Independent Innovation And Economic Growth Of China

Since reforming and opening-up, particularly after 1978's, China's high rate of economic growth has been astonished. Being rapid growth in resent years, China's GDP is now the forth position in the world. But there is a big difficult for China that is the economic growth in China is much more depended on resources input than anything else. The situation of economic growth in the future is not optimistic. How can we sustain the economic growth of China in long term?Economic growth theory figure out that the main factors of economic growth are capital accumulation, labor inputs and the technological progress produced by innovation. The sources of technological progress are independent innovation and technological diffusion or technology introduction. The innovation of technological progress is the main factors of sustainable economic growth. Therefore, facing of the problems of China's current economic growth, it is very valuable that to make it clear that what is the main factor of China's economic growth caused by different factors through inspection the factors caused China's economic growth. We investigate the role of the accumulation of capital, technological progress that includes the technological progress come from independent innovation and technology diffusion. It is important to make such investigation because it can make it clear for us how to promote the long-term sustainability of future economic growth and it can help us to know the important role of independent innovation to economic growth. Therefore, our research is on the issue of above analysis.Firstly, we explained the background, purpose and significance of our study and we cleared the questions which we discussed below in the thesis. In order to further clarify the content of our discussion, we defined the concept of economic growth, innovation and independent innovation based on the issues we discussed. On this basis, both the research of domestic and abroad scholars was reviewed. We evaluated the relative research along the clues of history and then we introduced the idea of research, analytical methods and possible innovation in our study. Based on the investigate the fact of China's economic growth, we argue that China's economic growth in the period 1949-2007 was great, the main characteristics of the overall growth rate was slow and lack of strength in the period 1949-1978. we also found that in 1978-2008 the rapid growth rate of China's economy was in line with the characteristics of modern economic theory summarized by the "typifying the facts" characteristics, which were economic growth and capital accumulation were related closely, the economy growth is not stable, and economic growth is now facing the severe pressures of resource constraints. So China's economic growth faced the difficult problem to sustain.In order to seek to resolve the question of China's economic growth, we analyzed and summarized the theory of economic growth and it's the main ideas. The economic growth theory gives us an analytical framework for problem and the ideas about how to get the answer. The early theories about what was the reason of economic growth began from the division. Then factor of the growth of population was researched. The internal and external of economy and the factor of innovation were realized. The early theory of economic growth almost had all of the ideological sources of modern theory of economic growth. The modern growth theory further clarified the basic mechanism and principle about how the factor inputs promote the economic growth, and gave the modern basic framework of the economic growth which was to analysis the role of the accumulation of capital, labor inputs and technical progress. Furthermore, technological progress was been endogenous and innovation was considered as the factor of the long-term decision of the economic growth by the new growth theory. Subsequently, the theories of economic growth which based on independent innovation, technology diffusion were set up. These theories not only provide the clue of analyzing China's long-term sustainability growth of economy for this paper, but also provide a theoretical basis and methods. Then from an empirical point of view we analysis two typical stage of China's economic growth and compared the main factors of economic growth of these two different stages. We demonstrated that the effective way to sustain the economic growth of China for the future is for independent innovation.In analyzing the China's economic growth factors in 1952-1978, we used co integration method to study the growth factors such as capital accumulation, labor input and independent innovation based on the nonstable macroeconomic data. We found and used an indicator to measure the role of the factor of independent innovation. The Granger causality test was used to test and analysis these causal relationships between the factors. By analyzed this period, the main result we got was that economic growth is heavily dependent on capital and labor inputs and independent innovation which was the full expression of innovation did not promote economic growth. Granger causality test also verified the above relations.In the paper we subsequently selected the stage of 1998-2003 after 1978 to compare with the stage of 1952-1978. We selected this period because the economic circumstance were relative stable and we could make credible conclusions according to this stable circumstance. We have adopted a panel data analysis method to investigate the issues. We study the roles of the growth factors including capital accumulation, independent innovation and FDI in 1998-2003 after the reform and opening up in China. We discussed the issues from the National level and the district level. The results showed that in the country level the independent innovation had a significant role in China's economic growth, but the role had a small flexible. The effect of technological diffusion caused by FDI is not significant. The main factors caused economic growth were still the accumulation of capital and labor inputs. In different regions, capital accumulation has significant role, technological diffusion caused by FDI still does not has significant role, the impact of the other factors are quite different. Independent innovation has a significant positive role to economic growth in the central region and in the eastern region, but hasn't a significant role in the western region.By analyzing the factors of economic growth in different periods and different areas, we conclude that sustainable economic growth of China in the future is depend on the independent innovation, and to promote the role of independent innovation in the economy in the future is the only viable way of overcome resource constraints on economic growth in China.