Pearl River Delta's economic development experience and enlightenment

 MR Branch
advance reform and opening up in Guangdong, especially the Pearl River Delta region, in this year appreciation of the renminbi, raw material prices, rising labor costs and other unfavorable factors, the emergence of a number of businesses close their doors. National community are concern, as the leader of the Pearl River Delta, the country's reform and opening up economic growth sustainable? simple to say that the Pearl River Delta's economic growth pattern is typical of the East Asian model of economic growth, the high savings rate of investment-led economic growth model. We use the Cobb - Douglas function is nearly 30 years of data processing, the national level, found that the contribution of capital to economic growth, 78%, labor's contribution to economic growth accounted for 22%. while Guangdong is more prominent, the capital contribution of 91%. more should permit the investment-led model of economic growth-led economic development in the Pearl River Delta. Although this model has this or that problem, but it still allows the Pearl River Delta's economy achieved a rapid development. Since 1985, Guangdong's GDP growth rate of total and ranking first in the country for 23 consecutive years .1978, Guangdong Province amounted to 18.5 billion GDP, to the end of 2007 it reached 3.0606 trillion, 30 times in 1978. And In 2007, not only the value of Guangdong's GDP accounted for 1 / 8, and the country's fiscal revenue reached 1 / 7 of total imports and exports to the country level 1 / 3, use of foreign capital to the country's 1/4.2007 income of urban residents in Guangdong 1978, 51 times the income of rural residents is 41 times in 1978. investment-led growth model to be worthy of the name of Guangdong province in China's first economy. Why this model can be successful in Guangdong? We believe that close to Hong Kong, Guangdong the regional advantages and the first step of the policy advantages play a significant role, Hong Kong has experienced 100 years of British colonial rule, has trained nearly 150 million know how to orders to the Pearl River Delta for the factory, and produce products with low price and low value-added production elements of the network means to participate in international division of labor,
and great success.
However, such a large province in the recent face of economic The great challenge, in September 2008, the national industrial added value growth rate of 12.8% compared to 13.1% in Guangdong, the Guangdong abnormal in previous years, the growth rate of industrial added value is generally higher than the national average of 7-8% of the phenomenon. Is the Pearl River Delta is not sustainable export-oriented economy? exchange rate and prices of production factors and other factors make it a part of business failures prove this model has come to an end? The answer is not so simple.
first row of Guangdong to the production of the model orders is very mobile and flexible market mechanisms, from orders to completion, usually within five days, companies earn 3-5% processing fee. as long as the operation goes well, a year down the number of income. Although low profits, but cash flow fast. but too many factors have led to the recent rise in the cost too fast, causing some businesses to close. enterprises do not make money to close, in line with principles of market economy, and business owners to close the bankruptcy not because they still have some capital, waiting for chance to do the right investment, closing a stop action. After all, enterprises of processing trade enterprises are lighter, easier to operate close stop loss.
Second, most of the Pearl River Delta is no other place-based enterprises in domestic loans First, because the domestic interest rates high; again outside the headquarters of these export-oriented, only a manufacturing center in the Pearl River Delta, so their cash flow does not occur in the country, rarely in domestic loans. From this sense, will not close on the impact of China's banking system.
Finally, the Pearl River Delta economy is market-oriented economy, the region every year, hundreds of thousands of businesses could argue. enterprises were shut down is normal to phenomenon, once the economy recovers, they have a lot of companies were founded. output per unit of land from the point of view, Japan, Germany, South Korea is a Guangdong were 7.5 times, 6.5 times and 5.4 times. Pearl River Delta, the intensive use of land as long as the strengthening , can carry more labor-intensive industries.
then criticized by many labor-intensive industries should give up? We believe that should not give up. because the resource endowment of labor is still the comparative advantage of China's natural resources, To give up the labor-intensive industries, capital and technology do we have a comparative advantage in the world? the answer is no.
not give up does not mean to promote industrial upgrading. use of production factors in transition from extensive to intensive industrial structure from lower, lighter and heavy transformation to high-class is still necessary. But the transformation and upgrading is not done based on the exclusion of labor-intensive. China as a large population, full employment remains the primary goal of macroeconomic growth. So We can not give up the outward processing trade, investment-led growth model, not the world needs China, China's economy will lose vitality.
(of the Real Estate Institute of Economic Research, Peking University Center for Financial Research)