Research on Interaction between Urbanization and Economy Growth from the View of Economy Transformation

By introducing a multi-dimensional marketization index as a variable of economic transformation process, the paper aims to study the interaction between marketization, urbanization and economic growth, which means that the two great reform process: marketization, urbanization, and economy growth are combined in one economic system. A simultaneous equation model is built, which contains the three elements above based on the theory of mechanism analysis. With use of the panel data of all provinces in China from 2000 to 2012, the empirical results show that China’ s marketization plays significant roles in urbanization and economic growth. Urbanization has obviously driven the economic growth; while the effect of economic growth on urbanization presents an inverted u-shaped curve relationship. Therefore, a reasonable rate of economic growth can better promote the stable and healthy development of urbanization.