Capital Embodied Technological Change And Test On Bias Effect Of Investment Style

From the21st century, with the flourish of science and technology, technologicalchange has become the focus of international economic competition. With the gradualtransformation of the economic growth mode, technological change has become animportant contribution to world economic growth, and turned to be a forceful anddecisive factor. To explore the mode and mechanisms of economic growth promotedby technological change, it is of practical significance to measure the technicalchange and its contribution to economic growth accurately. Technological changeconsists of two parts: embodied technological change and non-embodiedtechnological change. Total factor productivity, which cannot fully measure thetechnological change, only contains the non-embodied technical change, missing thepart of the embodiment of technological change.Three decades of reform and opening up, China is demonstrating an appearanceof high capital accumulation and economic growth, while a downward trend in totalfactor productivity. Some scholars state that the economy of China is the high capitalinvestment-driven growth and that the technological change is low and unsustainable.Owing to the view of low-efficiency mode of economic growth, they conclude thatChina’s economic growth pattern is imperative.This paper selects series of1990to2010to do a comprehensively empiricalanalysis of China’s capital embodied technological change and equipment investment.Taking the ratio of construction investment price index and equipment investmentprice index as the substitution variable of the quality factor of capital, On the basis of the theory created by Greenwood, this paper estimates the contribution of the capitalembodied technological change and neutral technical change on economic growthrates are18.53%and19.57%. Using time-varying parameter state-space model toestimate the coefficient of each input, and then estimate the effect of the capitalembodied technological change on the investment structure, named as investmentstructure bias, is1.63. This paper puts forward a reasonable explanation for themechanism of China’s technological change: the equipment investment containingembodied technological change, especially the advanced, of high quality andhigh-efficiency equipment introduced from developed countries, is promoting China’seconomic growth. China’s technological change and capital accumulation is a parallelprocess.Finally, on the basis of the empirical analysis of China’s economy, to maintainsustainable high growth trend, this paper proposes four policy recommendations:Firstly, take serious of the accumulation of efficiency capital and increase the ratio ofcapital equipment investment to improve the capital investment structure; Further,expand the introduction of foreign investment, encouraging joint ventures and foreigninvestment; thirdly, give the necessary policy support to R&D department, mergerthe high-tech companies, establish the jointed scientific research projects and othermulti-channel, enhance the introduction of advanced foreign technology and domesticR&D efforts to master the core technology and to narrow the technology gap withdeveloped countries; lastly, focus on personnel training and persist in implementingthe strategy of developing the country through science and education.