The Impact Of Capitalized R&D Expenditure On China's Economic Growth

Since the Theory of New Growth has been put forward,the Economic Growth Theory that is related to Research and Development(R&D)and knowledge spillovers have been developed.Knowledge innovation and technological progress do the really important roles in the development of productivity.Scientific and technological innovation capacity has gradually become the important indicators of national core competitiveness and the future capacity of the economic and social development.R&D investment is the main factor to promote technological progress,so the world's R&D investment is growing rapidly.And the international economic accounting system SNA2008 has changed the R&D expenditure from the "intermediate consumption" to the "fixed assets",which should be added to the GDP accounting.What's more,developed countries have established the R&D accounting satellite accounts to do the capitalization of R&D,China's Bureau of Statistics is also trying to capitalize the R&D expenditures and to change the GDP data by following international standards of the SNA2008.The capitalization of R&D expenditures can reflect the R&D contribution to economic growth better than before.This article has tried the capitalization of R&D expenditures in the National Accounts and tried to find whether there is a significant relationship between R&D capital stock and GDP in the long-term and short-term according to the China' s data under the economic theory of Cobb-Douglas production function.This process is done by the econometric model,which is called Cointegretion and Error Correction Model.The results show that:(1)Changing R&D expenditures from "intermediate consumption" to the "fixed assets",making the value of GDP increased by an average of 0.49%,and making the 2010-2015 GDP increased by an average of 1.15%.This result show that China plays more intention on R&D investment.(2)There is a statistical significant and positive relationship between the growth of R&D capital stock and the growth of productivity in the long-term with China's data from 1978 to 2015.The long-term elasticity of GDP with respect to R&D capital stock is about 0.3458,which means 1%increase in R&D capital stock may increase the GDP by 0.3458%.(3)The short-term elasticity of GDP with respect to R&D capital stock is about(-0.035),which means 1%increase in R&D capital stock may decrease the GDP by 0.035%.(4)The growth rates of China's material capital stock,labor investment and R&D capital stock have the significantly positive correlation with the GDP growth rate in the long term,and the sum of the three coefficients are greater than 1,indicating the existence of the increasing returns to scale in China.However,labor investment has the greatest contribution to GDP,indicating that China's economy is still mainly dependent on labor-intensive industries.So we need to change the model of economic growth,and increase R&D investment to improve productivity making the long-term and stable economic growth.