A Study On The Potential Economic Growth Rate Of Taiwan Based On The Perspective Of Physical Capital And Human Capital

Taiwan had experienced a period of high-speed growth of more than 30 years since the 1950s,and thus created a miracle of economic take-off.In the mid and late 80s,Taiwan's economic growth slowed down due to the end of accelerating stage of industrialization and the entry into society of service industry.It became difficult for Taiwan's economy to sustain a high-speed growth,and thus turned to a stable medium-speed growth.From the beginning of the 21st century,the economic situation in Taiwan has been reversed,major economic indicators have continued to deteriorate,and the stability of economy has gradually disappeared,the Taiwan's economy enters a period of low-speed growth.Taiwan's economic growth has been declining due to internal and external factors,and the gap between actual and potential economic growth rates has drawn attention.Based on the calculation of the physical and human capital stocks of Taiwan from the year of 1981 to 2015,this dissertation uses the method of production function to measure the potential output and potential economic growth rate of Taiwan.Considering that Taiwan's economy has different development characteristics in each period,it is divided into several stages from the beginning of the modern economy starting in 1953 to the year of 2015,and the important internal and external factors that caused changes in economic development at all stages are analyzed in order to understand the reasons for change of Taiwan's economic growth.As economic factors,physical capital and human capital are indispensable variables to estimate potential economic growth rate by the method of production function.After the brief descriptions of the calculation methods of physical and human capital stocks,the physical and human capital stocks in Taiwan from the year of 1981 to 2015 are calculated respectively,and the measurement results are explained.When two input factors of physical and human capital are measured in monetary form,there should be an optimal allocation ration between the two input factors under the condition that the total amount of capital remains unchanged,so that the economic output can be maximized.On the basis of the proof of existence of the optimal allocation of physical and human capital,the optimal allocation of the two capital factors in Taiwan is empirically studied.The complementarity of physical and human capital constitutes the joint endogenous structure of the supply of factors.The SVAR model is used to decompose the structure of physical and human capital what influence economic output of Taiwan,and to quantitatively analyze the interaction between endogenous structure of the two production factors and economic output.And then impulse response function of the SVAR model is used to analyze the influence of random impact on the Taiwan's economic system.The structural time-varying elasticity production function is used to take investment structure of physical capital,labor and human capital into analytical framework of economic growth,and Taiwan's changing characteristics of factor output elasticity from the year of 1981 to 2015 are estimated before calculating the potential economic growth rate of Taiwan.The findings show that Taiwan's actual economic growth rate mainly depends on the change of potential economic growth rate,while the main reasons for constant declining of the potential economic growth rate are the gradual decreasing of growth rate of the two factors of labor and physical capital and the insignificance of technology and human capital.When it's difficult to solve the insufficiency problem of technological innovation,labor employment and human capital,Taiwan should consider further relaxation of restrictions on technology,capital and senior personnel flow from the mainland China into Taiwan to promote the sustainable growth of Taiwan's economy.