Construction And Application Of Economic Growth Model Based On The Resources Of Intermediate Goods Trade

In the current research on the relationship between natural resource and economic growth, natural resource has always been directly taken into the aggregate production function. This modeling mode causes two aspects of limitations: on the one hand, current models only partially reflect the properties of natural resource nether as exhaustible or non-exhaustible, and accordingly, unable to entirely and factually explain the essence of the relationships between natural resource and economic growth; on the other hand, international trade on primary goods is the most important and immediate way to break through the restriction of natural resource, but this kind of modeling mode is unable to take the influences of international primary goods trade into consideration within the theoretical framework.This paper brings forward the concept of 'resource middle goods', and advances a new method on putting natural resource into economic growth models. In this paper, natural resource takes part in producing activities by an indirect way, that is to say, it is though resource middle goods that natural resource is taken into an aggregate production function. Further more, natural resource is totally renewable in the model of this paper. This hypothesis is more close to the reality that natural resource basis has always been stable and expanding during the course of economic development of human society. At the same time, this paper also takes the postulation of diminishing return in resource middle goods production, which can embody the essential fact of increasing scarcity of natural resource along with the expanding of economic scale. By this way, the model in this paper can largely resolve the limitations of current research on defining the properties of natural resource. In addition, resource middle goods are presumed as tradable. This makes it feasible to analyze the influences of resource middle goods international trade on economic growth in the theoretical framework constructed in this paper.In order to exclude the disturbance of labor restriction on economic growth, this paper assumed that labor is always surplus in the objective country so that the input ratio of labor and other factor is constant. Then, with a set of neoclassical hypothesizes such as exogenous saving rate and technology, complete competition, a close model is established first to show the economic growth mode with nature resource restriction in an autarky economy. Based on the autarky model, international trade on resource middle goods is introduced into the framework to construct an open model. In the open model, this paper discusses the mechanism of how international trade on resource middle goods influences economic growth. The model established in this paper provides a new idea not only on finding a more proper way to introducing natural resource into economic growth model, but also on filling up the vacancy of international primary goods trade in current research about the relationship between natural resource and economic growth. Meanwhile, the paper also put forward a new theoretical framework about the analysis on the relationships between natural resource and economic growth.Based on the study of this paper, in an autarky economy, the capital input ratio of final goods section and resource middle goods section is constant, and economic growth will be restricted by the endorsement of natural resource, and the stock of natural resource is positively correlated with the limitation of economic increase. And in a small open economy, the capital stock and output of resource middle goods section is constant. Economic growth course will go through three stages: the resource middle goods specialization stage, the resource middle goods exporting stage and the resource middle goods importing stage. When the world price of resource middle goods is high enough, economic growth will enter stable state in resource middle goods specialization stage or the resource middle goods exporting stage, or economic growth will enter stable state in the resource middle goods importing stage. When the world price of resource middle goods is low enough, the economic growth will be durative.This paper also applies the opening theoretical model mentioned above to analyze the effects of external shocks such as international capital flows and technology progress, and the implementation impacts on economic growth of industrial policy and trade policy. The conclusions are as follow:In an open economy, the marginal return of capital and resource middle goods is fixed by the world price of resource middle goods. The actual reward of capital will diverse among Countries with deferent labor endorsement, and then courses international capital flows. If direct capital inflows do not bring technology change and all the capital income in host country is sent back to home country, capital inflows do not have essential influences on the of economic growth and income distribution. Indirect capital flows are deemed as the result of trade imbalance in this paper. So the preset capital price will course international trade balance lose the ability of self-poise, and trade imbalance will be a long-run environment of economic growth.Within the framework establish in this paper, technology progress can be divided into three types: resource middle goods economizing technology progress, resource middle goods production increasing technology progress and natural resource basis expansion technology progress. The main effect of resource middle goods economizing technology progress is the decrease of resource middle goods price condition to durative economic growth. The main effect of resource middle goods production increasing technology progress is the influence on resource middle goods section's capital stock, output and contribution to economic increase. The main effect of natural resource basis expansion technology progress is the expansion of economic growth limitation.The impacts of industrial policy are largely influence by world resource middle goods price. When world resource middle goods price is too high to realize durative economic growth, oppressive industrial policy to resource middle goods section or encouraging industrial policy to final goods section in proper extent can bring faster economic increase. But when world resource middle goods price is low enough for durative economic growth, encouraging industrial policy to resource middle goods section or oppressive industrial policy to final goods section in proper extent can bring faster economic increase.The impacts of non-quantity restriction trade policy such as tariff and export subsidy are equivalent to the corresponding the price change of resource middle goods, but the quantity restriction trade policy such as export quota on resource middle goods will fundamentally change the economic growth mode at resource middle goods exporting stage. Proper degree of resource middle goods export quota will make the increase of resource middle goods section and final goods section more balanced.