Study on distribution and economic growth based on feder-model: evidence from Fujian province in China
Yong-shi Hu1, 2, Yue Yu3, Ming-xing Xu3
1Department of Traffic and Transportation, Fujian University of Technology, Fuzhou City, Fujian Province, P.R. China, 350108
2Theoretical Economics postdoctoral mobile research station, Fujian Normal University, Fuzhou City, Fujian Province, P.R. China, 350108
3School of Economics & Management, Fuzhou University, Fuzhou City, Fujian Province, P.R. China, 350108
The effect of distribution expansion on economic growth is examined as one of the sources of growth. The research available mostly focused on the direct effect of distribution and ignored the externality effect of distribution. The paper tested the direct effect of distribution on economic growth in Fujian province, China with the indicators such as direct contribution and direct contribution rate, and an analytical framework is developed, incorporating the possibility that marginal factor productivities are not equal in the distribution and non-distribution sectors of the economy. Econometric analysis utilizing this framework in the period 1978-2011 indicates that the existence of externality effect generated by distribution sector, which is much larger than the direct effect, significantly affected the economic growth in Fujian province, China. However, the results indicate the marginal productivity of distribution sector is lower than non-distribution sector in Fujian province, which constrains the externality effect of distribution sector. We should take action to improve the level of modernization and informationization of distribution sector and turn distribution sector from labour-intensive to technology-intensive as soon as possible.