Social Sciences in China (Chinese Edition)

No.11, 2013

 

International Trade and the Urbanization of Developing Countries: Evidence from Asia

(Abstract)

 

Zhang Yuan and Wan Guanghua

 

Surplus grain and grain trade are closely related to the urbanization of developing countries. Our theoretical model explains the mechanism whereby changes in surplus grain constrain the level of urbanization in both closed- and open-economy contexts. A test of the theoretical model based on some developing countries in Asia during the period 1993-2010 shows that international trade is generally negatively correlated with the level of urbanization. Nevertheless, there exist variations between cereal trade and non-cereal trade in relation to urbanization: whereas the former is positively correlated with the level of urbanization, the latter is negatively correlated with it. Since the net import of cereals relaxes the constraints of domestic surplus grain on the level of urbanization, it can remarkably promote the course of urbanization. Therefore, when grain production or safety is guaranteed, developing countries may adopt the policy of importing an appropriate amount of grain to enhance their level of urbanization.