Source Of Economic Growth

Since the reform and opening up, China's economy maintained a rapid growth, especially after the 1998 Asian financial crisis and 2008 global financial crisis, China's economic growth is still known as the "Chinese miracle". What's the source of this growth? What are the prospects? Answering these questions has an important significance both in theoretical aspects and practice. Until now many scholars have carried out the studies on the analysis of economic growth's source, and they have achieved some fruitful results. But there are still many deficiencies in the research process, especially in the model's establishment and specification. Therefore, this paper suggested a multilevel model to modeling the hierarchical structural data, and made up for these shortcomings. The article first reviews domestic and foreign literature and related economic theory on the topic of economic growth's sources, then follow by introducing the basic theory of multi-level model and describing the commonly used forms of two-level models, to establishes a multi-level C-D production function model using the China provinces'data from1997 to 2007.The main conclusions of this paper are as follow: (1) Statistical conclusions .The multi-level model for fitting multi-level data is applicable for macroeconomic analysis. Multi-level model gives the estimates and statistical inference process for the regression coefficients, variance and covariance parameters, and it also provides detailed information for comprehensive study of model structure and deal with practical problems. Besides, multi-level model presents a detailed functional form for parameter heterogeneity, makes the relationship between study variables become more apparent. (2) Economic conclusions. From 1997 to 2007, the main source that china maintained a relatively high rate of economic growth is still capital factor. The average contribution to the national capital share of 94.35 percent, the average contribution of the labor share of 3.69%, and the average contribution of total factor productivity accounted for 1.96%. A higher share of capital contribution not only concentrated in the eastern region provinces, Yunnan, Guizhou, Shanxi, Ningxia, andother provinces also have a higher share of capital contributions, indicating that the efforts on capital investment in central and western regions of China is greatly improved, and meantime the difference between the province for the capital share of factor contribution is closely related with the extent of foreign development across regions. Secondly, the provincial labor force growth factors is little different, they maintain a relatively low growth, indicating that China has changed the way of labor input, and simply increase the quantity of labor can not be good for economic growth. The role of TFP contribution to economic growth is more active, and it forms a complementary benefits with the capital element in provinces, which co-stimulating the economic growth.