¡¡¡¡¡¡¡¡¡¡¡¡Economic Research Journal (Monthly) Vol.43 No.11 November, 2008

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

Structural Change and Technical Advance in China¬ðs Economic Growth

¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­ª«Liu Wei and Zhang Huiª« (ª©4ªª)

CPI vs. PPI: Which Drives Which£¿

ª«¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­..He Liping, Fan Gang and Hu Jianiª« (ª©16ªª)

The Relationship between Insider Ownership and Firm Value£ºThe Study fo

r the Chinese Listed Private Firms

ª«¡­¡­¡­¡­¡­¡­¡­¡­¡­.Li Xinchun, Yang Xueru, Jiang Yuexin and Hu Xiaohong(ª©27ªª)

Ownership Structure, Resolution Mechanism and Control Right of Listed Companies

ª«¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­..Zhang Xiaoqian and Wang Weiª« (ª©40ªª)

Corporate Donations and Economic Incentives: An Empirical Study Based on Corporate Donations Following the 5ª±12 Earthquake in China

¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­..ª«Shan Liwei, Gan Li and Zheng Taoª« (ª©51ªª)

Study on Performance Evaluation of the General Transfer Payment of Provinceª²toª²County in China: The Binary Relative Effective Model Based on the Data Envelopment Analysis (DEA)

ª«¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­.Fu Runmin, Chang Bin and Miao Xiaolinª« (ª©62ªª)

Policy Effect of Rebating Export Tax and Subsidizing Innovation in Innovation In

Centive¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­ª«Chen Lin and Zhu Weipingª« (ª©74ªª)

The Impact of Energy Price Increases on Macroª²economy: An Analyses based on CGE Method

¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­ª«Lin Boqiang and Mou Dunguoª« (ª©88ªª)

Sectoral Difference in Growth Rate of Technology and Change in Economic Growth Rate with Humpª²shape¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­..ª«Chen Tibiaoª« (ª©102ªª)

Firm Size, City size, and Agglomeration Economies ¡ª¡ªEvidence from China Manufacturing Census¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­..ª«Fu Shihe and Hong Junjieª« (ª©112ªª)

Research on the Mechanism of How City Group Drives Economic Growth¡ª¡ªEmpirical Evidences from 16 Cities of Yangtze River Delta

ª«¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­..Wu Fuxiang and Liu Zhibiaoª« (ª©126ªª)

Empirical Analysis on Spatial Linkages in FDI across China

¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­..ª«He Xingqiang and Wang Lixiaª« (ª©137ªª)

A Summary of the 8th Forum of Young Economists in China

¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­ª«Hong Yongmiao, Chen Guojin and Fang Yingª« (ª©151ªª)

A Book Review¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­..Hong Yinxing and Zhang Erzhenª« (ª©157ªª)

Structural Change and Technical Advance in China¬ðs Economic Growth

Liu Wei and Zhang Hui

(School of Economics, Peking University)

Abstract:This article empirically measures the effect of structural change of industries on China¬ðs economic growth compared to the impact of technical advance on China¬ðs economic growth, using decomposed expressions of labor productivityand total factor productivity. The study illustrates that the impact of structural effect on the economic growth is decreasing during the thirty years since China¬ðs economic reform in 1978, gradually exceeded by the impact of technical advance, which means that technical advance will play a more important role than market mechanism in the future. However, our study also indicates the decreasing of the impact of structural change on economic isn¬ðt equivalent to the disappearance of gains from market reform. Some of the institutional and developmental factors retard the improvement of allocative efficiency. In this perspective, China still has a great deal to improve the efficiency of market mechanism.

Key Words: Structural Change; Technical Advance; Economic Growth

JEL Classification:O330£¬O470

CPI vs. PPI: Which Drives Which£¿

He Lipingª¬1, Fan Gangª¬2, Hu Jianiª¬1

(1. Beijing Normal University;

2. National Economic Research Institute, China Reform Foundation)

Abstract£ºThe consumer price index(CPI) and the producer price index(PPI) are interrelated concepts, and they have certain differencing elements. The two indexes have various different causality or nonª²causality relationships in principle.The paper conducts a Grangerª²causality examination on Chinese data of CPI and PPI for the period from January 2001 to August 2008, and finds a result that PPI responded to the change in CPI with a time lag of 1ª²3 months. The result may suggest that the demandª²side factors have played a more important role than supplyside factors in CPI inflation in contemporary Chinese economy.

