure of property rights, and promote the collective development of enterprises; we must develop independent R&D and increase the introduction and investment of technology, strengthen the management of funds of the technological transformation of stateª²owned enterprises and improvetheir efficiency in use; we must encourage foreign direct investment and restrict the access of the industries of high pollution and high energy consumption at the same time. In short, only if we develop in a comprehensive, coordinated and balanced way, may we really solve the environmental problems and realize the ¡°Sound and Rapid Development¡± of national economy.

Key Words£º Efficiency of Environmental Technology; Coordination of Environment and Industry; Environmental Directional Distance Function; Sound and Rapid Development

JEL Classification£ºC61, Q56, O31

Dynamics of Factor Payment£ºEvidence from China

Xu Xianxiang and Wang Haigang

(Lingnan College, Sun Yatª²Sen University; School of Economics,Central University of Finance and Economics)

Abstract£º

Based on a new data set about individual factor payments, we estimate the national income distribution by integrating individual factor income distribution for 28 provinces between 1978 and 2002. The characteristic and mechanism of the dynamics of the national factor income distribution are documented. The whole national income distributions shift to the right over time, but gradually move toward the bimodal distribution, which visualize the picture of the polarization of income. We also find the bimodal distribution can attribute to the acrosssector difference in marginal product of labor, and that other kinds of difference in marginal product also distort the national income distribution substantially, the magnitude ranged from 2% to 15%. Our findings are robust, and may shed highlights on the direction of the ongoing income system reform in China.

Key Words£º Dynamics of Factor Income Distribution; Factor Payment; Twinª²peaks Convergence

JEL Classification£ºE25£¬ O11£¬ C14

The Fluctuation and Regional Difference of theStrength of Precautionary Saving Motive

Yi Xingjian, Wang Junhai and Yi Junjian

(1st: School of International Trade and Economy, Research Center for Internation

al Trade and Economy, Guangdong University of Foreign Studies;

2nd: Center for Macroeconomic Studies, Xiamen University;

3rd: Department of Economics, Chinese University of Hong Kong;

Research Center of Labor Economics and Public Policy, Zhejiang University)

Abstract£º

This paper empirically examines the fluctuation and regional difference of the strength of precautionary saving motives in rural China by employing the fixed effects instrumental variables model on a panel data set from 1992 to 2006. It is found that there does exit a strong precautionary saving motive in Chinese rural inhabitants and that the strength of western rural inhabitants is stronger than that of the central and eastern rural ones. However, the rolling estimates reveal a considerable variation across different geographic regions in rural China. Lastly, based on the explanation for the empirical findings, the paperproposes policies to mitigate the high growth rate of rural habitants saving inChina.

Key Words£º Rural Inhabitants; Strength of Precautionary Saving Motive; Coefficient of Relative Prudence

JEL Classification£ºR22, E21, C23

Does Contractual Incompleteness Necessarily Lead

to Inefficient Specific Investment?

Nie Huihua

(School of Economics, Renmin University of China)

Abstract:

The classical theory of incomplete contracts argues that contractual incompleteness will bring on inefficient specific human capital, but it can't explain the fact that employees efficiently invest in specific human capital abounds. Introducing repeated games and the asymmetric information of investor's ability into the classical holdup model, this paper proves that although contractual incompleteness will definitely cause the holdup problem, holdup may not necessarily impede efficient investment in specific human capital under some conditions.This paper characters three perfect Bayesian equilibria: Good reputation induces highª²type agent to invest socialª²best specific human capital in the first period, and compel lowª²type agent to quit the market; neutral reputation induces both types agent to invest socialª²best specific human capital; however, bad reputation induces both highª²type agent and lowª²type agent to quit the market. Also, this paper indicates that property rights still matter in dynamic environment.

Key Words:Incomplete Contracts; Hold Up; Reputation; Specific Investment

JEL Classification:L140, L220, D230

Language as Human Capital, Public Good and Institution:

A Basic Analytical Framework of Language and Economics

Zhang Weiguo

(Center for Economic Research, Shandong University)

Abstract:

This paper mainly deals with three basic propositions of Language and Economics, a new branch of economics, from the standpoint of human capital, public good and institutions. As a kind of human capital, language is one of the important determinants of labor market employment and earnings, and it is closely related with social economic activities and personal status; as a kind of public good, language can influence the choiceª²making and constitution of language policy and language planning; as a kind of institution, language has some influencesnot only on the transaction cost, but also on the efficiency of other institutions. So far as the current researches are concerned, we think the future researches of Language and Economics can either be based on them, or develop around them. In this sense, they will constitute a basic analytical framework of Language and Economics.

Key Words:Language; Language and Economics; Human Capital; Public Good; Institution

JEL Classification:A190, B590, D010