Ni Pengfei a Yan Yingen b and Zhang Anquan c

　　a National Academy of Economic Strategy, CASS

　　b Research Institute of Yellow River Civilization and Sustainable Development, Henan University

　　c School of Economics, Southwestern University of Finance and Economics

　　Abstract:To study the relationship between under-urbanization and international trade, we set up a model of the transfer of surplus rural labor in an open economy using 1995-2010 data from 40 countries and regions where industrialization was incomplete. Our findings indicate that if, in an open economy, there is a substantial labor surplus and in which domestic goods and services can be sold to foreign markets, there will be a significantly positive correlation between the net export ratio and the degree to which urbanization lags behind industrialization; countries or regions with higher marketization level, lower urban unemployment rate and poorer public health facilities are more likely to be under- urbanized; and an inverted U-shaped relationship exists between under-urbanization and per capita GDP.

　　Keywords: surplus rural labor, external demand, industrialization, under-urbanization