To what extent was the Shenzhen SEZ the main cause of the exponential increase of GDP in China during the Industrialization period?
Background/
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Ancient China was a self-sufficient country which had little to no interaction with other countries in terms of trade or political communication. This situation lasted in China for several of thousands of years until the middle of the the nineteenth century when the British first opened the Chinese door,
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What Effects did the reforms have on Shenzhen?
Before 1978, Shenzhen was a small town with only twenty-six small factories and a total industrial output of less than $10,000, and urban facilities were far from adequate. The standard of living was equal to that of a village.
Since the 1978 Economic Reforms; Shenzhen gradually has transferred from an agricultural based town to an industry city. The industrial development has been the most important focus for urbanization in Shenzhen. Only in 1981, 66% of the total number of investment projects in Shenzhen are connected with manufacturing. These include a wide variety of items ranging from the more basic light industries, such as textiles and clothing, electronics and light metals, to industries that require more advanced technology such as motor vehicle assembly and printing. Statista. "China: Distribution of Gross Domestic Product (GDP) across Economic Sectors from 2005 to 2015." Statista. The Statistics Portal, 2016. Web. 21 May 2016. <http://www.statista.com/statistics/270325/distribution-of-gross-domestic-product-gdp-across-economic-sectors-in-china/>.
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Comparing the two time periods on the right, we can see it was how Shenzhen developed, not only in the industries that were now in place but also the standard of living. With all these new industries being built up and funded by foreign investment it allowed china to gain and increase its GDP from multiple angles. Before the economic reforms they were self sufficient, and were basically gaining all profits from farming. With new industries it allowed many new streams of income and attracted many markets, which attracts investors and that adds to the FDI. All of these small factors will generally impact one of the components in the GDP equation resulting in a larger GDP. From the graph on the left you can see how as the years progress in more recent times, the farming sector is slowly decreasing its input to the GDP. This shows how China has progressed past the traditional agricultural sector. To learn more about the urbanization of China and its issues click below: |
How does the Development of Shenzhen impact the Chinese GDP? |
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Cheng, Linsun. Globalization and Shanghai Model: A Retrospective and Prospective Analysis. Rep. University of Massachusetts-Dartmouth, 31 June 1998. Web. 17 May 2016. <https://www.lindenwood.edu/jigs/docs/volume4Issue1/essays/59-80.pdf>.
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What about the other factors? Did they contribute to the GDP?
Shanghai was seen as the economic hub before the 1978 economic reforms. It lead China in most areas of manufacturing and banking and centre of economics and finance.
Shenzhen's Geographical Location and How it benefited the SEZ. |
We can say that perhaps Shanghai laid out the basis for economic growth in China before the 1978 economic reforms. As we saw the population jumped immensely showing either and immigrant rise or a standard of living increase that helped the population also increased. They also manufactured for a giant industry; Cigarettes and held the Chinese banking in place. Which allowed China to progress when it came to manufacturing new goods and setting up a foundation for the future GDP + Population increase that would be brought in by the SEZ's.
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![Picture](/uploads/7/9/4/8/79484204/9450501.jpg?261)
From an economic perspective, economic development in Shenzhen and in Hong Kong should be able to complement each other as they are geographically so close. We can see how close Shenzhen and Hong Kong by looking at the map on the left just to get a better understanding of their relationship. Hong Kong possesses capital and technology while Shenzhen is endowed with land and labor; cooperative utilization of these resources could benefit both parties. Hong Kong's industrial diversification has been somewhat restrained because land is insufficient and too expensive, particularly for those industries that demand a lot of space. On the other hand, Hong Kong can help Shenzhen in term of finance, marketing, materials and labor training. Thus, both places can benefit from each other's mutual existence. In general, the economic development in Shenzhen will continually be with a high urban growth potential. The close connection with Hong Kong will further improve the urbanization and development in Shenzhen SEZ and is another reason for the success of the Shenzhen SEZ. Below are four specific examples of Shenzhen's relationship with Hong Kong.
