The Empirical Study Of The Efficiency Of Investment In R&D

Time flies, after35years of rapid development, China has passed through nearly300years of Western path. From the sharp development of light industries in1980s to the great era of industrialization, represented by the increasing of heavy industry in the late20th century, coupled with the rising post-industrial era of reality and cultural in the beginning of the21st century, it makes our mission of keeping the speed of economic increasing and transforming economic structure more complicated, as well as the huge difference between development of various regions of China.In this case, seeking the starting point for reform became a critical task. From political reform and institutional adjustment to mushrooming establishment of high-tech gardens all of our country, from the original " old three stocks" to the second place of capital market in terms of size and breadth, a number of approaches, theories and opinions, in order to keep economic developing and adjust economic structure, has been proposed. However, there is no dispute that we should keep forward to the direction of an innovative and environment-friendly society, which makes the research and development (R&D) investment had become one of the major promoters of our economy development in the future.At present, with the increasing of R&D investment, it becomes an essential and controversial issue that how to measure the efficiency of these investment and how to assure the efficient difference between provinces of our country. In this paper I start from the efficiency of R&D investment, considering influences of various factors of economic development, and study its impact on China’s economic development. Moreover, about the mechanism of the R&D investment to economic increasing, I focus on the core role of development of capital market, represented by credit market and equity market. Taking account of huge gaps between eastern, central and western regions of our country, this paper uses panel data methods to describe it. Significance of this paper is mainly reflected in three aspects. First, I study the influence of research and development investment to economic development efficiency, in order to investigate the law of the economic development. It’s well known that innovation is the major promoter to the development of China. After reform and opening up, there are so many innovations from the institutional to technical, from the beginning of household contract responsibility system to the invention of MI Talk and Micro letter, which is one of the core elements contributed to China miracle. Therefore the study of this issue is extremely important for the future’s economic development of China. Second, I explore the relationship between development of capital market and the efficiency of investment in research and development, so that we can use of our capital markets platform better to enhance the efficiency of research and development investment. Market makes a country rich; capital market makes it wealthy. Capital market development can enhance the development of economy of a country, especially in the high-tech industries. It is meaningful to explain how to achieve the function of developed capital market, especially for improving the efficiency of investment in research and development in order to enhance the efficiency of regional economic development. Third, it is probable to explore a viable path for economic transformation if we can make the relation clear between the capital market, investment in research and development and the economic development. At present, after30years of rapid development, our economy is experiencing a stage in which the speed of growth is slowdown and social contradictions appearing comprehensively. At this stage, steady growth, adjusting structure becomes two urgent missions. Steady growth is to be carried out under the premise of structural adjustment. In other words, only there are a reasonable economic structure, can steady growth is maintained. Apparently reasonable economic structure should be built on two main aspects. On the one hand industrial structure should be more reasonable, including reasonable ratio of three industries, and the reasonable proportion of high-tech and other industries. On the other hand, the regional economic structure should be more reasonable, so that regions of our country can give full play to their local advantages, promote industrial structure transformation and economy comprehensive development. Finally, make the income structure change from the dumbbell-shaped structure to the spindle-shaped structure. And there is no question that we should give full play to the function of the capital market, so that enhance degree of information symmetry of market. This is the third significance of this paper.This paper is logically divided into three levels. The first level, I begin from the emotional point of view to recognize the relationship between development of capital market, investment in R&D and economic efficiency. In this section, I use the integration data to study how R&D investment to impact on economic development. This approach is beneficial to have a basic understanding of the overall problem, but we cannot sure the reliability of conclusions. In other words, it can only be described as a perceptual level understanding. The second level is rationally examine two major problems, the first is whether R&D investment has specific impact on the economic development, and the second is whether the development of capital market has significant influence on the efficiency of R&D investment. At this level of research, I use the regression of panel data with data of31provinces to describe the relationships between the factors we interested in, and draw valid and reliable conclusions. The third level is to study how the development of the capital market, represented by equity market and bond market, to influence the efficiency of R&D investment.After the study, I get some conclusions as follows:R&D investment has an important role in boosting the economy, but this conclusion is not stable. There are two main reasons. First, in the post-financial crisis era, there is a big shock on China’s import and export trade, this conclusion can be obtained from the results of each model identification, OPEN one of the coefficients are significantly negative. It also brought about government spending increasing significantly in these five years. This conclusion can be obtained from the results that GOVT factor has a significantly positive coefficient.Secondly, with the mission of "steady growth, structural adjustment", government and firms began to gradually emphasis on R&D investments. According to the conclusions of both the international and domestic literature, the efficiency of R&D investment in developing areas is better than in the developed regions. The relationship between development of the capital market and R&D Investment is complex.In addition, China is faced with excess capacity, duplication of investment and serious problems in the area of fixed assets investment. So we should establish effective bankrupt mechanism of the market, in order to eliminate backward production capacity and transform the economic structure.