Theoretical And Empirical Analysis Of The Determinant Factors Of China's Economic Growth

About the question of factors of economic growth, the literatures always are on the argument, and the factor determinant theory each emphasize its own factor on the determinant effect on economic growth. Until now, that which factor finally makes economy grow still doesn't achieve the agreement. The uncertainty of environment, the endogenous characteristic of factor development and economic growth, and the limitation of the empirical test methods, all these make the argument last on. So the theory history of economic growth is the history of the origin of economic growth.The liberation of economy, the marketization and the reform of property right are the basic characters, and the success of almost thirty years reform makes the researchers focus on Chinese economic growth. What makes the factor development, and what makes Chinese economic growth? Some paper makes the success of Chinese growth owning to the empirical and experimental reform. Others point out that Chinese economic reform is not the experimental reform. It is the reform that the river by touching the stone, or the fiscal decentralization of the central and local government. All these literatures almost apply the free market economic theory into Chinese economy, and quickly make the conclusion, and neglect the complex process of Chinese growth.So economic growth research should not only emphasize on the one factor and causal relationship, but also on the economic and institution environment of each country. Chinese economic reform is being on without political institution reform, and under the state bank owned financial structure and state capital owned property right structure, and the government governance, Chinese economic growth can be used to compare the factor contribution. Based on the limitation of economic growth theory, and further to analyse the factor attributions, and to explain the characters of Chinese economic reform under the traditional political institution, the research content of the paper is including with: (1)the endogenous process of factor development and economic growth; (2)the original cause of Chinese reform and openness and the factor analysis of Chinese economic growth; (3)the causality of financial development and economic growth; (4)the determinant factor attribution of economic growth; (5)the dynamic characters of the factor attribution of economic growth. The paper is including with seven chapters.Chapter 1 is the review of the literature of economic growth and the content of the paper. In the first section, the paper reviews the literatures, and points out that the main arguments of the literatures can be divided into four kinds, the theory of the institution, the neoclassic endogenous factors, the finance factor, and the region. (1)the institution theory points out that only the efficient institution can make the limiting of the government and property protection into reality, stimulate investment and technology progress, and promote the economy to grow. It is the development of political institution and property institution ahead of economic growth that determines economic growth. (2)the neoclassic endogenous theory shows that the investment of the capital, the human capital, the technology, and the trade is the origin of economic growth, and that the development of all these factors is ahead of the institutional development, and the final cause of the institution and democracy development, and that the political institution appears when the neoclassic factors develop further. (3)the financial theory argues that economic growth originates from the financial development, and that other factors only depend on the finance to be used by the economy, and all these is just the channels of the financial development to make the progress of the economy, and the financial development is not the effect but the cause of economic growth. (4)the regional theory believes that the region determines the endowment of the resource, the climate, the transportation, which difference will affect the speed of the capital accumulation, the quality of the human capital, the technology, and economic production. In control of the effect of the policy and the institution, the region will have effect on economic growth through the transition cost, the transportation, the health and the productivity of the agriculture. For example, the coastal region makes use of the convenient condition of the transportation, and the low transportation cost, and the superiority of the international trade, to promote the economy grow more quickly. But the disadvantageous region and the burning climate will make the population grow excessively quickly and excessively heavy and healthy burden, all these hinder economic growth. So it shows that the region not only have effect on the model of economic growth and institutional development, but also make function with the production precession. Namely, the region determines economic growth. The second and third section further concludes that the limitation of the index, the sample, the method, the assumption of the model, and the further research field of economic growth. The fourth section explains the content, the methods, and the new idea of the paper.Chapter 2 is that the model of the development of the endogenous factor of economic growth. Based on the logic and the framework of the neoclassic endogenous growth theory, the first section reviews the dynamic process of the capital and human capital, and the characters of the capital development on the way of the balanced growth. Because in the neoclassic growth model without the financial system, and with the financial function more powerful, the second section fully thinks about the financial function. The model shows that whether the endogenous causality of the financial development and economic growth or not depends whether the financial capital can be invested into the best efficient production economy. If the financial capital has been invested in the best efficient economy, it has the close causality relationship of the financial development and economic growth. If in the financial section it is the state owned property structure and the governance structure of the government determination, it will be lack of the efficiency of the financial development, and can't keep up with economic growth, and will be not cause but the result of economic growth.Based on the institution attribution and the logic of the institution determination that the origin of growth is the institution especially the property institution and property protection in the transition economy, and with the institution the capital can promote economic growth, and the capital and human capital is just the production factors, the third section concludes the institutional model. The model shows that: (1)in the transition economy, especially the developing country without the perfect institution, economic growth originates from the institutional development. The more quickly and efficient the institutional development is, the more quickly economy grows, namely, economic growth is limited with the institutional development. (2)in the market economy with the perfect institution, economic growth depends on the technology and the human capital, namely, the more quickly the technology and the human capital grow, the more quickly the economy grows. It also points out that in different environment and growth stage, the determinant factor is different. Namely, in the perfect market economy, economic growth is originated from the neoclassic endogenous factors. In the economy without the efficient institution, the institution determines economic growth.Chapter 3 is the theoretic analysis of the factor development and economic growth. Based the limitation of the factor theory, and according to the reality of Chinese reform, the chapter achieves some theoretic hypothesis. The first section studies on the determinant factors of economic growth and the causality relationship of the institution and the other