Technology Gaps, Resource Allocation and Economic Growth of Large Late starting Countries*

Ouyang Yao, Yi Xianzhong and Sheng Yanchao
Research Center for Large Country Economies, Hunan University of Commerce, Changsha, China

 
Abstract: In the evolution of economic growth drivers, technology gaps are a key variable that determines the efficiency of resource allocation. Analysis of an optimal resource allocation path based on an extended endogenous growth model reveals that economic growth drivers evolve from productive investment to R&D investment and a shift from imitation to innovation. Empirical analysis based on China’s provincial-level panel data suggests that the effect of productive investment and R&D investment, as well as innovation and imitation, on economic growth and technological progress varies greatly among regions of disparate technology levels. As a late-starting country, China should properly allocate resources between productive investment and R&D investment, and between imitational investment and innovative investment while advancing the transformation of economic growth patterns on a differentiated basis in light of regional technology disparities.
Key words: economic growth, technology gaps, indigenous innovation, late-starting

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