Economic Growth Model Based on Six Basic Factors of Production—Xu Growth Rate Equation

Abstract

This paper proposes an economic growth model based on the Six Basic Factors of Production and Xu Growth Rate Equation for the first time, which fills-in the deficits of the New Classical Economic Growth Model based on the Solow Model. The empirical analysis indicates that over the past three decades, the consumption of six basic factors of production had complicated relations with economic growth. In some years, the consumption rate of the basic factors of production was meager, but the economy witnessed relatively rocketing growth rate; in some years, the factors of production consumption rate was very high, but the economy growth rate slowed down. In general, economy grows at the expenses of huge consumption of four factors. There is an obvious characteristic of huge input and low efficiency. The average contribution rate of technological advance peaks in the middle, while it drops down at two ends. Noticeably, since 2004, the technology contribution rate generally shows a downward trend, reasons of which should be explored systematically in aspects like economic policy and industry structure with a view to boost further transformation of the macro-economy scientific growth model.

Keywords

six basic factors of production / economic growth model / Xu Growth Rate Equation

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