The Contribution Rate of Advanced Scientific and Technological Progress and the Internal Circulation of China's Economy

Abstract

This study observes the impact of China's advanced scientific and technological progress contribution rate on China's internal circular economy from 1958 to 2020, and formulates China's appropriate economic policies. Firstly, the method of taking logarithm by difference is used to make the variables studied stable, the VAR model is established, and the stability of the model is tested. Then, this study uses the Granger causality test to evaluate the relationship between the contribution rate of advanced science and technology, consumption, social fixed investment, and macroeconomic climate index. The impulse response function shows that in the long run, the contribution rate of advanced scientific and technological progress will not only promote the improvement of consumption but also improve the macroeconomic climate index and social fixed asset investment. Variance decomposition shows that with time, the interaction between consumption and the contribution rate of advanced scientific and technological progress gradually deepens, and the influence of other variables is relatively stable. Therefore, China needs to increase its investment in scientific research and improve the contribution rate of advanced scientific and technological progress, which will help promote China's implementation of the internal circular economy strategy.