1. Shenzhen is next to Hong Kong and Macau and accessibility to the markets of the international world is much easier.
2. Shenzhen is the origins of Hong Kong immigrants. Most of the Hong Kong businessmen and entrepreneurs speak the same languages and maintain good relations.
3.Shenzhen has the luck of close location to the port facilities of Hong Kong, there is no desperate need for the construction of wharves in the primary phases of the development.
4.Shenzhen currently facilitates and controls the flow of goods and people between these areas and the rest of China.
1. Shenzhen is next to Hong Kong and Macau and accessibility to the markets of the international world is much easier.
2. Shenzhen is the origins of Hong Kong immigrants. Most of the Hong Kong businessmen and entrepreneurs speak the same languages and maintain good relations.
3.Shenzhen has the luck of close location to the port facilities of Hong Kong, there is no desperate need for the construction of wharves in the primary phases of the development.
4.Shenzhen currently facilitates and controls the flow of goods and people between these areas and the rest of China.
Wahyuni, Sari. The Role of Special Economic Zones in China Economy Development. Rep. ., 24 Feb. 2012. Web. 17 May 2016. <http://www.easybib.com/mla-format/report-citation>.
Conclusion
Restating the Original Question:
To what extent was the Shenzhen SEZ the main cause of the exponential increase of GDP in China during the Industrialization period?
From the above information presented in this website, we can understand that due to the Shenzhen SEZ being put in place, it was evolved into an economic hub for international trade and investment. It evolved from a traditional agricultural environment into a city with many different industries and markets to be invested in and to make money from. We can observe this through the exponential increase of FDI which is directly linked to the open market reforms of 1978. Another way to measure this is by also looking at the level of exports which is another variable in the GDP equation. With the increase in value of these two variables the GDP would increase and continue to increase.
However we also have to take into part that was not only just the mere fact that an SEZ had revolutionized the economy but also the geographical advantage that Shenzhen had over the rest of China, it was right next to Hong Kong allowing it to use some of the communication technology that had developed there to also further push its growth. Also Shanghai had only a couple decades before been China’s leading marketplace controlling the majority of manufacturing of for example cigarettes. It also had nearly all banking being controlled from Shanghai making it the economic hub of China before Shenzhen, which gives us the potential argument that Shanghai was the foundation of growth in GDP in China.
In Conclusion, Shenzhen opened up China to high levels of foreign trade allowing it to trade out its manufactured goods and also have many countries invest in it. Which heavily boosted its GDP. Even though Shanghai had set up a foundation it did not have the level of international dealings that Shenzhen boasted. Shenzhen also lead the other 3 SEZs that were implemented in money generated from exports and FDI.
To what extent was the Shenzhen SEZ the main cause of the exponential increase of GDP in China during the Industrialization period?
From the above information presented in this website, we can understand that due to the Shenzhen SEZ being put in place, it was evolved into an economic hub for international trade and investment. It evolved from a traditional agricultural environment into a city with many different industries and markets to be invested in and to make money from. We can observe this through the exponential increase of FDI which is directly linked to the open market reforms of 1978. Another way to measure this is by also looking at the level of exports which is another variable in the GDP equation. With the increase in value of these two variables the GDP would increase and continue to increase.
However we also have to take into part that was not only just the mere fact that an SEZ had revolutionized the economy but also the geographical advantage that Shenzhen had over the rest of China, it was right next to Hong Kong allowing it to use some of the communication technology that had developed there to also further push its growth. Also Shanghai had only a couple decades before been China’s leading marketplace controlling the majority of manufacturing of for example cigarettes. It also had nearly all banking being controlled from Shanghai making it the economic hub of China before Shenzhen, which gives us the potential argument that Shanghai was the foundation of growth in GDP in China.
In Conclusion, Shenzhen opened up China to high levels of foreign trade allowing it to trade out its manufactured goods and also have many countries invest in it. Which heavily boosted its GDP. Even though Shanghai had set up a foundation it did not have the level of international dealings that Shenzhen boasted. Shenzhen also lead the other 3 SEZs that were implemented in money generated from exports and FDI.