The Endogenous Factor Of Economic Growth

Some studies show that management factor and technology progress would be two of primary source for productivity improvement. While technology progress analyzed in detail by most of economists and the endogenous growth theory, the management factor has not been studied in detail owing to uncertainty of management and it can't be measured precisely. The growth theory about TFP was ignorant for most of growth residual because lack of management input. However, the historical experiences about many countries'economic development prove that improving productivity of factor input would be effective measures to stabilize economic growth, furthermore, transforming China's economic growth mode can't do without exploration about productivity. Therefore, this paper discusses the function and impact of management input on economic growth.Firstly, this paper defines the management factor as one of knowledge resource by comparing the argument about the management factor of the Management domain with the Economics domain, and discusses about the mode of action and character of the management factor in the economic growth. And it expands the endogenous growth model based on knowledge production. The result of analysis indicates that the entrepreneur's knowledge would be one type of endogenous element for economic growth, and the entrepreneur endowment of number and the entrepreneur ability would be a crucial element to economic growth in one economy.Secondly, this paper builds the endogenous growth model of two-section economy which includes household and firm, and of three-section economy by adding government up to two-section, based on the ability to urge the labor and the ability to deploy the capital of the management factor, by linking the entrepreneur's ability to urge the labor with the labor's striving level to do. It discusses the contribution of Deployed Input and Motivational Input to economic growth in the model of two-section economy, and analyzes the effect of some elements on growth such as the entrepreneur's ability to urge the labor, the labor's striving level to do, and the input for entrepreneur motivational exercises by government, and so on, in the model of three-section economy.Thirdly, this paper proposes a theoretical hypothesis about the relationship of the production factors contribution, namely, with the neutral technical progress, the production contribution of management factors would be in direct proportion with the labor factors while it is in inverse proportion to the capital factors, owing to motivational character of labor, and the labor have big potential, the supply of endeavor of labor need entrepreneur's incentives, but the physical capital only have allocative efficiency. By a model involving such as capital, management, and labor factors, it provide a good theoretical proof for the hypothesis, and the result of empirical test also prove the hypothesis truely with the data from 1970 to 2006 years which involved U.S. and seven countries of OECD, and China's data. And with the hypothesis applying to our country, the analysis show that the government in China should choose some policy and measure according to the theoretical hypothesis to revert the good trend of economic development.Fourthly, with introducing endogenous management factor into equation of growth accounting, the TFP computation about Chinese Data and American Data show that it could explain the ingredient part of TFP effectively.Fifthly, this paper uses the variable of type and endowment of entrepreneur in the production function of per capita, and study the contribution of the number of SME's entrepreneur and big capital's entrepreneur to per capita gross industrial production by provincial panel data in China, the result shows that the SME's per capita contribution be inferior to the big capital's, the cause of which is that the management efficiency of SME is inferior to the big business, such result of inferring origin from that we use per capita profit to display the entrepreneur ability. The result also shows that SME make significant contribution to national economy aggregate and the insufficient inner management for SME would become one hindrance factor to hold on high-speed economic growth in China. The analysis results show that entrepreneurial ability about knowledge spillover would be an important factor to determine the marginal product of the enterprise's private knowledge, and the owners of SME who short of entrepreneurial ability about knowledge spillover result in that the share of SME contribute to per-capita output is lower than one to gross product. The conclusion is that we should enlarge input for inner management of SME in China, promote the process of transformation from the enterprise owners to entrepreneur effectively, enhance the capability of SME to produce knowledge in order to improve the productivity of resource in SME, and then improve the whole productivity in China, end in being one long-run measure to hold on high-speed economic growth in China.In summary, this paper comes up with some policy proposal, which is to reinforce the process of accumulating the management knowledge, improve the capability of the SME's entrepreneur, and exert proficiency of labor sufficiently, and increase input of management strongly. The possibility innovation of this paper is to build one endogenous growth model by introducing management factor into production process, and classify the production input into motivational input and deployed input, according to the motivational function and deployed function of the management factor.