The Effect Of ICT Capital On Economic Growth In China

With the rapid development of Information and Communication Technologies(ICT)in China,ICT is widely applied to many fields of our life or manufacture.Moreover,the integration with other emerging technologies has promoted the development and innovation of ICT,and a series of new industries have been derived,such as the digital economy industry.As the core technology of the digital economy,ICT plays a key role in the development of the digital economy.While considering the effect of the digital economy on economic growth,it is an important topic to study the effect of economic growth through the perspective of ICT.Taking this as a starting point,this paper separates the ICT capital stock from the total capital stock,divides capital into ICT capital and nonICT capital,and sets up two nested three-factor CES production functions of ICT capital,non-ICT capital and labor as a factor input variable,and studies the effect of ICT capital stock on economic growth from the new perspective of biased technical change.The specific approach is to assume that there is a bias of technical change,add the biased technical change to the three-factor CES production function in the form of factoraugmenting technical change function.Firstly,set it as an exponential function,exponentially carry out Box-Cox transformation form of the growth rate of technical change of factors.Secondly,give the calculation method of biased technological progress index according to the definition of biased technical change of Acemoglu(2002),and then give the judgment method of technical change bias accordingly and the method of calculating the degree of bias of the overall technical change.The Kmenta approximation method is used to expand the two-level nested three-factor CES production function,and according to the perspective of growth accounting,the effect of ICT capital investment growth and ICT capital factor-augmenting technical change on economic growth is decomposed.In addition,standardized supply system equations are constructed to better identify the substitution elasticity of the parameters to be estimated,and the relevant parameters are estimated using the feasible generalized nonlinear least squares method(FGNLS)method.The corresponding data from 2001 to 2020 is used to estimate the parameters of the model.When estimating the capital stock,the final capital stock is calculated based on the perpetual inventory method by first deriving the fixed capital formation sequence and converting it at comparable prices according to the corresponding price index,considering the time-efficiency model and decommissioning mode of different capitals,and calculating the user cost of capital,multiplying it with the productive capital stock to obtain the final capital stock as capital input.Based on the results of parameter estimation,three indicators of technical change bias and the effect of ICT capital on economic growth were calculated,and the biased technical change in China and the effect of ICT capital and its biased technical change on economic growth were analyzed.Measuring the results,this paper mainly has the following findings:(1)In China’s ICT capital investment,the proportion of ICT hardware capital has decreased year by year,and the proportion of ICT software capital has increased year by year,and has risen to nearly 80% in 2020.(2)The substitution elasticity between ICT capital and non-ICT capital in China,as well as the substitution elasticity between ICT capital and non-ICT capital and labor as a capital portfolio,are less than 1,indicating that China’s ICT capital and non-ICT capital are complementary,and capital and labor are also complementary;(3)China’s technical change is generally biased towards non-ICT capital,while for ICT capital and labor,technical change is relatively biased towards ICT capital,and in general,China’s technical change is biased towards capital;(4)From 2001 to 2020,China’s ICT capital and its factor-augmenting technical change generally had a positive effect on output growth,and ICT capital factoraugmenting technical change had a greater positive effect on output growth.(5)While the deepening degree of ICT capital relative to labor increases and ICT capital relative to labor technology progress is biased to ICT capital,it can promote the increase of TFP growth rate.Because the ratio of ICT capital input to non-ICT capital input is not stable,when the ratio of ICT capital input to non-ICT capital input increases,technological progress will favor ICT capital to increase the growth rate of TFP.When the ratio of ICT capital input to non-ICT capital input decreases,technological progress favors non-ICT capital to increase the growth rate of TFP.