Sponsor(s): Wuhan University
6 issues per year
Current Issue: Issue 04, 2020
Journal official website:http://jer.whu.edu.cn/
Economic Review is supervised by Ministry of Education of PRC, and sponsored by Wuhan University. It aims to promote the modernization, localization and standardization of Chinese economic study. Its scope covers all fields of economics, particularly those with an emphasis on the research of Chinese economic development and economic theory research. The Journal is included in CSSCI.
Economic Review,2020,No. 04
Looking back at history, we can see that every major economic event, especially the severe economic crisis, has promoted the evolution and development of economics, especially the constant innovation of macroeconomics. This is of reference significance to the innovation of local economic research. The Great Depression from 1929 to 1933 triggered the Keynesian Revolution in economics. Keynesianism dominated the macroeconomic policies of Western developed countries, mainly the United States, for a long time after the Second World War, and achieved positive results in the early stage. However, when faced with the new economic problem of stagflation in the 1970s, it not only failed to solve the problem, but was deeply stuck. Therefore, the stagflation in 1970s made Keynesianism widely questioned, and critics thought that Keynesian theory lacked a solid micro foundation. Although John Maynard Keynes analyzed the macroeconomic instability from the perspective of insufficient effective demand, he did not explain why the market mechanism would not work, nor did he explain why unemployment and depression would appear constantly from a rational perspective. Therefore, critics believed that Keynesianism in the 1960s and the 1970s cannot be called theory, because it lacks principles and only puts forward various policies; it can only be called macroeconomic engineering. While criticizing, neoclassicists set up a micro foundation for macroeconomics from a rational point of view, and this idea was absorbed by Neo-Keynesianism. In such way, neoclassical macroeconomics and Neo-Keynesian macroeconomics were born. However, macroeconomics is no longer just macroeconomic engineering; it has the principle of macroeconomics, and this principle is microeconomics. Since the 1980s, macroeconomics on the micro basis has developed further, from the theory of real business cycle to the theory of dynamic stochastic general equilibrium (DSGE). DSGE theory not only adheres to the micro-foundation of rationality, but also insists on explaining all economic problems with a unified theory, instead of applying different models to different topics. Therefore, it advocates adopting the general equilibrium idea and establishing a model that can explain all economic problems. Although the central banks of many countries and some international financial institutions have established large-scale DSGE models, DSGE theory failed to predict and prevent the Great Recession during 2008 and 2009, which is known as the subprime mortgage crisis in China. The Great Recession made DSGE theory questioned and criticized, and at the same time, the mathematicization of economics was also questioned. Since then, DSGE theory has added more elements in modeling, such as market incompleteness, individual heterogeneity, incomplete rationality and learning behavior. Sorting out major economic events and innovation in macroeconomic research may provide implications for judging China’s local economic research. First, the core theory of any mature discipline is stable. As far as economics is concerned, the essence of Adam Smith’s thought dominates the basic position of modern economics. More specifically, rational principle has always been the cornerstone of the whole economics. Because the world is changing, but the core things have not changed, and people’s behavior has not changed. Therefore, Greg Mankiw said that the principle of macroeconomics is microeconomics. It seems quite reasonable to say in the Bible that there is nothing new in the world. Second, there are differences between policy propositions and theoretical principles. If the policy proposition lacks rigorous academic support, there will be risks: it may fail in the future despite the current success. Keynesianism in the 1950s–1970s encountered this dilemma. This is the same as medicine. If one treated a disease only based on experience, there would always be hidden dangers; medical science is still needed to serve as a guarantee. We cannot call Franklin D. Roosevelt’s New Deal a theory, and Greg Mankiw also believed that the Keynesianism is more precisely macroeconomic engineering. In this way, many economic theories have been awarded in China in the past few years, but these award-winning theories are actually policy science and economic engineering, not economic principles. Third, the seemingly pedantic theory is actually very practical. For example, the rational expectation theory holds that everyone’s expectations are consistent with those of economists in terms of results, which is the target of criticism of rational expectations. But think about how parents expect the standards for file acceptance of colleges and universities during the college entrance examination. They are not experts, but their expectations are very accurate, because they bought the guide of professional institutions. Fourth, major economic events make economic theories innovate constantly, so when studying Chinese economic problems which are totally different from those of Western developed countries, Chinese scholars should put forward theories which are different from those of the West. For example, when many scholars use DSGE theory to study Chinese problems, they seldom considered whether Chinese economy has a general equilibrium as stable as that of Western countries. In this respect, there is still a long way to go for Chinese economic research.