factors in the model, and shows that the other factors development is originated in the institutional development. Through building the model of factor development and economic growth, the second section concludes that the factor development is endogenous in economic growth originated from the resource endowment and property institution especially the property protection, and that economic growth depends on the factor development, which is originated in the resource endowment and the property right, and that the present growth will strengthen the resource endowment and the factor development of the future, which will determine economic growth of the future, namely, the resource endowment and the level of economic growth of t period→ the property institution and property protection of t period→the factor development of t period→economic growth of t period→the resource endowment and the level of economic growth of t+1 period. The third section concludes the endogenous mechanisms of economic growth on the base of the endogenous factor development. The content is that: the resource endowment RSt and the structure of the property right PRSt of t period→the governance mechanism SGMt of t period→the factor allocation way and efficiency FAt of t period→economic growth efficiency EGEt and the income allocation IRt of t period→the resource endowment RSt+1 and the institution structure PRSt+1 of t+1 period. Namely, economic growth not only depends on the factor development, but also the resource endowment and the property structure, and even if some country with the same resource endowment, its economic growth may be different.Chapter 4 is the institution attribution of Chinese economic growth. The first section deduces the origination of reform and openness policy. It points out that the policy comes from the polity, which is originated in the economic condition and resource endowment of Chinese especial development stage, especially low income of the country and cities. The second section is further to study the determinant factors. Some papers make economic growth owing to the government voluntary choice and the polity especially the trade policy. This section deduces that the development of trade is originated in the property institution. Based on the development of the rural enterprises and the reform of state owned enterprises, the third section analyses the best organization institution under the different level of the property right and the property protection.Chapter 5 is the empirical study of the relationship of financial development and economic growth. According to the assumption and deduction of the contents, the financial market is not efficient. The first section reviews the reform process of the financial development and financial reform, especially the institution origin of low efficiency of state owned banks. The second section studies the relationship of financial development and economic growth with the limit of the property right, and shows that the property right of the finance determines the investment and the efficiency of the capital, and further determines economic growth. If the state-owned finance has more power in the economy, the efficiency of finance is much lower. There is less positive function to economic growth. If the finance is in the control of the state-owned, the finance has no efficiency, and there is no co-growth of financial development and economic growth. The third section and fourth section test the efficiency of the bank and the stock market. Based on the hp filter, the wavelet and the spectrum analysis respectively, Chinese financial development and economic growth have no dual causality relationship, and financial development lags economic growth, and financial development is the result of economic growth. One explanation is that the state owned property right structure causes the low efficiency. Chapter 6 is the empirical test of the main factors based on the series of Chinese whole economic growth. In the first section, it is to design and explain the indexes of the determinant factors. The second section is to test the factor attribution in different methods. The results show the different factors have different attribution. The test proves that, the property institution is endogenous in economic growth, and can explain the development of the capital, the human capital, the financial factor and the trade. The third section and the fourth section retest the attribution of the capital, the human capital, and the whole factor productive based on the State Space Model, and show that Chinese economic growth mainly depends on the quantity of the capital and the labor, and the institution. But the high attribution of the capital has included the function of the institution. Because the institution can make straight contribution to economic growth, the institution also has effect on the production factors. The institution has effect on the investment quantities of the factors and the efficiency of the use of the factors.Chapter 7 is the empirical test of the main factors of Chinese economic growth based on the panel data. In essence, it is to test the dynamic attribution of the factors. Further understanding the characters of the region factor, the first section compares quantities of the factors of every province. The second section used the Kernel Density Distribution to study the model of economic growth. The result shows that it is imbalance of growth of the regional economy, and that there is the change from the sharp peak to dual peaks on the process of economic growth since 1980s, especially the bipolar development in the same level of economic growth. In the same region, economic growth has the club convergence trend, such as the east, the middle, and the west. In the different region, there exists not the convergence but the bipolar trend.The third section analyses the determinant factors of growth and decomposes the factor attribution. The empirical study is that: (1)the capital is the key determinant factor of the regional growth. (2)the less important factor is the property institution, and the attribution of the factor becomes higher and higher. Comparing with the regions, the institution of the east is ahead of the middle, and the growth caused by the institution of the west is less than the middle. The trade has positive effect on the growth, and keeps unchanged, but the coefficient of the east is ten times than the middle and the west. So the bipolar development of the regional growth is originated from the difference of the institution and the trade. Just like the theory of chapter 4, the trade development also comes from the institution. (3)the attribution of the industrial structure in the east is the biggest, namely, the industrial structure is easier to promote economic growth. But the finance and the region both have obvious dynamic characters, and both have little effect on growth. As the whole, the institution and the trade determinate regional growth with the function of the property institution and the industrial structure.From the first section to the third section, the study further shows that: (1)on the base of different resource endowment, the factor of growth is different and dynamic. In the middle and the west, growth depends more on the government investment, but in the east, growth mostly depends on the competition and the trade. (2)the unbalance and bipolar growth is caused by the development of the property institution and the trade. If there is good property protection, the trade and competition will promote the regional growth. If there is no change of the resource endowment, the factor development and economic growth, the unbalance of regional growth will be lasted.In the whole, the research not only deepens the endogenous economic growth theory, and explains the factors and the efficiency of Chinese economic growth, and testifies the dynamic characters. All this supplies the theoretical support and empirical evidence of the west exploration, the Northeast industry development and the building of the new countryside of China.