Key Words£º Consumer Price Index; Producer Price Index; Price Transmission

JEL Classification£ºE31, E37, C22

The Relationship between Insider Ownership and Firm Value£º

The Study for the Chinese Listed Private Firms

Li Xinchunª¬1, Yang Xueruª¬1, Jiang Yuexinª¬1 and Hu Xiaohongª¬2

£¨1.          School of Business Sun Yatª²Sen University, 2. School of Business Guangdong University of Foreign Studies£©

Abstract: On the basis of the theoretic analysis, this paper redefined insider ownership by classifying it into ¡°insider ownership in broad sense¡± and ¡°insider ownership in narrow sense¡±, and examined their different principalª²agent problems. With the data of the Chinese listed private firms, we found the curve relationship shaped like the letter ¡°U¡± between Tobin¬ðs Q and¡°insider ownership in broad sense¡±, also confirmed the curve relationship shaped like the symbol reverse ¡°U¡± between Tobin¬ðs Q and ¡°insider ownership in narrow sense¡±.The conclusion indicated that the monitoring effects and the expropriation effects exert influence on the Chinese listed private firms, the large shareholders of the enterprise are easy to play booty and collude with top managers to expropriate the small shareholders¬ð benefits; the entrenchment effects and the convergenceª²ofª²interest effects also exert influence on the Chinese listed private firms, but in China, ¡°insider ownership in narrow sense¡±is so low that the existing data is hard to give a perfect investigation.

Key Words: Insider Ownership; Firm Value; Corporate Governance

JEL Classification:G390£¬M100

Ownership Structure, Resolution Mechanism

and Control Right of Listed Companies

Zhang Xiaoqian and Wang Wei

(Center for Research of Private Economy, College of Economics, Zhejiang University)

Abstract:The definition and measurement of the control right always puzzle the research in corporate governance. The theoretical categories of control type defined by the largest shareholder, including complete ownership, majority control, control through pyramiding, minority control and management control, ignored the difference of the residual shares ownership, i.e. ownership structure. Considering ownership structure, probabilistic voting model offsets this flaw. But since it just started, there are some theoretic bases to be completed. This paper modified the model according to the attendance of the shareholders in three resolution mechanisms. The analyses of the model reveal some factors other than ownership, involving its structure, resolution mechanism, shareholders¬ð attendance and voting probability.

Key Words: Control Right; Corporate Governance; Controlling Share

holding; Ownership Structure; Resolution

JEL Classification:G32

Corporate Donations and Economic Incentives: An Empirical Study Based on Corporate Donations Following the 5ª±12 Earthquake in China

Shan Liwei, Gan Li and Zheng Tao

(Research Institute of Economics and Management, Southwestern University of Fina

nce and Economics;Department of Economics, Texas A&M University)

Abstract: This paper studies economic incentives of corporate donations by China Aª²share firms immediately following the 5ª±12 Wenchuan Earthquake. It uses whether a firm sells product directly to consumers to identify the firm¬ðs incentive to use donation for its commercial advertisement purpose.  The paper finds that firms selling products directly to consumers have 50% higher total donation amounts and 1.8 times higher cash donation amounts than other firms. Also, more profitable firms have higher donation amount, which indicates that firms make donation decisions based upon their financial conditions. Other firm characteristics such as size and controlling shareholder types also have effects on corporate donations. In general, our results indicate that firms choose donation amounts and donation methods according to their economic incentives. Therefore, a marketª²based approach to regulating corporate donations is recommended.

Key Words: Earthquake; Donations; China Listed Firms; Economic Incentives; Commercial Advertisement

JEL Classification:G30, H32, M37

Study on Performance Evaluation of the General Transfer Payment of

Provinceª²toª²County in China: The Binary Relative Effective

Model Based on the Data Envelopment Analysis (DEA)

Fu Runmin,  Chang Bin and Miao Xiaolin

(Yunnan University of Finance and Economics)

Abstract:The general transfer payment is an important part of the transfer payment system in China, it is an important system arrangement by the central finance for adjusting the financial disparity among different regions and promoting the equalization of basic public service. However, the central and provincial finance did not regulate the specific uses of the general transfer payments when they allocated funds to lower lever governments based on equalization and standard financial budget difference. Thus, countyª²level government posses right to control the funds. Under the pressure of multiple goals, especially economic growth, the funds may be misappropriated, which make higher lever governments not to implement public service equalization effectively. The purposes of this paper are to analyze the internal relations between policy goal of the general transfer payment and efficiency evaluation in the system; to discuss the applicability about the binary relative effective model based on DEA to the performance evaluation of the general transfer payment; to construct the general transfer payment performance evaluation system of provinceª²toª²county from funds distribution and efficiency promotion of basic public service; to do simulative study on performance of the general transfer payment based on counties of Yunnan province; to propose that establishment of performance evaluation is an important content of improving the general transfer payment system of provinceª²toª²county.

Key Words: General Transfer Payment; Performance Evaluation; Binary Relative Effective Model Based on DEA

JEL Classification:

H71£¬H41£¬C67

Policy Effect of Rebating Export Tax and Subsidizing

Innovation in Innovation Incentive

Chen Lin and Zhu Weiping

(Institute of Industrial Economics, Jinan University)

Abstract£ºThe policy effect of innovationª²incentive is examined with a static cournot competition model in this paper. Results show that under certain labor structure and laborª²market environment subsidizing innovation and rebating export can incent innovation. The effective innovation incentive policy can also inspirit native company profit, consumer surplus, social surplus. Actually, national education and human capital really decide native science and technology level in long views. Finally, we use econometric model to prove our mathematical model, argue that in today¬ðs China rebating export can incent innovation, but subsidizing innovation fail to do that, its policy effect is uncertain.

