Revealing the Pattern of Causality in Processes of Urbanization and Economic Growth: An Evidence from China

Abstract

This paper introduces a method of combining phase space reconstruction and symbolic dynamics to study the causality between urbanization and economic growth at different regional levels in Shandong Province and finds that there is a strong positive relationship between urbanization and economic growth from China, indicating that the development of urbanization can drive the economic growth. Then, according to the results of correlation analysis between respective subvariables belonging to urbanization and economic growth and the principle of “deleting strong and reserving weak,” the paper selects the independent variable and dependent variable to explore the hidden causal mechanisms that drive the developing of urbanization and economic growth from China. The results show that (1) the pattern causality between the independent variable and the dependent variable is dominated by dark causality at the provincial level; (2) the pattern causality between the independent variable and the dependent variable is dominated by dark causality at the Jinan economic circles and the Lunan economic circles, but the positive causality is dominated at the Jiaodong economic circles; (3) the types of causality between the same evaluation index and PU in different regions are different, and furthermore the degrees of positive, negative, and dark causality are different at two levels and three regions. The conclusion shows that although there is an obvious positive interaction between urbanization and economic growth, the influences of many factors are neither positive nor negative causality, but dark causality, which plays an important role in developing urbanization and economic growth. This work is useful for studying the law of causality between urbanization and economic growth, and this interesting result can be extended to other economic events.