The Analysis On The Relationship Between Capital Flows And Capital Efficiency In Different Areas Of China

Since the 1990s, with the development of economy, the economic disparity among thedifferent areas of our country has been expanded gradually too. In order to reduce thedisparity, the government invests a large amount of fund to the west by kinds of policies, butthe fund flows back to the east again. That makes it more difficult to increase the economygrowth of the west. The problem is how to take effective measures to make the west attract and keep the fund.In order to solve this problem, the paper uses the data for 1991-2004 years to analyze. Firstto compare the situations among the different areas of China that the economic growth, thecapital flows and the capital efficiency. And then based on New Economic Growth Theoryand considered the essence of the capital-trending towards profit, the paper builds anAuto-regressive Distributed Lag Model of capital flows and capital efficiency and analyzesthe relationship between the two. The result is that, first the economic development in our country is uneven, a largedisparity exists between the east and the west;Second the situation about capital flows is thatthe east is a large-scale of capital inflow well the west is capital outflow;Third the capitalefficiency in the east is better than the west;Finally in the east to improve the capitalefficiency is helpful to make capital flow in, well in the west that relationship does not exist. The last part of the paper analyzes insufficiency of the economic development in the west,and then according to the findings and considering the current economical situation, putsforward some proposals on solving the fund question and improving the economic growth inthe west.