Effective Theory Of Economic Growth

This paper is not only a theoretical discussion, but also contains analyses based on actual cases. The core content is a survey of the dynamic course of the effective economic growth in China during the 30 years since reform and opening-up. On deeply and widely basis, the paper describes the track of the effective economic growth in China during the last 30 years, analyzes the underlying rules of the track in the short term and long term, and points out the deep mutual relations of the economic variables in the formation of the trend, and thus develops a new concept for the theoretical research of Chinese economic growth.In order to achieve the above aims, the author develops a series of new concepts and new theoretical models for analyzing problems. First, the author introduced the concept of "effective economic growth", including the changes of basic consumption level, the upgrading of consumption structure and the expansion of gross social consumption capacity, etc. Effective economic growth refers to the growth of national income per capita exceeding the "baseline consumption level per capita" as the scale and level of gross social consumption capacity are changing. "Baseline consumption level per capita" means the average consumption level for maintaining the basic living standard of a person within a certain period. "Baseline consumption level per capita" keeps stable within a short period, but in the long term, it will go upward along with the development of social economy and the increase of the actual income level. The income per capita exceeding the "baseline consumption level per capita" is called "excess income per capita", and is regarded as the main indicator for measuring effective economic growth. And on this basis, the "Dynamic model for effective economic growth", "gain-loss model for excess income per capita" and "increase rate model for excess income per capita" are set up. The basic principles and quantitative relations of these theoretical models are made use of to probe into the effective economic growth process in China during the last 30 years, and thus the trend and periodic fluctuation of the effective economic growth in China are explained quantitatively.The theoretical analysis of the effective economic growth process in China is rolled out first abstractly and then concretely from long term to short term. The paper contains seven chapters. Chapter 1 is introduction, which briefly introduces the purpose, method and internal logic of the research, and gives the definitions for the innovative concepts in the paper. The second chapter simply reviews the evolution of economic growth theories and the studies on Chinese economic growth carried out by Chinese and foreign scholars. In the third chapter, "dynamic model for effective economic growth", "gain-loss model for excess income per capita" and "increase rate model for excess income per capita" are set up through abstract theoretical analysis, and conditions for realizing effective economic growth are described. Chapter 4 goes to concrete things. According to the records of Chinese economic growth and the theoretical principle and variable relations of "dynamic model for effective economic growth", measurement is made of such variables as "excess income per capita", "baseline consumption per capita", "effective economic derogation coefficient", etc. The dynamic process of effective economic growth during the 30 years starting from the reform and opening-up in China and the basic characteristics shown in the long term are analyzed on the basis of practical cases, and the difference between the features of effective economic growth trend in urban and rural areas are pointed out. In chapter 5, short-term and long-term comparison is made for reviewing the periodical fluctuation of the effective economic growth in China. The generation mechanism and characteristics of the periodical fluctuation of the effective economic growth in China and its influence on the long-term trend are described. In the sixth chapter, the "dynamic model for effective economic growth" is used for analyzing the dynamic process of effective economic growth in Japan and Taiwan China ever since their economic take-off, and the common features and differences of the "effective economic growth" process among Japan, mainland China and Taiwan China during their economic take-off and transition periods. In chapter 7, a conclusion is drawn and the direction of further study is pointed out.According to the theoretical analysis and practical investigation of the "dynamic model for effective economic growth", conclusion is drawn as follows: 1. During the 30 years after reform and opening-up in China, the trend of "effective economic growth" has been stable and also increases on accelerating basis periodically, and the baseline consumption per capita grows slowly as the social economy develops and the actual income level increases. Comparing the effective economic growth in urban and rural areas, the former enjoys higher level and quicker speed than the later, and the baseline consumption level per capita in urban areas is much higher than that in the rural areas.2. The absolute derogation of effective economic operation in China increases gradually, while the intensity of derogation decreases bit by bit. Viewing from the contribution rate of the three demands on effective economic growth, the contribution rate of excess consumption per capita is low, and contribution rates of investment and consumption of are obviously unbalanced, which becomes the potential hindrance for the Chinese effective economic growth in future. Comparing the situation in urban and rural areas, the baseline consumption level, consumption structure, marginal propensity to consume, revenue flexibility, etc. in urban areas are better than those in rural areas, and the derogation of effective economic growth in urban areas are larger than that in rural areas, but the derogation intensity is smaller. It can be seen that urbanization can facilitate the overall effective economic operation speed in China, but the pace of urbanization should be well controlled.3. Effective economic cycle shows the characteristics of short wavelength and large amplitude, presenting the derogation effect of baseline consumption level per capita (C₀) and social consumption capacity (P) as well as the intensifying effect toward the periodical fluctuation of the effective economic growth. The paper also points out that the unbalanced state caused by the coexistence of "demand restriction, resource restriction and system restriction" is the root cause of the periodical fluctuation of the effective economic growth. By comparing the influence of investment and consumption on the effective economic periodical fluctuation, it is discovered that the functioning mechanisms of the two are completely different. In the short term, the impact of investment is more obvious, while in the long term the consumption is more influential.4. It is discovered through globally comparison that the effective economic growth in China is slower than and the people's consumption structure is relatively inferior to that in Japan and Taiwan China in the economic take-off period, and the consumption in China is not strong enough for driving the effective economic growth. However, the effective economic growth in China is now seeing a progress, but that in Japan and Taiwan China is seeing stagnation or negative growth, so it is hopeful for China to realize sustainable effective economic growth. For achieving this and dealing with the high derogation coefficient and hindrance for effective economic growth, Chinese government should issue effective policies and take powerful measures to enhance the driven force of consumption, so that the effective economic growth can be continuous and stable.