Entrepreneur’s Ability And The Efficiency Of Capital Accumulation

Numerous theoretical and empirical literatures the fact that trade is an important source of capital accumulation for the country, but the development of theory and practice often presents a different trajectory. Combined with China’s trade, the growth rate of import and export.and the share of trade to GDP continues to expand, which increase china’s foreign exchange reserves. At the same time, China’s fixed capital investment and capital stock increased, economic growth has always maintained a high level, obviously, and trade has an important role for the promotion of capital formation and economic growth. Domestic scholars have confirmed this fact.On the other hand. China’s income terms of trade and price terms of trade are often reverse while the income terms of trade are rising, indicates that China’s foreign exchange reserves increasing depends on the low price and the expansion of trade Volume. Which cause the non-revenue-earning results, gains from trade is low, which means that efficiency of capital accumulation caused by trade is relatively low.Based on this situation, this article will follow the basis of comparative advantage, take the value of entrepreneurship into the production function, through the neoclassical growth theory to study entrepreneurship’s impact on capital accumulation efficiency, specifically we will discuss the effect of entrepreneurship on trade conditions and the rate of return to capital. This line of thought is the starting point from Justin Lin’s new structuralism analysis, it considers a firm’s ability to determine the level of economic development, but he did not provide an explanation about the source of firm’s ability, this paper believes that a company’s viability depends on entrepreneurs ability, to enhance entrepreneurship helps to improve firm’s viability, thus making economic gain dynamic comparative advantage.Through the analysis of the effect of Entrepreneurship ability on capital accumulation, the corresponding three inferences can be drawn, namely the consumer goods sector relative to capital goods sector have a high capital-product elasticity,entrepreneurship abilityrise will help to improve the terms of trade; relative to capital goods sector consumer goods sector increased the proportion of capital investment will favor the terms of trade; whether the rise of capital-labor ratio of export sectors (consumer goods) can have benefit to improve the terms of trade depends on its ability, capital-output elasticity is greater than the capital goods sector; consumer goods sector entrepreneurs capacity and labor efficiency improvements will be conducive to improved terms of trade, and promote capital accumulation and per capita output levels; Second, only when the consumer goods sector capital output elasticity is less than the capital goods sector, its capital-labor ratio will conducive to capital accumulation and output increases, the more likely that capital-intensive consumer goods, improved terms of trade effects and capital accumulation effect is more obvious; the rise of capital-labor ratio of consumer goods sector will increase return on capital; only when the consumer goods sector capital-output elasticity is greater than the capital goods sector, its entrepreneurship will increase return on capital, in turn, will reduce the return on capital.Data analysis also confirmed the existence of the above reasoning, the ability of entrepreneurship can indeed alleviate rising terms of trade deterioration. By taking the above analysis extended to the regional comparison, we can understand the gap between regional disparities, precisely because entrepreneurs factor in regional differences has led to uneven results also confirm that the entrepreneurship in eastern region have a significant impact on the efficiency of capital accumulation, while entrepreneurship ability of central and western regions still reflected the expansion of amount of capital accumulation rather than efficiency improvements, which is an important reasons for regional economic disparitiesFinally, a comparative analysis of differences of entrepreneurs’ability and efficiency of capital accumulation of Jiangsu and Zhejiang it can conclude that the difference of capital accumulation efficiency of two regions rooted in the division of labor pattern, it is this path differences lead to the performance of the entrepreneur ability.