Technical Progress And Regional Economic Growth Under Institution Change

Since the reform and opening in 1978, China has achieved remarkable "Chinese miracle". The classical economic growth theory suggests the technological progress is a source of economic growth in a country or a region. But the new institutional school of economics has an idea that the institute is the determining factor for economic growth. This paper studies institution changes, technological progress and regional economic growth in China in recent years. We try to answer the following questions:what is the trend of technological progress? What are differences among Eastern, Central and Western region? At this stage in our transformation process, what is a role of independent innovation and diffusion of foreign technology? How do independent innovation, diffusion of foreign technology and institution changes affect on regional economic growth. What are interactions among them?To answer these questions, firstly, we have reviewed the theory of economic growth and technological changes, and we summarize the existing literatures. Then, based on latest datum, we estimate two indicators of technological progress—TFP and contribution rate of soft-input. And we compare the differences between them. After that, we carry out descriptive analysis and convergence analysis on the trend of technologic process. Secondly, we not only examine institution factors which have influences on independent innovation and what influence that independent innovation put on technological process, but also based on channels of diffusion of foreign technology, we analyze institutional factors have put what influences on technological process and these factors also have influences on diffusion of foreign technology. Finally, we analyze the relationship among technological progress, institutional change and regional economic growth. And we also examine the influences on national and regional economic growth which are caused by independent innovation and channels of diffusion of foreign technology.Through this research, we get the following conclusions:(1) Through DEA method, we calculate TFP and coefficient of variation, and results show that the coefficient of variation of TFP has experienced the process of first decreases and then increases. There is obvious difference in technological process level. Judging from the sub-region, bothδconvergence and absoluteβconvergence results show that there is phenomenon of club convergence in eastern, central and western region. The convergence rate of eastern part is 0.708%, and central and western part is 0.69% and 0.303%. The convergence speed in eastern region is quicker than that of western region.(2) Institutional factors have significant effects on foreign technology diffusion, especially the market structure and market size. In the country's situation, FDI technology spillover is bigger than that of international trade, and each region varies.(3) In independent innovation, there is redundancy and waste in scientific and technological funding. The using rate is inefficient, and the reasons are as follows:on one side, it is due to less investment in our scientific and technological personnel, and the enthusiasm of scientific personnel has not been mobilized. On the other side, it is due to that the production and research is not closely linked. And it makes the state investment in universities and research institutes dose not translate into productivity as soon as possible. Situation in eastern part is contrary to our country. It requires increasing investment in science and technology funds and improves technological process in a high level of TFP. The situation of central and western regions is similar to our country.(4) Enterprises have gradually become the main body of independent innovation in China. Enterprises in the east, with its own viability and strong absorption of foreign technology spillovers, have the ability to carry out independent innovation activities, less reliance on government. The central and western enterprises, especially SMEs, have the weaker independent innovation ability, and the opportunity and capacity to absorb foreign technology diffusion are not as good as enterprises in the east. Therefore, the Government has the responsibility to give financial support for independent innovation to the central and western enterprises, particularly SMEs, and for enterprises which have the independent innovation capability, the Government should provide policy support that supports from the various acts of independent innovation of enterprises.(5) As a result of regional differences in initial conditions, institutional factors and technological innovation on the role of economic growth are quite different in different regions. The regression of samples from the national results, independent innovation plays the biggest role in promoting economic growth, whiles the smallest influence is technology diffusion. Eastern region and the country's situation is different, because its higher institute quality, its promoting effect of economic growth is no significant;if the Eastern region wants to improve the economic growth rate, it is mainly depend on an increase in science and technology inputs to achieve. Similar to the central and eastern regions, but still need to improve institutional quality, in order to promote technological innovation, but in the western region, by the foreign direct investment and international trade,the technology diffusion effect is not brought, but had a strong crowding-out effect, indicating the institution of the western region in terms of quality and the absorption of foreign technology have obvious lack of ability, to improve the level of technological innovation in the western region still need the Government's policy support to achieve.