It is worth noting that from early 1949 to the late 1970s, Chinas financial system was centered on central planning. A 10% output decrease from 1966-1968, a new agricultural revolution that allowed people to sell their goods in the rural marketplaces was introduced in 1978. Later in the 1970s private enterprise guided by a revenue drive was promoted. This form of entrepreneurship saw to the increased numbers of foreign investment in China which in turn improved the states' output.
Since the 1980's, the Chinese economy has grown fast. Studies show that after every year the growth rises by around 10%. This percentage indicates that in every seven years the country experiences a double income. Despite the financial crisis across the world in 2008 and 2009, China's growth and employment rates did not decrease. High demand for public investments resulted in high output, and therefore, this formed the basis for the continued growth.
Some experts in economy believe that Chinese growth dates back to 1980 due to agriculture. Others say the development is as a result of the firms situated and the political governance of the country.
The Cause Of Economic Growth In China Since 1980
Chinas' development results from several sources. Accumulation of finances brought about by the investments is one of them. The investment rate estimates to 48%. More money means more productivity and output. The second resource is the fast high-tech advancement.
The total capital indicated by K caused the economic developments in China. The more the money, the higher the number of the effective workforces (AN). A high growth rate in labor will, in turn, lead to more production which will automatically result in the increased output.
The Role of Innovation Vs. Imitation in Chinese Growth and the Importance of Property Rights In China
China relies more on imitation rather than innovation. The country's economic sector has improved over the years because of the importation and adaptation of the already prevailing foreign technology. China uses these new technologies instead of developing new expertise. This technology adaptation typically implies that the country lacks proper patent rights because they are less progressive in technology.
With the technology imitation, the cost of the patent rights is low because there are few local inventions. The low patent costs allow for domestic companies to use and acclimatize imported technology without having to pay for it, which is beneficial for the nation. Having just property rights promotes sustainable growth in any country. Lack of adequate asset rights will make a state poor. Most countries are currently working towards ensuring that there is the implementation of well-protected property rights.
The Likely Sources Of Growth And How They Will Speed Up The Development In Future
Technological process is likely to speed up growth in the future. Innovating new skills will have several advantages in that it will lead to increased output for a given quantity of labor and capital. There will be the production of better goods, novel products and manufacture of a wide variety of commodities. Output solely depends on labor and capital (K & N) and the condition of technology (A). Having workforce and finances, development in technology, A, increases output.
Technological advancement reduces the workforce rate required to give a certain quantity of output. Doubling up A produces results in the same production rate with only half the initial number of workers N. with the development of technology, the output generated by a certain sum of employees will increase.
The increase in the capital per worker (K/N) will lead to small amounts in the growth of output per work (Y/N). The higher the increase in K/N the more elevated the Y/N. The increase in output will eventually cause development in a state's financial growth.
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