| Abstract | In this paper, the product diversity is introduced into the analysis of China's economic growth, to establish a specific structure of the monopolistic competition model, the model results separate two different types of technical progress, a technical progress increases output, and the other technical progress increases the diversity of products, and then concludes that technical progress does not necessarily lead to increase in output! The technical progress which increases diversity of products will not be reflected in the TFP, the seesaw effect of technical progress of two types can explain the China’s TFP puzzle; and then give a hypothesis: the growth rate of TFP of the catch-up economy is U type structure ;even if the government or enterprises don’t increase investment in research and development, TFP growth rate will still rise, this can in some extent hedge the disappearance of the demographic dividend. |