The Causal Relationship between Equipment Investment and Infrastructures on Economic Growth in China

Maria Jesus Herrerias ()

Frontiers of Economics in China-Selected Publications from Chinese Universities, 2010, vol. 5, issue 4, 509-526

Abstract: There is agreement in the literature on economic growth concerning the transitory effects of capital accumulation on the process of economic development. However, controversy arises if this effect is permanent. In this sense, the key point is the embodied technological progress and whether supply factors predominate among the determinants of capital accumulation. Only in this case should expect long-run effects of capital accumulation on economic growth. Inspired by this idea, I focus the study on two elements accounting for economic development—equipment investment and productive infrastructure and I also analyze the type of the empirical relationship that exists between them. The results indicate that equipment investment and infrastructures have played a significant role in accounting for long-run growth in China. However, I do not find empirical evidence supporting any relationship between the two types of investment. In addition, I find that foreign trade has stimulated output and equipment investment in the long run. Finally, it is found that innovation activities encourage equipment investment in the long run.

Keywords: China; openness; equipment investment; infrastructures; growth (search for similar items in EconPapers)
JEL-codes: F43 O40 O47 O53 (search for similar items in EconPapers)
Date: 2010
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Citations: View citations in EconPapers (7)

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Journal Article: The causal relationship between equipment investment and infrastructures on economic growth in China (2010)
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