The Effect Of Balance Of Payments Constraints On Directed Technical Change

In the era of "high-quality development" and "supply-side structural reform",industrial structure upgrading and technological progress have become key factors driving China’s sustained economic vitality.With the transfer and allocation of capital,labor,technology and other factors in foreign economic activities,China may also copy the same technological progress bias of foreign countries.In recent years,"anti-globalization","COVID-19" and other reasons have slowed down China’s economic growth along with the growth of import and export.Therefore,the inconsistency of import and export capacity and growth rate may constrain economic growth,thus affecting the current output level and the directed technical change.In view of this,compared to the directed technical change is determined by factor efficiency on the supply side,this article discusses the influence of balance of payments constraints on the directed technical change in China from the demand side.On this basis,three questions are derived:(1)the characteristics of directed technical change in China’s industrial sectors.(2)The degree to which the current imbalance of import and export growth constrains economic growth.(3)The influence and mechanism of balance of payments constraint on directed technical change.The solution of these problems will help China speed up innovation-driven,expand the pattern of foreign trade opening and improve the quality of trade participation.This article follows the theoretical analysis framework of directed technical change proposed by Acemoglu(2002)and combines with the "BPCG Model" proposed by Thirlwall(1979),which is a dynamic model of balance of payments and mainly studies the determination of economic growth rate in long-term balance of payments.Directed technical change is based on the CES production function on the supply side,which can deduce that output growth rate is between factor efficiency growth rate.The demand-side BPCG model identifies the economic growth rate of a country as the equation of the relative growth rate of import and export and the growth rate of foreign income.This article describes the relative gap between the growth rates of the two sides as the constraint degree of international balance of payments on economic growth.Based on the above theories and models,the international trade model of two countries("domestic" and "foreign")and two production factors(capital and labor)is expanded and constructed.The main research conclusions are as follows:First,the elasticity of capital-labor factor substitution in China’s industrial sectors calculated by the standardized supply-side system method is all less than 1,and the growth rate of capital efficiency is basically lower than the growth rate of capital efficiency.All industries showed the characteristics of capital-biased technological progress in the sample period.In the extractive industry and manufacturing industry,the vlue of directed technical change in each year presents the characteristics of "upward-downward-upward".After reaching the peak value in 2011,it sharply declines to labor-biased technological progress.After 2013,the sign of this index turns from negative to positive.Second,among the 25 industrial growth rates calculated by the "strong form" of BPCG model,there is a significant gap between 21 industries and the actual economic growth rate,indicating that China’s industrial industries are generally constrained by balance of payments.It is possible that the current large amount of consumption and investment in imports cannot rapidly generate export growth,and the expansion of domestic demand does not have the production and technical efficiency to adapt to it,thus forming constraints on economic growth.Thirdly,the influence of balance of payments constraints on directed technical change is significantly negative by mathematical proof,robustness test and endogeneity test,and the empirical results are consistent and reliable.Among them,compared with the control group,the constraint indexes of industry groups with high trade openness,high capital intensity and low R&D investment respectively have a greater impact on the directed technical change.In addition,if directed technical change is decomposed into capital efficiency growth rate and labor efficiency growth rate,the constraint index is also negatively correlated with the two,namely,the balance of payments constraint negatively affects the biased technological progress index by negatively affecting factor efficiency growth rate.According to the theoretical expansion and empirical research of this article,in order to improve the efficiency of factor and economic growth in China,especially to form a"double cycle" development pattern of benign interaction between internal and external demand,this article summarizes the following policy implications:(1)to promote the dynamic balance of trade.For monopolized high-tech products,import substitution should be realized as soon as possible to enhance the spillover effect of directed technical change.On the one hand,it can solve the problem that key technologies are controlled by others.On the other hand,it can also interrupt the long-term dependence on imports and inconsistent import and export growth rate of such products.(2)Increase enterprise income,enhance import and export capacity.There is a corresponding relationship between the growth of internal and external demand and the overall economic growth rate.In order to realize the stable growth of internal cycle,the supporting role of external cycle is also needed.Through R&D subsidies or corporate tax relief measures to directly or indirectly increase industry revenue,so as to gain stronger import and export capacity.(3)Expand industry factor of production input and optimize factor allocation efficiency.Industry scale measured by capital and labor can improve the factor efficiency of corresponding factors,but different factors have different degree of improvement,so factors should be guided to industries with high production efficiency.