The Effect Of Technical Progress And Its Suitability On China's Industrial Overcapacity

Behind the continuous expansion of China's economic aggregate,a series of problems such as overcapacity,real estate bubble and local government debt have become increasingly prominent.The problem of overcapacity has become the focus of domestic scholars in recent years,and it is a lingering haze in the process of national macroeconomic governance.Although economists all come up with the way of reducing overcapicity from the supply side and the demand side,In 2013,the guidance of the state council on solving the problem of serious excess production capacity mentioned in the guideline of the state council to strengthen the driving force of enterprise innovation and development,and to use market mechanism and economic leverage to force enterprises to strengthen the inherent power of technological innovation and establish a long-term mechanism to eliminate serious excess production capacity.The report of the 19th national congress of the communist party of China stressed the importance of strengthening China's economic innovation.With the continuous upgrading of policies,scholars pay more attention to the improvement of technological innovation ability,which is an effective way to reduce overcapacity.As for the underlying causes behind overcapacity,the previous literature has largely ingored technical progress bias,in mos case,technical advances are non-neutral.Biased technical progress provides a more convincing explanation for international trade,transnational technological differences,and wage inequality in economics.This paper intends to study the impacts of technical progress bias on overcapacity.From existing studies,few literature has directly studied the impacts of technical progress bias on overcapacity,and there is no literature to explore the mediating transmission mechanism of technical progress towards overcapacity,certainly combined with the existing factor endowment structure in China,there is even more rare to explore the relationship between technical suitability and overcapacity.Therefore,this paper focuses on analyzing the "facilitating effect" and specific transmission path of technical progress bias on China's overcapacity,and also explores the heterogeneity of technical suitability in the process of technical progress bias affecting overcapacity.Based on existing studies,firstly this paper tested the impact and transmission mechanism of technical progress bias on industrial overcapacity.Next this paper build translog production function,measure technical progress bias index and the degree of overcapacity using SFA stochastic frontier analysis method.Then base on revant data,empirically analysed the relationship between technical progress bias and overcapacity using the dynamic panel data model.Whereafter,under the different technical suitability,further explored mechanism and empirical results of technical progress bias on overcapacity.Lastly,summarized the whole paper and put forward some policy suggestions.The relevant conclusions of this study are as follows:First,this paper measured technical progress bias index by fronier 4.1 software,which was analyzed from industrial difference and time trend.The results show that,technical progress in 36 industrial sectors has mainly biased capital factors,only 4 industrial sectors show technical progress biased label factors.What's more,except for a few years,technical progress in most years mainly biased capital factors,the mean deviation is 0.02.Second,the industrial difference of overcapacity show that the degree of overcapacity varies greatly from industry to industry.In term of time trend,the overall overcapacity is consistent with the change of economic cycle.In 2006,the macro economy was overheated with high capacity utilization rate and relatively low overcapacity in various industries.In 2008,the global financial crisis led to a certain decline in the capacity utilization in various industries and overcapacity has intensified.In recent years,despite a series of measures were taken by the government to tackle overcapacity,the results have not been effective,excessive investment in the past is releasing huge capacity,overcapacity has increased.Third,Based on 36 industrial data from 2001 to 2015,this paper constructed dynamic panel data model to study the relationship between technical progress bias and overcapacity.The results of the study showed that technical progress bias of China's industry aggrevated the occurrence of overcapacity to a certain extent,mainly through investment effect,demand effect,R&D effect and capital allocative efficiency effect.Forth,based on technical progress bias index and factor endowment structure,The 36 industries were divided into technical suitability industry group and technical unsuitability industry group.The results of the study showed that among 36 industries,20 are in the technical unsuitability industry group,16 are in the technical suitability industry group.Then,technical progress bias could effectively improve production efficiency and resolve overcapacity under technical suitability,but it would further increase overcapacity under technical unsuitability.