Opening Up, Human Capital And Total Factor Productivity

Since three decades of reform and opening up, China’s economy has reached rapid development, the average annual GDP growth rate has been as high as9.9%, however, GDP growth mainly depending on investment is still one of the main features of current China’s economy. Although high investment growth with low efficiency drives China’s economic development, the limit of the resource and the constraint of environment lead to this mode of economic development unsustainable. In the current background of advocating sustainable development and constructing harmonious society, we need to change the China’s economic growth mode of "high consumption, high input, low output".Modern economy growth theory emphasizes the contribution of total factor productivity to economic growth, that total factor is the integrated performance of the role of technological progress in economic development, total factor productivity is one of the important indicators in developed countries to measure the quality of economic growth. Therefore, in order to change China’s economic growth mode, we should study the factors which have an impact on China’s total factor productivity. Combined with the contemporary trend of economic development in the world, we need to consider the most important feature of China’s current economic development-opening up, we should study the total factor productivity within this opening up framework. But during the research of relationship between opening up and total factor productivity, we can not ignore this important factor of human capital, on the one hand, from the view of the endogenous growth theory, relationship between human capital and total factor productivity are inextricably linked, on the other hand, opening up and human capital are also closely related.On the basis of reviewing main measurement methods of total factor productivity and the calculated results, we use the method of data envelopment analysis, with the1978-2011panel data of29provinces or cities in China, to calculate our country’s technical efficiency, technology progress, and total factor productivity growth, then analyze from two dimensions of time and area with this result. After that we analyze the mechanism that FDI, international trade, human capital affect total factor productivity, and point out that FDI technology spillover and the spread of knowledge of international trade, market competition, economies of scale, the elements of the price mechanism are the productivity primary means in which FDI, international trade influence the total factor productivity, as to the human capital, in addition to the direct impact on technological progress, technology absorptive capacity reflected through itself is the key factor that affect the ability of the mechanism to give full play to. On this basis, we choose the three factors as the main explanatory variables, further we select the investment rate, financial development, the degree of marketization, industry structure as control variables, and conduct panel data regression from two angles, the national, and sub-regional. Our conclusions are:China’s total factor productivity significantly increase, the main reason for China’s TFP increase is technical progress, and technical progress contribution to TFP growth rate is far greater than the technical efficiency; FDI, international trade, human capital in different region have different influence on TFP. Based on the current situation analysis and empirical results, we put forward to some policy recommendations to promote economic development, mainly about focusing on improving the quality of introduced FDI, adjusting trade structure, and enhancing human capital.