The Relationship Between China’s Imports Of Capital Goods And The Growth Of TFP: An Empirical Study

Nowadays, with the rapid development of human civilization, the world economyhas made great achievements. In the process, manpower, capital of these input factorsplayed an irreplaceable role in promoting economic growth. However, according toSolow model, the source for long-term economic growth is technological progress, asthe TFP. National R&D investment is bound to promote their total factor productivity,but technological advances abroad will raise total factor productivity of the importingcountry has a significant role in promoting through trade. Compared to developedcountries, developing countries need this technology spillovers imports.The way of China’s participation in international manufacturing division since theearly1990s has changed. With the upgrading level of China’s manufacturingindustry,China’s processing trade has been developed to a higher level.China importslarge number of high-tech components and capital goods from abroad, processing andassembly into products and then exported, resulting in a total yearly imports of capitalgoods improved. Capital goods contains a number of advanced technologies and canbring latest technological achievements abroad back. China’s imports of capital goods hasa great effect on China’s technological advances and the increase of TFP.In this paper, I empirically analysis the relationship between China’s imports ofcapital goods and total factor productivity, here is the following conclusions:(1)technology spillover effect of imported capital goods exists. Imports of capital goods canimprove TFP, technology spillover effect of imports of capital goods from developedcountries are bigger than in developing countries;(2) The level of human capital has asignificant role in raising our total factor productivity, high level of human capital isimported capital goods produced technology spillover prerequisite;(3) The existence oftechnology spillovers delays, technical capital goods imports overflow will reach thepeak in the second year.