The effects of biased technological change on total factor productivity: Based on the new perspective of appropriate technology

Abstract

The paper explains the effect of biased technological change (BTC) on total factor productivity (TFP) from the new perspective of appropriate technology. We have certified that the assumption of neutral technology progress of Solow is ostensible and also to get the general technological progress which can be divided into three parts: effect of knowledge progress, effect of capital intensity improvement and scale effect. We selected the data of Chinese provinces to give an empirical test to the effect of BTC on TFP. When we have last-year based empirical analysis, it illustrates precisely that not all years’ direction change between technical progress and factor endowments is consistent. But when we fix the capital and labor in 1997 as the base period, it seems that the eastern coast is still the main engine of China’s economic growth in recent years. And in backward areas, upgrade of technological change and factor endowments need to be further improved. On the national level in terms of the effects of BTC on TFP, they all get still a steady growth process, which illustrate that the process of upgrading of China’s factor endowments and technological change is relatively successful. Key words: Total factor productivity; appropriate technology; biased technological change.