The Research on Technical Progress and Economic Growth and the Related Fiscal and Tax Policy in China

In modern economic development, people will never doubt the tremendous effects of technology advances to the economic growth. However, as an important factor in promoting economic growth, technology is very different from natural resources, labor and capital. In this paper, the author carried on a quantitative calculation on the role of technology progress in China's economic growth for the past 20 years, using the Cobb-Douglas (C-D) production function and Solow model. The results show that the share of China's technology progress contributing to the economic growth is smaller than that of developed countries. Therefore, this paper suggests that the government establish an effective financial policy to support technology progress, and play a leading role in economic growth.