Key Words£º Innovation; Rebating Export Tax; Subsidizing Innovation; Innovation Policy

JEL Classification£ºO320, O380

The Impact of Energy Price Increases on Macroª²economy:

An Analyses based on CGE Method

Lin Boqiang and Mou Dunguo

(China Center for Energy Economics Research, Xiamen University)

Abstract£ºIn recent years, we have seen great increase in energy prices. The impacts of energy price increases on Western countries¬ð economy drew great attention, and Western scholars did a large number of related research. However, very few researches on the subject were done in China. Different studies have shown that energy prices have contraction effects on economy. Since 1993, China became a net oil imported country. Recent oil price increase is the first time for China

to face the oil price shock. Coal prices have also kept rising in recent years. What kinds and how great of the impact will coal and oil price increases have on China¬ðs economy are highly related with the China¬ðs economic characteristics, and both are import questions need great research effort to support macroª²policy decision making. This paper studies these questions, particularly comparisons of coal and oil price impacts using computable general equilibrium (CGE) method, and therefore fills the research gap. The results show that the impacts of energy price increase have contraction effects, and the levels of contraction are different significantly across industries. This will not only affects the economic growth but also impel the industrial structure change. For most industries in China, the contraction effects of coal are 2 to 3 times that of oil for the same pr

ice increase, and conclusion holds even for the less energyª²intensive service industries. The impact differences of coal and oil are in line with the observed energy consumption structure of China, which coal takes 70% and oil takes 20% of the primary energy consumption. This paper put forward some suggestions on how to deal with the energy price increases.

Key Words£º Oil Price; Coal Price; Contraction Effect; Industrial Structure

JEL Classification£ºD580, Q430

Sectoral Difference in Growth Rate of Technology

and Change in Economic Growth Rate with Humpª²shape

Chen Tibiao

(The Institute for Shanghai Development and Reform)

Abstract: In the wellª²known economic history, we find there would be a hump shaped fact of economic growth rate. Growth is slow when per capita GDP is low or high, while quick when per capita GDP is at the middle level. The history of economic growth shows at the same time that the eras of the quick growth are almost these of violent changes in economic structure. This paper tries to construct a threeª²sector growth model in the neoclassical growth framework to explain the humpª²shaped fact and the structural changes behind it. The numerical simulation shows that the results of the model may combine Kaldor facts with Kuznets facts and explain the ¡°humpª²shaped¡± economic facts reasonably.

Key Words: Structural Change£» Economic Growth£» ¡°Humpª²shaped¡± Facts

JEL Classification: E130£¬O110£¬O410

Research on the Mechanism of How City Group Drives Economic Growth¡ª¡ªEmpirical Evidences from 16 Cities of Yangtze River Delta

Wu Fuxiang and Liu Zhibiao

(School of Economics of Nanjing University)

Abstract: In a city group, there is a significant positive correlation between urbanization rate and economic growth, and the Yangtze River Delta city group is playing an increasingly important role as the new engine on economic growth, the empirical results in the paper support this hypothesis. Yangtze River Delta city group drives economic growth mainly achieved through two mechanisms: First, when elements are footloose among regions, some advantage elements prefer to gathering in large cities, while the disadvantage elements prefer to gathering in small cities, which not only improve the urban agglomeration in the accumulation of external economic factors and increase the urban agglomeration in the efficiency of research and innovation, but also promote economic growth; Second, when elements are also footloose among regions, governments prefer to selecting the Tiebout Choice¡± mechanism efficiently and they enforce investment and the urban infrastructure construction within or among cities, and they try to absorb the outer businesses and industries, which not only reduce transport costs of the enterprise, but also foster the circular cumulative causality and the inputª²output linkages, thus it promotes the economic growth in the city group.

Key Words:City Group; Economic Growth; Tiebout Choice; Inputª²Output Linkages; Circular Cumulative Causality

JEL Classification:R11,R22

Empirical Analysis on Spatial Linkages in FDI across China

He Xingqiang and Wang Lixia

(Lingnan College, Sun Yatª²sen University)

Abstract: At present most of the empirical researches on the locational choice of FDI in China are usually based on bilateral framework. There are few articles focusing on spatial effects and cityª²level data. Based on the ¡°thirdª²country effects¡±, using spatial panel technique and a data set on 154 cities during the period of 1985¡ª2005 in China, this paper estimates both a spatial lag and spatial error model to examine the spatial effects for FDI in China. We find that spatial linkages dominate in China. A city¬ðs FDI inflow increases with the FDI inflow ofneighboring cities and its market potential is affected by a shock to FDI in neighboring cities. Among the subª²samples including within different regions (eastern, center, and western regions), between regions (between the eastern and the center,  the center and the western,  the western and the center, as well as between Yangtze River Delta & Pearl River Delta and the eastern, the center separately), we find that the dominated forms FDI behavior in the eastern, center, and western regions are vertical specialization with agglomeration, vertical specialization with limited agglomeration, and pure horizontal respectively.

Key Words:Foreign Direct Investment; Location of FDI; FDI motives; Spatial Linkage; Spatial Panel Model

JEL Classification:F210, F230, R120