A Study On Transformation Of China’s Economic Growth Mode

This dissertation studies China’s economic growth mode from the perspective ofeconomic growth source. The results show that China’s economic growth is stillcapital-driven mode, and the contribution rate of total factor productivity to economicgrowth is low. China’s economic growth mode is factor-driven growth essentially.This dissertation uses the data of1978-2010to estimate China’s total factorproductivity and its rate of change in the aggregate production function. From1978to1985, the contribution rate of total factor productivity to economic growth was3.25percent; from1986to1994, the contribution rate rose to5.91percent; after1994totalfactor productivity was a negative contribution to economic growth, on the wholereducing China’s total factor productivity contribution during the years of1978-2010.After the1990s, the savings rate rising with China’s rapid economic growth, providesa sufficient prerequisite for the expansion of investment. At the same time, Chinaattracts a large sum of foreign direct investment with cheap labor advantage and ahuge market advantage, and becomes the world’s product distribution center andassembly center. In addition, with the industrialization of China’s higher educationfrom1996, while human capital increased, a lot of capital was also put in. Thesecause China’s economic growth more and more relying on capital rather thantechnological progress. Therefore, to improve the total factor productivity and itscontribution to economic growth rate is the key to transforming economic growthmode from factor-driven to innovation-driven.This dissertation also estimates total factor productivity of three industries inChina, and the results show that the contribution rate of TFP to China’s first industrygrowth is an average of16.47%from1978to2010, while the average contributionrate of capital was83.65%; the second industry TFP average contribution rate in theyears of1878-2010is an average of22.81%, capital contribution rate of59.88%; theaverage contribution rate of TFP to the third industry in the years of1978-2010isnegative, about-5.26%. Three industries in China are factor-driven growth mode;contribution rate of TFP in the second industry is the highest, followed by primary industry, tertiary industry, the lowest contribution rate. This shows that contributionrate of China’s TFP in the second industry is higher, and perhaps the second industrywill beceome the first one to achieve the transformation of factor-driven growth toinnovation-driven growth; in the growth of the primary industry and tertiary industry,technological progress contributes lower, and there are still a large room for growthand potential, especially for the tertiary industry.Facing domestic resource and environmental constraints and labor constraints,lack of domestic consumption, coupled with the external market by the internationalfinancial crisis, frequent trade friction, which makes China’s domestic investment andexport growth has been on the impact. The original mode of economic growth isunsustainable, and China has to turn to innovation-driven growth mode.The following section examines the determinants and factors that affect totalfactor productivity: the country’s human capital, R&D investment, industrial structure,financial deepening, the ownership structure, technology transfering and marketconcentration, the international technology spillovers from abroad. The dissertationuses data of1990to2010to make a ridge regression analysis and principalcomponent analysis by SPSS software. The results show that: the growth of foreigndirect investment, exports and secondary industry promotes the improvement of totalfactor productivity; human capital, independent research and development investment,imports, financial deepening, state budget funds in the fixed asset investment funds,technology transfering and market competition have a negative impact on TFP.On the basis of above, the dissertation proposes the mechanism and policyrecommendations of improving total factor productivity and transforming economicgrowth mode from factor-driven to innovation-driven. The mechanism is to stimulatetechnology entrepreneurship. Through resource allocation effect and the incentiveeffects, technology entrepreneurial activities will further strengthening the linksbetween companies, universities and research institutions and governments, andpromote the transformation of technology into practical production capacity, therebyenhancing the contribution of technological progress to economic growth. Policyrecommendations as follows: to build the innovation system is the current mainmeasures, with the combination of fiscal policy, tax policy, monetary policy and government procurement. In addition, it is also critical for transformation ofeconomic growth mode to improve the quality of education to increase human capital,to change the industrial structure, to vigorously develop small and mediumenterprises, to transform government’s functions. At present, the practical choice is todevelop strategic emerging industries, and gives preferential policies to promote rapiddevelopment of strategic emerging industries.