The Research Of Provincial Return To Capital In China

First of all,this paper evaluates the provincial rate of return to capital in total and in the three main industries from 1978 to 2016 in China.Secondly,according on the outcome evaluated above,we analysis the regional difference and change trend of the rate of return to capital.And then,explore the influence fators and influence mechanism of the rate of return to capital.Next,construct a model to evaluate the rate of return to capital without uncertainty and to determine whether China is overintestment at two levels.Finally,explain the phenomenon that the inter-regional difference development exists in China and why the production factors such as capital and labor flies to the southeast of China from the perspective of return to capital and reveal the mechanism behind.Firstly,the results showed that conclusions that the rate of return to capital in China is over 20%may be overestimated.Secondly,there are both universality and individuality in the trend of rate of return to capital in national level and regional level.The convergence analysis shows that the national absolute convergence is not obvious before 90s of the 20th century;however,the national absolute convergence is obvious after 1994.Thirdly,the empirical analysis shows that the cause of change in the rate of return to capital in China from 1978 is the mixture of mismataches of fundamentals improve,capital deepening,the growth rate of technical progress and the shock bring by financial crisis broken out in 2008.Fourthly,according to the overinvestment determination,there are nine provinces such as Hebei which is overinvested at the second level;there are twelve provinces such as Beijin which is nearly overinvested at the second level and the other eight provinces is not overinvested in our sample.Finally,from the analysis of regional economic development impact on return to capital we found that return to capital makes an positive effect on the regional net capital inflow and economic development.Further analysis shows that return to capital makes an effect on the development of regional economy significantly through the direct effect alone.Some conclusions can be summarized as follows at last.Firstly,there are some significant regional differences in return to capital in China.Although convergence is obvious,the speed is too slow to narrow the regional gap.So national macro-control is necessarily needed to narrow the regional gap in the rate of returns to capital.Secondly,the regional difference of the rate of return to capital can be used to analysis the difference of regional economic development and the phenomenon that production factors such as capital and labor flies to the southeast of China.Thirdly,national overinvestment is not reached in China but reached in some provinces and some industries.Only throuth supply side reform to make market plays a key role in resource allocation process and less the misallocation of capital and labor,can convergence of both rate of return to capital and economic development will get.