Biased Technological Progress, Biased Factor Allocation And TFP Growth

This paper analyzes the relations between biased technological progress, biased factor allocation and the TFP growth, using the elements enhanced CES production function. The results show that: in the period 1978-2012, China’s total factor productivity increased by an average of about 2.10% per year, biased technological progress presents the trend of capital in general, the factor allocation are also showing a trend in favor of capital, the direction of both are basically the same. Biased technological progress tend to impact TFP growth by the beginning of promoting transition to suppression. The influence on TFP growth by biased factor allocation is positive before 2004 and becomes negative after 2004, means it inhibits the TFP growth. But biased technological progress and biased factor allocation combined effect of TFP growth has gradually changed from inhibition to promote, which indicates that China’s technological progress and factor allocation turned match from mismatch, China’s technological progress are moving the appropriate direction.