The model of capital allocation efficiency influencing on economic growth in open economies

China has not completely opened its capital market, and there is heterogeneity between domestic and foreign capitals, and the domestic savings cannot be transformed to efficient investments. Based on these facts, this paper creates an endogenous economic growth model in open economies trying to prove the mutual effecting mechanism between capital allocation efficiency and economic growth. Moreover through precise mathematical analysis, this paper educes the equilibrium condition i.e. the higher capital allocation efficiency of foreign capital should function together with higher productivity efficiency and technology spillover effect in order to promote balanced economic growth.