Research on Relationship between Expenditure for Science & Technology Activities and Economic Growth in China

Based on the statistical data during the period from 1978 to 2006 released by National Bureau of Statistics of China, this paper aims to apply the compensative GM (1, N) model and regression model to simulate the relationship between the expenditure for science & technology activities and economic growth in China. In the numerical experiment, the established grey model simulates the China’s GDP values during the period from 2000 to 2006. The empirical research results reveal that the established mathematical model based on grey theory for the relationship between the expenditure for science & technology activities and economic growth has a higher precision than regression model. Research results show that this grey model established in this paper could provide valuable information to policy makers in their efforts to make technological and economic policies.