High-quality human capital and upgrading of urban industrial structure in China: evidence from enrollment expansion
Economic Review,2020,No. 04
In the critical period of reshuffle of global industrial division of labor, China’s economy is encountering many bottlenecks after more than 30 years of rapid development, including the challenges brought by irrational industrial structure and high factor costs faced by relatively backward industrial systems. In this context, the importance of industrial upgrading has become increasingly prominent, and its success (or failure) and process determine the core power of China’s future economic growth. As General Secretary Xi Jinping emphasized, to promote high-quality economic development, it is necessary to focus on the promotion of transformation and upgrading of industrial structure, and make the real economy stronger and better. Therefore, it is a key measure for China to maintain high-quality development by adjusting industrial structure to solve the bottleneck of total growth. How can we better promote the transformation and upgrading of industrial structure? The report to the 19th National Congress of the Communist Party of China pointed out that talents are strategic resources to realize national rejuvenation and obtain an initiative status in the international competition. Theoretically, as an important factor input, human capital will continuously promote the digestion, absorption and application of various technologies and induce innovation, promoting technological innovation and upgrading of technological structure at the industrial level, and finally realizing industrial transformation and upgrading. However, the existing research found that the simple increase in the amount of human capital does not necessarily lead to the rational adjustment of industrial structure, and the mismatch of human capital will even hinder the full utilization of various production factors and restrict the development of knowledge and capital-intensive industries. Therefore, it may be uncertain whether the increase of human capital can promote the upgrading of industrial structure. To solve this problem, we innovatively constructed a quasi-natural experiment which can be used for policy evaluation, and used difference-in-differences (DID) method to evaluate the impact of human capital formed by college enrollment expansion in 1999 on the upgrading of urban industrial structure. The conclusions are as follows. First, the expansion of high-quality human capital effectively promotes the upgrading of industrial structure, and the effect gradually increases with time. This conclusion is still valid with the consideration of the identification hypothesis and a series of other factors that may interfere with the estimation results, indicating that China needs high-quality human capital to promote the upgrading of industrial structure and realize economic transformation and development. Second, the upgrading effect of the industrial structure mainly comes from the fact that human capital improves the innovation level and income level of cities. This is because high-quality human capital is an important foundation and support for R&D innovation, and the improvement of innovation level can promote the transfer of resources from low-productivity departments to high-productivity departments, and eliminate those backward industries while developing a number of emerging industries and high-end industries, thus driving the upgrading of the regional industrial structure. In addition, the higher the level of human capital, the higher the income level of cities, which will give birth to more high-quality consumer demands. In order to better adapt to the growing demand for products and services in the region, the industrial structure must be continuously and reasonably adjusted, thus forcing the upgrading of local industrial structure. Third, the industrial structure upgrading effect of high-quality human capital expansion is more prominent in eastern cities and cities with higher degree of marketization, which shows that the advantages of eastern cities in material capital, financial capital and foreign trade are helpful to further improve the industrial structure upgrading effect of human capital. For cities with a high degree of marketization, the adjustment of production factors such as human capital is more flexible, and enterprises are more likely to match the suitable labor force, thus giving full play to the role of human capital in industrial upgrading. Therefore, investing in high-quality human capital can promote the upgrading of industrial structure, which provides important policy implications to the high-quality development of China’s economy in the new era. First, cities at all levels should take the preferential policies for talents as the guide, implement the talent policy of training from inside and introducing from outside, and continuously inject energy into the upgrading of urban industrial structure. Second, it is necessary to continue to attach importance to and coordinate the development of higher education. Although China’s higher education has begun to take shape, the unequal distribution of higher education resources among regions has not been effectively alleviated, and the gap between the eastern and central and western regions is still large. Therefore, in the process of comprehensively promoting higher education, China should pay special attention to the central and western regions, and formulate appropriate preferential policy to promote the rapid growth of local high-quality human capital, so as to further promote the upgrading of industrial structure in the central and western regions and finally achieve coordinated development among regions. Third, governments and enterprises at all levels should respect knowledge, encourage creativity, establish and improve innovation incentive system and intellectual property protection system to mobilize the enthusiasm of high-quality human capital, and thus release more talent dividends. In addition, it is necessary to further improve the income distribution system, match individual abilities with their income levels, so as to improve the expected returns of various types of educational investment. Fourth, it is necessary to accelerate the process of marketization in various regions, build a market-oriented development system, form a complete and mature market mechanism, and promote the full play of production factors such as human capital among industries, so as to enhance the overall resource allocation efficiency of cities.
