Research On Dynamic Efficiency Of China's Economy, Based On Data Of Year 1979 To Year 2008

The rapid growth of China's economy was characterized with investment especially, the fixed assets investment, and export driven in the past 20 years. The inspection of the dynamic efficiency of China's economy is to check whether capictal overaccumulation exists in China's economy. If the economy is dynamic efficient, the possibility of capital overaccumulation is ruled out; if not, people could lower their saving to consume, thus increasing the level of consumption of following generations. Some researchers did some empirical studies of China's economy but got contradict result using nearly the same method. This paper reviewed and compared the process of their research work and does the empirical study of the dynamic efficiency of China's economy by considering the capital reward in net taxes on production and self-employed income.In the first palce, the author used Cobb-Douglass production function to estimate the China's economy based on the data of the year 1979 to year 2008.After inspection, the economy conform the premise of constant return to scale. The production function has a characteristic: the share of capital reward equals the output elasticity. Then the author adopted the AMSZ criterion to test the dynamic efficiency of the economy and got a conclusion that the economy of China is dynamic efficientSecond, the author used the data from the national accounts from the income approach to do the test again. In the paper, the method, used by previous researchers, of constructing the capital reward series was improved. By considering the specialty of national accounts of China's economy, the author inspected the mix income of the self-employed and split the income to capital reward and labor reward. The capital reward of net taxed on production is also considered. After test, the consequence of the new test is consistent to the previous test.The dynamic efficiency of China's economy could be attributed to two factors according to the research. The first one is that China has been through the rapid transformation of dual economy to an integrate economy. Due to abundant labor force, the wages of labor increase quite slowly and the reward of capital remains a relative high level. The senond factor is the rapid growth of technical level. The results reviews that the technical improvement compound annual growth rate was baout 2.5% percent. It is the two factors mentioned above that guarantee the dynamic efficiency of China's economy.