Performance Analysis Of R & D Investment In China

It’s becoming a consensus that technological advancement leads to economic growth, and continuous technological innovation and new product development is able to maintain sustaining growth for the national economy. Market players conducting research and development activities is fundamental for innovation, and R & D investment lays the financial basis of technological innovation activities, therefore the study of China’s R & D investment becomes crucial. The performance analysis for R & D investment in China involves two aspects; the former being the amount of investment and later the efficiency.This paper based on the theory of economic development and innovation, use Douglas production function and utility function model; conducts comparative analysis and empirical research to study the current status of China’s R & D investment; uses the model to estimate the most optimized structure; and ultimately resolves the problem where investment resources are not structured optimally nor used efficiently. Researches show that the total spending on R & D is relatively low, and the proportion of R & D spending out of total government spending is not optimal, although it’s helpful for economic growth. The reason why it’s happening is that the expenditure is structurally flawed, the R & D investment to public sector and fundamental research should be increased and geologically more resources should be allocated to mid-west regions. Within public research institutions, government investment in resource should transfers from test development to more basic research activities. The empirical results and international comparisons show the current shortage of basic research into issues, it affects the ability of original innovation. At the end of technological catch-up phase of latecomer countries, at this stage, mainly through the introduction of innovative ways to absorb again,original innovation ability become an important foundation for the development of innovation-driven, so pay more attention to basic research activities, and increase investment in basic research, and while the exponential growth based on the increase of the total economy.This article is composed with six sections. The first part describes the background and significance of the research, the summary of current research domestically and internationally, the research method, content and innovation points; the second part defines the concepts and systematically summarizes the theory of innovation and economic growth; the third compares the current investment between China and other countries, introduces the amount and structure of R & D spending during the past two decades in China, and compares them with major OECD developed countries; the fourth part studies the facts on relationship between investment spending and economic growth, utilizes Douglas Production Function, multiple regression models and Granger Causality test to confirm the positive correlation between investment expenditure and economic growth, and furthermore discovers the problem of current investment model through data analysis; the fifth part concludes that the current scale and structure investment spending is not optimal and can be improved based on the optimal ratio calculated by using utility function model and comparing the actual spending and the estimation; the last part propose targeted policy recommendations from the result of empirical analysis.