Endogenous Economic Growth in China

Abstract

China has enjoyed spectacular economic growth over the past twenty years or so. However, Chinese regional economic development has relied on foreign direct investment, export-oriented industrialization, and other traditional growth models. While China can perhaps continue to rely on exports, cheap labor, and a huge domestic market for foreign investment for some time to come, sooner or later the question will arise; How long can China sustain economic growth based on her current strategies? We propose in this article the endogenous growth model as an alternative and long-term growth strategy, and focus largely on its treatment of knowledge as an independent factor of production in Chinese regional economies. This article thus proposes a new institutional framework defined as a trilateral commission. The commissions are designed to advise and enhance communication between local and regional government leaders and administrators on knowledge-based collaboration and coordination among business, government, and the research community, as well as on the issue of knowledge generation and utilization.