DID Analysis on the Impact of Policies on the Rural-Urban Income Disparity in Resource-Dependent Regions: A Case Study of Ordos

Rijimoleng Si and Gang Han

International Journal of Economics and Finance, 2018, vol. 10, issue 7, 191

Abstract: Ordos is the most abundant coal resource city in Inner Mongolia. Its coal resources account for one half of Inner Mongolia's coal resources and one sixth of China's total coal reserves. Abundant coal resources have laid the foundation for Ordos become today¡¯s resource-based city. In 2003, Inner Mongolia issued ¡°the guiding opinions on accelerating the development of key coal enterprises¡± (hereinafter referred to as ¡°policy¡±), supporting the development of coal enterprises and providing policy conditions for the rapid economic development of Ordos. However, with the rapid development of economy, the rural-urban income disparity is also getting bigger in Ordos. Based on panel data from 1999 to 2012 and use the DID analysis of ¡°quasi-natural experiment¡±, the paper finds that the policy has increased the rural-urban income disparity. The policy increases the rural-urban income disparity by promoting GDP growth. Therefore, the role of the policy system in the economic development of a region cannot be ignored. The government supports the development of local resource-based industries and also increase support for the development of upstream and downstream industries. Under the guidance of policy, the mineral resources income should be transformed reasonably. Government should invest the proceeds of mineral resources in material capital and human capital. Government also should invest the proceeds of mineral resources in external industries and projects that require large initial capital or long construction cycles, such as those essential infrastructure sectors- education, health, transportation and energy. In this way, the integration of urban and rural development will be realized and the rural-urban income disparity will be reduced.

Date: 2018
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