Economic Review,2020,No. 04
Promoting the upgrading of manufacturing industry is an important link to achieve high-quality development of China’s economy. In the early days, limited by the time-consuming and expensive technology development, replacing technology with elements has become an effective means to participate in the global value chain division of labor and gain competitiveness in a certain period of time. However, China has depended on factor input to drive development for a long term, and the overall technical level and independent innovation capability of manufacturing industry are weak, which leads to long-term locking in the low end of global value chain. The manufacturing industry is in large size but not strong, and such disadvantage is obvious, so it is extremely urgent to realize the transformation and upgrading of manufacturing industry. In addition, from 2006 when the state explicitly proposed to vigorously develop producer services to the report to the 19th National Congress of the Communist Party of China proposing to speed up the construction of modern producer services, these signals have shown the industrial layout policy that the state relies on producer services to promote the transformation and upgrading of manufacturing industry and the rising of value chain. Therefore, against the realistic background of accelerating the transformation and upgrading of China’s manufacturing industry, it is of great significance to clarify the logical relationship between the spatial agglomeration of producer services and the upgrading of manufacturing industry, and to clarify the mechanism path of promoting the upgrading of manufacturing industry by the spatial agglomeration of producer services. Manufacturing upgrading mainly includes rationalization and upgrading. In addition, at present, China’s economy has shifted from a high-speed growth stage to a high-quality development stage. Seeking green development of manufacturing industry is the inherent demand for realizing high-quality economic development, which is also an important connotation of upgrading China’s manufacturing industry. According to agglomeration economy theory, the upgrading effect of the producer service industry agglomeration mainly benefits from Marshallian externalities. Therefore, we combined the external effect of spatial agglomeration of producer services with the connotation of manufacturing upgrading. Specifically, on the one hand, the knowledge spillover effect of spatial agglomeration of producer services can improve the advanced level of manufacturing production factors, and then promote manufacturing upgrading. On the other hand, the reservoir effect of spatial agglomeration of producer services can improve the resource allocation efficiency of manufacturing industry by improving resource mismatch, and then promote the upgrading of the manufacturing industry. In addition, the economies of scale of spatial agglomeration of producer services can achieve energy conservation and emission reduction of the manufacturing industry, promote green production and upgrading of the manufacturing industry. We took urban space as the analysis boundary, and tested the interaction mechanism and path between them. It is found that the spatial agglomeration of producer services can promote manufacturing upgrading through the flow of R&D factors with knowledge spillovers and the reduction of pollution emission intensity. Therefore, all regions should accelerate the double industrial development strategy of scientific technology and mechanism, strengthen the spatial synergy and industrial interaction between producer services and manufacturing industries, and further promote the upgrading of manufacturing industries by exerting the positive external effects of producer services agglomeration. However, at the present stage, the spatial agglomeration of China’s producer services not only fails to exert the corrective effect of resource mismatch, but intensifies the degree of resource mismatch. In this regard, on the one hand, when formulating industrial policies, it is necessary to comprehensively consider formulating a reasonable performance appraisal system, weaken the intervention motivation and protectionist tendency of local governments to economic development from the source, and reduce the clustering of low-quality and homogeneous enterprises. On the other hand, it is necessary to start from the law of industrial development and provide a good external business environment for the agglomeration of producer services, and encourage the producer services to spontaneously form industrial agglomeration under the guidance of market mechanism and its own externalities, and form a rational allocation of resources based on market competition means. Further transmission path test shows that the manufacturing upgrading effect of spatial agglomeration of producer services presents an inverted U-shaped transmission path, and R&D capital flow, resource mismatch degree and pollution emission intensity play a regulatory role, which makes the promotion effect of spatial agglomeration of producer services on manufacturing upgrading present a multi-stage dynamic strengthening effect, but it is constrained by the threshold of R&D capital flow. In this regard, on the one hand, it is necessary to implement differentiated agglomeration policies of producer services according to local conditions, fully grasp the spatial form of agglomeration of producer services within cities, and reduce the adverse impact of excessive agglomeration of low-tech and labor-intensive producer services on manufacturing upgrading due to agglomeration of shadowing effect. On the other hand, the local government should actively formulate various incentive policies, rationally distribute R&D capital, and avoid the polarization effect caused by the one-way flow of capital. The eastern region should also offer help and set up a special department for innovative fund management to provide support for the cross-regional flow of R&D capital.