New Socialist Suburbs: How strong are the rural-urban linkages in Shanghai?

Transcription

1 New Socialist Suburbs: How strong are the rural-urban linkages in Shanghai? David Roland-Holst UC Berkeley Weibo Xing Peking University ASEM/DRC Workshop on Capacity for Regional Research on Poverty and Inequality in China Tuesday, March 28, 2006

2 Contents I. Introduction and Motivation II. Overview of the Shanghai SAM III. Multiplier Decomposition Analysis IV. Conclusions

3 I. Introduction While the majority of China s population remains in relatively low income rural areas, urban living standards have risen sharply. In its commitment to promote economic convergence between these areas, the Chinese government has developed the New Socialist Countryside policy. In addition to such targeted policies, a primary means for rural households to leave poverty will remain participation in China s urban growth phenomenon.

4 In this paper, we examine rural-urban income linkages for the Shanghai region, a very dynamic urban area which still includes a significant rural periphery. Although Shanghai is China s largest urban area, 25% of household income in the Shanghai goes to households classified as rural. Careful examination of rural-urban expenditure linkages can support more effective policies for rural poverty alleviation.

5 Income is Rising in China (2000 USD and growth rate) 25% % % % % 500 0% Domestic GDP % Per capita GDP, dollars 0

6 but so is inequality.

7 Two Vital Rural-Urban Linkages Labor Markets: Rural migrants remain an important source of new entrants to the urban labor force, where their earnings generate substantial remittance income for rural households. Food Markets: About two-thirds of farm income still comes form marketed agricultural surplus in China, and rising incomes in cities are creating many new opportunities for enterprising farmers.

8 Chinese Diets are Changing New foods are more resource intensive, with higher value added. kcal/person/day Percent of caloric intake

9 II. Overview of the Shanghai SAM 1997 Shanghai Sam (77 77) I Product II Factors III House IV. V. Ent,GovTaxes VI. Row VII. Total I. Production (53 sectors) T 11 O T 13 T 14 O T 16 Y 1 II. Factors ( Lab,Cap,Land) T 21 O O O O O Y 2 III. Households(Rur, Urb) O T 32 O T 34 O O Y 3 IV. Enter, Gov (Cen, Loc,Ext) O O O O T 45 O Y 4 V. Taxes (9 types) T 51 T 52 T 53 T 41 O O T 41 VI. Row, Cap T 61 T 62 T 63 T 64 O T 66 T 41 VII. Total Y 1 Y 2 Y 3 Y 4 Y 3 Y 4 Y 4

10 Sectoral Aggregation 5 Agricultural sectors 6 Mining sectors 1 Mining 28 Manufactory sectors 17 sectors 3 sectors of Electricity, Gas, Water was aggregated 3 types of Governments and 9 Taxes, 1 Gov A SAM, including 34 production, 3 kind of labor, capital, land, 2 households, enterprises, Government, ROW & ROC

11 III. Multiplier Decomposition Analysis In a market economy, income generation is a process that extends over long chains of expenditure and other income generation. Tracing these links gives insight into sources of income and opportunities for poverty reduction. In this paper, we apply two techniques to gain these insights, block and path decomposition analysis. Both are covered in the paper, but we present only one here because of time constraints.

12 Schematic Social Accounting Matrix Consider a SAM partitioned as follows, with four generic sets of accounts: n-sectors, f-factors, d-domestic institutions, and x- exogenous institutions T nn T nf T nd T nx T fn T ff T fd T fx T dn T df T dd T dx T xn T xf T xd T xx

13 Block Decomposition Using block decomposition techniques from matrix algebra, we can separate the linkage effects across the economy into three generic categories T nn T nf T nd T nx T fn T ff T fd T fx T dn T df T dd T dx T xn T xf T xd T xx M = M 3 M 2 M 1 = N 3 + N 2 + N 1 the component effects can be expressed multiplicatively or additively

14 A n denotes the matrix of average expenditure propensities A n = A A y n total incomes, exogenous injections x. 0 0 A 32 A 13 0 A 33 yn = An yn + x

15 M is called accounting multiplier matrix. 1 yn = ( I An ) x = M a x M is decomposed by three Matrix: intra-group income flows of endogenous accounts, inter-group income flows of endogenous accounts and indirect interaction of all endogenous accounts (Pyatt & Round, 1989).

16 Block Decomposition (cont.) M 1 = M 2 = (I-A 11 ) (I-A 22 ) (I-A 33 ) -1 I (I-A 11 ) -1 A 12 (I-A 11 ) -1 A 13 (I-A 22 ) -1 A 21 I (I-A 22 ) -1 A 32 Linkages Intra-group Inter-group (bilateral) Equilibrium Indirect (I-A 33 ) -1 A 31 (I-A 33 ) -1 A 32 I M 3 = I-D 12 D 21 -D 13 D 31 D 21 D 12 D 31 D 13 D 12 D 21 I-D 21 D 12 -D 23 D 32 D 23 D 32 D 13 D 31 D 23 D 32 I-D 31 D 13 -D 23 D 32 Note: D ij = (I-A ii ) -1 A ij

17 Multiplier Links to Products Crops Livestock Othcrop FoodProc HHRural HHUrban M N3/M M N3/M M N3/M M N3/M M N3/M M N3/M Agriculture Mining Manufacturing Utility Construction Services Indirect linkages are very important to agriculture, mainly through marketing channels that have weak net benefits to farmers. Food processing does not appear to benefit regional farmers, but relies more on imported raw materials.

18 Multiplier Links to Factors Crops Livestock Othcrop FoodProc HHRural HHUrban M N3/M M N3/M M N3/M M N3/M M N3/M M N3/M L01Farmer L02worker L03Skill Land Capital For farmers, income effects are largest for specialty crops, then livestock, then basic crops. This should position them well for urban income growth. Indirect benefits are quite weak, again indicating that they are not participating in higher value-added food supply chains.

19 Multiplier Links to Institutions Crops Livestock Othcrop FoodProc HHRural HHUrban M N3/M M N3/M M N3/M M N3/M M N3/M M N3/M HHRural HHUrban Enterprs Rural households in Shanghai appear to get most of their urban income from marketed raw agricultural products. Again, their participation in food processing chains appears to be very limited.

20 VII. Conclusions Here we briefly present analytical capacity for tracing the complex process of income generation in a market economy. Supported by tools like this, poverty reduction strategies can exploit this complexity by attacking poverty from many complementary directions. Rather than targeting with direct transfers, policies like facilitation of market access, supply chain development, and others designed can magnify indirect growth effects while promoting a broader basis for development.