IT Can Improve The Production Efficiency In China?

The micro business has exceeded the time and space restriction for shopping, and the emergence of the Internet has accelerated the speed for people to obtain information and to transfer information:with the popularization of computer, whether the social production and people’s way of life has undergone great changes. Because of its great convenience, the application fields of computer are constantly expanding, for example, industrial production, aerospace etc. Not only the computer, the information technology, taking the computer as the main body, has affected all aspects of the national economy, and people’s dependence on information technology products are growing with each passing day. It is generally believed that investment in information technology can reduce the transaction costs of enterprises, improve the operational efficiency of enterprises, and promote China’s economic growth significantly. Therefore, the scale of investment in information technology is becoming larger and larger. But with the passage of time, some entrepreneurs have found that high investment in computer did not bring a corresponding increase in productivity, to some extent, even inhibited productivity. Gradually, the economists have also found the abnormal phenomenon that the information technology investment and the social productivity in some degree has a negative correlation relationship. Robert Solow concluded:"we everywhere see the computer except in the productivity statistics aspect.", that is "Productivity paradox". Since then, many scholars have increased the depth of the study, but did not get the same conclusion. However, it is undeniable that the penetration of information technology on people’s lives has been an irreversible trend. So, the research on the existence of "productivity paradox" in the present stage of our country plays a very important role in developing the information industry policy of our country, and that is the main problem which is to be solved in this paper.Based on the existing domestic and foreign research, the paper is to study and explore the relationship between information technology investment and economic growth in China, and the relationship between information technology investment and labor productivity, and the relationship between information technology investment and total factor productivity in china. Based on the panel data of 30 provinces (autonomous regions) in China from 2007 to 2013, the paper selected the appropriate econometric research method, combined with the qualitative analysis and the quantitative analysis, and established the model to verify the relevant results. Using Cobb Douglas production function, this paper constructs a model of labor productivity and a model of total factor productivity, investigates the impact of information technology on economic growth in China, as well as the influence degree of productivity, and the existence of "productivity paradox" in china. The total factor productivity is measured by Malmquist index. In this paper, information technology investment has significantly promoted the economic growth and improved the labor productivity in China, but there is a negative correlation between information technology investment and total factor productivity. This paper argues that, "productivity paradox" has been disappearing gradually in our country, and the investment of information technology can improve the contribution of the labor input to economic growth in China. In addition, the negative relationship between information technology and total factor productivity is relation to the late starting and the small proportion of the information industry. Therefore, China should increase the scale of investment in information technology, encourage the development of the information industry, and make it become the pillar industry gradually, which have very important meaning to the economic development of our country.