Research On The Change Of Industrial Structure And Investment In China's Economic Growth

Since the Reform and Opening up, the fluctuation of investment and the adjustment of industrial structure have been the main subjects during the economy growth, which are also discussed during the current macro economy. From the structure opinion, today's industrial structure has been the result of previous investments, so the adjustment of industrial structure has to be depended on the investment adjustment, at the same time, the distribution of investment among industries also has impacts on its overall features. Though the central government has continuously reformed the investment system of planned economy and hoped to establish a market-oriented investment mechanism in the end, it does not work successfully. Direct administrable policies are still the most effective methods to control the expansion of investment in the short time.The purpose of the dissertation is to disclose the logistic feature of industrial structure during the institutional transition, and to discuss the correlation between industrial investment and the upgrading of demand structure, and finally to analyze the institutional cause of the unbalanced development in investment structure.At the beginning part, empirical analysis shows that economic growth is relying much more on capital input during the institutional transition to a market economy, while the investment efficiency declines. Except for the influence of extensive pattern of economic growth, the deepening process of capital also related to the structure change of industrial investment.By the calculation of industries'input-output and the econometric analysis of the industries'productivity, we find investment has been tilted to the tertiary industry in recent years, especially to those infrastructure industries in quasi public goods, which strengthens the investing trend to the capital-intensive industries. On the other hand, tertiary industry's share of GDP and employment does not seem to match its investing inclination. The ratio of investment in agriculture has been declined since the Reform and Opening up, and the same decline in investment is also reflected in the secondary industry in 1990s, but the secondary industry's share of GDP and its proportion of the contribution to the economy has increased. As to analyze the factors that have effects on capital flows among industries , the paper selected industrial sub-sectors of the annual statistical data with taking into account the data availability and quality. The regression of panel data shows low correlation between industrial investment and industrial added value, which means low investment efficiency in some industries if measured by J.Wurgler's(2000) method. In contrast, there shows a higher degree of correlation between the changes of investment and total industry output, that is to say that the total output effect in industry is more likely to affect industrial investment than output efficiency. Industrial investment in the region is not mainly based on the principles of industrial division and efficiency in the institutional transition, and non-market factors such as government's role also have influence on the distribution and flows of the investment among industries.As an important feature of the economic transition, local governments have acquired great authority and autonomy to develop regional economy in the reform process, which has a great impact on the industrial layout in the region, such as the convergence of industrial structure.From another perspective, China's reform is to allow and encourage institutional innovation of the local government so as to develop regional economy, which led to stimulate the national economy, including collective and private investment in the development of the private economy. Various investors have different traits of the economic behavior and local government still play an important role in the industrial investment. The problem of investment structure has been discussed then from the view of institutional change. In the end, it points out some problems such as how to promote the upgrading of industrial structure and enlarge private investment. From the research there come the following conclusions:China's economic growth is heavily relying on the investment, even though the efficiency of investment showed improving trend since 1978, it decreased from the middle of 1990s.The economic growth is still the extensive pattern by the input accumulation of the factors.The emphasis of the investment has turned from the secondary industry in 1980s to the tertiary industry in 1990s since the beginning of the Reform and Opening up, while share of investment in agriculture has been losing. The investment efficiency of secondary and tertiary industries shows that the two industries'growth display to rely more and more on capital investment, however, the marginal productivity demonstrates a significant downward trend in the tertiary industry and an upward trend in the secondary industry. The investment inclination to the service sector is in favor of the upgrading of the industrial structure in the long run. The empirical analysis of 31 industrial sectors in 18 years shows the fluctuation of industrial investment is not due to the principle of efficiency but to the total output change.Private investment is based much more on the goal of market profit in the process of establishing social market economy, while government investment should invest more in public goods for non-profit purpose. But in fact local governments in different levels also participate in the market investment for the profit goal, which somehow leads to the similar industry layout in the nationwide. State monopoly in some sectors of the economy also restricts the development of the industry and the improvement of economic efficiency.To promote the optimization and upgrading of industrial structure, promotion of industrial investment should start to rationalize the structure. For the transformation of economic structure, it is first necessary to establish the true status of the market investors. The enterprise market environment of fair competition and a clearly defined scope of government investment are also needed to eventually establish a market-oriented investment system.