The Transition of Growth Drivers and Derivative Effects of Final Demand on China’s Economic Expansio.doc

The Transition of Growth Drivers and Derivative Effects of Final Demand on China?s Economic Expansio Abstract: This paper presents an analysis of the sources of China?s economic growth from the perspective of final demand and provides a new approach to China?s growth pattern. Using input-output data from China?s National Bureau of Statistics (NBS), this paper employs an input-output model for a systematic analysis of the driving forces behind China?s economic growth between 1987 and 2007. The findings illustrate a few points. First, final demand, including consumption, investment, and export, experienced a downward trend. The majority of the output derivative effect came from manufacturing industries, with a significant shift from light industries to heavy industries. Second, between 1987 and 2007 the structure of China?s economy transitioned from dependence on domestic demand to export-driven growth. Third, China?s economic growth was driven by final demands, but the driving force mix experienced fundamental changes. Lastly, this paper makes suggestions for China’s economic growth model based on an empirical analysis. 　　Key words: final demand, economic growth, input/output, derivative dependence structure. 　　JEL: O11 　　 　　1. Introduction 　　Since the pro market reforms and opening-up, Chinas annual GDP growth averaged nearly 10% and its per capita GDP increased from less than $300 in 1979 to the current level of approximately $3,500, thus elevating China’s economy second only to the United States. Poverty eradication for 1.3 billion people, substantial economic expansion, and over thirty years of nearly double-digit growth rates have dazzled many economic researchers. 　　Identification of the momentum behind the rapid development and the evolving growth patterns is of great importance to China’s long-term prosperity. Chinese and international scholars alike generally attribute China’s rapid growth to technological advances in the factors of production and institut