Calculation and Empirical Analysis on the Contributions of R&D Spending and Patents to China’s Economic Growth

Abstract

Based on the national data from 1995 to 2014, we develop an extended C-D production function model alongside with the Solow growth rate equation to investigate contributions of R&D expenditures and patents to China’s GDP respectively. Results indicate that: 1) both R&D expenditures and patents granted are significantly positive correlated with GDP and the growing output elasticity to GDP is in leaps and bounds after 2000 and 2005; 2) comparing to patents granted, R&D expenditures account for a higher share of contribution to economic growth and the both shares show a fluctuating downward trend; 3) the output elasticity of labor is significantly higher than other factors, signaling capital saving technical progress in China. The elasticity coefficient of scientific-technical progress to GDP is small. Nevertheless, its influence is gradually increasing and the intensive economic growth transformation has formed. Some policy implications are distilled after empirical analysis. R&D application, transformation and related incentive mechanism should be improved. Besides, the fields of R&D funding should be adjusted to further coordinate the relationship between the structure of R&D expenditures and the industrial structure.