Inter-National and Intra-Country Economic Integration: The Case of China

Abstract

Intra-country market segmentation and urban-rural income disparity are undeniable indications of disintegration of a national economy. Inter-national economic integration has resulted in issues of intra-country economic integration being largely neglected in current research. China is a case in point. As China joins the World Trade Organization (WTO) and becomes increasingly integrated with the world economy, anecdotal evidence shows that markets are still internally segmented in the country. This paper provides a measure of national and international economic integration from the perspective of the level of the firm. It analyzes the importance of urbanization in national economic integration in the context of the current globalization trend. One key argument is that urbanization through free labor mobility is an unavoidable necessity for any economy seeking to survive and prosper in an increasingly competitive international environment.