Analysis Of The Impact Of Capital Misallocation On The Upgrading Of Industrial Structure

Since the reform and opening up,China’s economic development level has increased rapidly,but the industrial structure imbalance still exists.The fundamental reason for the imbalance of industrial structure lies in the failure of the market mechanism in factor allocation.This paper studies the impact of industrial upgrading based on capital misallocation.First of all,we use Aoki multi-sector general equilibrium model to measure the capital misallocation of eight industries,inter-provincial and regional capitals in China from 1993 to 2017.Secondly,we describe the current situation of China’s industrial structure.Finally,through the establishment of theoretical and empirical models,we study how capital misallocation impacts the rationalization and sophistication of industrial structure.The index of misallocation coefficient,consumer demand,invest structure,the level of international trade are analyzed from the national level,the middle/east/western regions.Then we put forward relevant policy suggestions based on the empirical studies.In this paper,the main research conclusions are listed as follows: through the Aoki multisector general equilibrium model to measure the phenomenon in China from 1993 to 2017,we find that capital shortage coexists with capital congestion,and the industry and regional differences in capital misallocation are significant.Analysis of China’s industrial structure change process indicates that huge overcapacity exists in China’s secondary industry,also the tertiary industry is developing slowly.The industrial structure of China is constantly upgrading,but there is still a lot of room for improvement.From the empirical results,capital misallocation will promote the sophistication of industrial structure and inhibit the rationalization of industrial structure.