Study of industrial influential factors of capital allocation efficiency in China’s manufacturing industry

Abstract

This paper calculates the yearly capital allocation efficiency of twenty eight manufacturing industries in China from 1999 to 2005 and analyzes influential factors of capital allocation efficiency with panel data model and sectional data model. Econometrical results show that the influential factors include FDI, foreign capital's monopoly degree on high-tech and capital-intensive industries, labor population's reflecting coefficient on industrial growth and capital return rate. The higher ratio of foreign fixed equity is, the higher allocation efficiency is; the higher foreign capital's monopoly degree in high tech and capital-intensive industries is, the lower allocation efficiency is; the higher labor population's reflecting coefficient on industrial growth is, the higher capital allocation efficiency is; the higher capital return rate is, the lower allocation efficiency is. Accordingly, when making the most use of foreign capital's allocation effect its monopoly on high-tech and capital-intensive industries should be avoided. Meanwhile the government should distribute investing scale, total credit quota and information of supply and demand in the market to make the enterprises and financial structure know economic condition of now and future to avoid negative influence that over affect manufacturing industry's capital allocation efficiency when industrial structure upgrades.