System Affect The Analysis Framework Of Economic Growth

Marx gave his points in the preface to the first edition of Capital Vol.1,“from whichthe evolution of the economic formation of society is viewed as a process of naturalhistory, can less than any other make the individual responsible for relations whosecreature he socially remains, however much he may subjectively raise himself abovethem.” All these “relations” consist of the institutions. The revolution of theCapitalism in the western world brought a new era of economic fast growing to theworld. The birth of new China starts up a new time of the modern economic growth.The reforms of Socialism Market Economics bring China into a fast growth process.With all the facts and histories, we can get the conclusion that, the institutions are thekey factors to the economic growth and development.The target of this research is building a theoretical analysis framework of theinstitutional effects on the economic growth. The framework includes the analysis ofdemands and supplying behaviors on the model of individuals’ behavior laws, theanalysis of the equilibrium of the demands and the supplements and economic cyclelaws, the systematic analysis of institutions system and the effects between theinstitutional changes and economic growth, and the final analysis of the effects oneach elements of the economic growth by each tier of institutions. The analysisframework will play a important role in the institutions constructions and reformationsfor the economic growth in the future.In the chapter1, the motivation and capability analysis model is built on the lawsof individuals behaviors. Based on the economics forms, in the author’s opinion, anew hierarchy model of the individual’s motivation of demands is given. The newhierarchy includes basic needs, improvement needs, and the superego needs. Thesemodels will be regarded as the external starting points of all the research.On the demand side, the demand constraint theory is given. The demand growth isone of the key elements of the economic growth. The demand growth includesquantity growth and composition growth. The quantity growth is limited based on thedemand constraint theory. The composition growth is related to the supplyinginnovation.On the supply side, the cost bottom and resources constraint should be considered. The enterprise is the key unit in the supply analysis. The motivation and capabilitymodel will also be applied in the supply analysis. The supply growth is also consistingof quantity growth and composition growth. The quantity growth is coming fromproduction factors growth and production efficiency growth. The composition growthis coming from innovation.The effective equilibrium is a new concept in the research, which is an importantreference to the factors analysis of economic growth.The origin of the institutions is analyzed through the review of human history. Then,the classification and changes analysis of the institutions is based on the economictheory. For the dimension of the institutional supplier, the institutions can be dividedinto three levels: Soft Institutions, Enforcement Institutions, and ContractInstitutions. For the both sides of institutions demanders and suppliers, the returnanalysis model of institutions supply and changes is built up. Respectively, the effectsof the three levels institutions is set forth on the motivation and capability of humanbehaviors, demand, supply, economic equilibrium, and institutional changes andeconomic growth.After the analysis on theory, several empirical analysis are given on the institutionaleffects on the modern economic growth in the western world, the institutional changesand economic growth in Japan, the institutional changes and economic growth inChina. In the chapter, the comparison analysis is also stated between China and Japan,which is the evident of the decisive role of the institutions to economic growth. And,the analysis forwards to the institutional impact on economic growth in current China.The main points and conclusion are stated in the end part of the paper. Economicgrowth owes to innovations; Innovations owes to the investment of the intelligenceresources; The investment of the intelligence resources owes to the competence, valueinstitutions, and the comprehensive impacts of the institutions. Both the innovation oftechnologies and the management are derived from the investment of intelligenceresources. Fundamentally, the institution is the key factor of the investment of theintelligence resources. It also causes to the innovations, the speed and the persistenceof the growth.There are some developments in economic theory, which are: the motivation andcapability model on individual economic behaviors, the elements framework of theeconomic growth, demand constraint theory, supply and innovation theory, economic equilibrium theory, economic cycle explanations, institutional classification, theeconomic analysis model of the supply and changes of the institutions, and theanalysis framework of the institutional impacts on economic growth. These build up awhole system of the impact on economic growth of institutions.