The Impact Of International Trade On Directed Technological Change

Economic growth is a hot topic in economics.On the one hand,international trade can promote a country’s employment,production and economic development.On the other hand,international trade can bring advanced technologies,equipment and products to promote the technological progress for a country.With the continuous deepening of the theory of endogenous economic growth,economists began to realize that the assumption of neutral technological progress is not consistent with the actual economic situation.The technological innovation activities in enterprises are not blindly carried out.Instead,they lead to the existence of directed technical change purposely.So we have some question about international trade and directed technical change in China.Does China have directed technical change?What is the direction of technical change in Chinese manufacturing enterprises?Biased toward labor or capital?Will international trade have an impact on the directed technical change of Chinese manufacturing enterprises?This thesis attempts to explore the issues above.This thesis deduces the Hicks biased technical change function and calculates the index of alternative elasticity by Kmenta’s approximate estimation method,based on the standardized CES production function.Then,this thesis calculates the directed technical change index of Chinese manufacturing enterprises and industries from 2002 to 2006,and analyzes its changing trend.The study find that China’s manufacturing industry technical change is labor-intensive and directed towards capital during the sample period,but the degree of capital bias is not significant,which may be related to the selection of sample period.In addition,for the industry,the high-tech industries’ technical change is generally directed toward capital,while the technical change direction in low-tech industries is random and uncertain.Subsequently,this thesis empirically analyzes the impact of international trade on directed technical change index using panel data regression.At the enterprise level,6461 enterprises are classified as high trade dependence region,medium trade dependence region and low trade dependence region.And they can be also classified as state-controlled enterprises and non-state-controlled enterprises at the same time.On the industry level,29 industries are classified into high trade-dependent industries and low trade-dependent industries.And they can be also classified as high-tech industries and Low-tech industries at the same time.The empirical results show that dependence on foreign trade and import dependence have a significant positive impact on the development of directed technical change,and export dependence has a significant negative impact on directed technical change.The greater the degree of change in international trade,the more it will promote technical change in favor of capital.Finally,this thesis puts forward feasible suggestions.In order to improve China’s technical change and promote economic development as well as reduce the income gap,the government should encourage the development of international trade and pay attention to the import structure.Then the government needs to increase investment in R&D for laborers at the same time.And the government also should strengthen economic restructuring and rationalize the market structure.