System Research Of Investing Effect On Economic Growth

This essay has made an in-depth study of the mechanism of how the investment influences the economic growth. It is guided by Marx's theory about investment and the economic growth in accordance with the requirements of the concept of scientific development. Drawing on Western economics and modern economic growth theory, especially on how the investment influences the economic growth, combined with the real situation of our country's economic operations of the past and current years, it's mainly expanded along the road from the theoretical analysis to the empirical analysis and then to economic contradictions and finally some policy recommendations are put forward.Firstly, Marx considered the volume of the capital being used and the efficient of the use of capital as the determinants from analyzing the factors of economic growth. While the western theory about economic growth has divided the determinants of economic growth into two parts: one is the total input including the factors of labor, capital and land. The other one is the output from each unit of input including the amelioration of the allocation of resources, the improvement of technology and the economies of scale.Through analyzing the elements which influence economic growth, we have drew a conclusion that the investment influences the economic growth mainly in 3 ways. The first is to promote economic growth by factors'input. Second is to promote it by the investment on adjustments of economic structure. Last one is to make it by the investment on adding the knowledge stock and improving the technology.From the point of view of bankroll input, investment has its influence on economic growth mainly in 2 aspects. One is the driving role that the investment demand has played on the economic growth. The other one is the promoting role that the investment supply has played on it. Chapter 2 of this essay is just standing at this point of view and then it comes to a conclusion that the bankroll input especially the investment of fixed assets has played an important role in economic growth. The rate of economic growth is fluctuating as the fluctuation of investment. According to the long-term trends of China's economic growth and its affordability, the speed of China's economic growth is determined to be 9.7% or so. China's recent investment rate should be controlled between 35% to 40%. The moderate investment rate to the level of potential economic growth should be 11.5% which should set the average growth rate–16.5%--of 1992-2006 as the upper limit of the investment growth rate.From the point of view of economic structure, the economic structure is generally studied from the perspective of output. It is the volume of the elements which form the national economy has contributed to GDP and their proportion relationship. While investment is generally studied from the perspective of input. The investment structure refers to the compositions of various investment contained in the total volume of investment in a certain period of time and the distribution ratio between different departments, different areas and different organizations.So, the relation between input and output has also determined the relation between investment and economic structure of whether to determine or to be determined.The economic structure and economic growth are two relevant aspects which reflect the socioeconomic activities. If we take the economic growth as the process of total volume of economy output's expanding and assume that the volume of economy output of a certain period is equal to the volume of all structure, then, the economic growth will be equal to the volume of economic structure growth. From a dynamic point of view, we can not analyze economic growth without the premise of economic structure. Any growth is under some certain economic structure conditions. Economic structure could have influence on economic growth in many aspects.Chapter 3 of this essay is just standing at this point of view and then comes to a conclusion that the secondary industry is the main driving force of economic growth. We need to develop the secondary industry if we want to keep the rate of economic growth at a certain speed, to develop China's technology level, to achieve industrialization. The development of agriculture is weakening by year. Though the current development of agriculture does not contribute too much to the rapidly growth of GDP (this is the underlying reason to that the agricultural development is seriously lagging the economic growth), since most of China's population is in the rural area, the stability of agricultural development is closely related to the country and people's livelihood, to the stability of the whole country and policy. So, we can't ignore it too much. The development of the tertiary industry should be based on the development of the material wealth production sectors i.e. the secondary industry. We can't develop the tertiary industry blindly, or there can be a waste of resource and it can easily cause the economic fluctuations. The real estate's ahead of economic growth has brought many problems. Coordinate development of the three industries should be in line with the current economic situation.From the point of view of the improvement of technology, the improvement is an important element of promoting the economic growth while the investment is an important element of promoting the technological improvement. On one hand, investment is the carrier of technological improvement. The application of any outcome of technology should be embodied by some investment activities. It is the tie between technology and economic. On the other hand, technology itself is an outcome of investment. All the technological achievements are the results of the input of some certain labor force and capital resource. New technological development and applications should not be separated from investment. From this perspective, we draw a conclusion in chapter 4 that China's development of technology has distribute a little to the economic growth especially the distribution of labor force. Independent innovation is the only way for China to develop its economic.At last, in chapter 5, judging from the analysis of China's current investment and economic growth, we can see some evidences of disharmony in China's macroeconomic. It seems to be overheating. Analyzing the surface and deep-seated reasons of the disharmonious macroeconomic, we've reached 4 points of view on the current economic situation. First, the aim of China's macro-control should be to reduce the fluctuation of the investment and economic growth, to prolong the economic growth cycle. Second, we can not put more emphasize on reform and less on control. Third, the heat of investment is mainly that of real estate. Excessive reliance on real estate will seriously hamper the updating of economic structure. We should take some neutral-to-tight policy to prevent the real estate from restricting China's economy too much. Last, the restrictions to China's continuable economic development are not the shortage of energy or resource but the lack of dominative technology and the innovation capability. The writer expounds his specific ideas of current macro-control. First is to control the total capital input. Second is to started with the rate of input-output. Third is to enlarge the proportion of consume in economic growth. After setting the idea of control, we should take the lag of economic policy into consideration and pay attention to the degree of control in operational process. This requires close monitoring of the indicators of economic data to prevent overkill.