A Study On The Improvement Of International Competitiveness From Human Capital Perspective

Since East Asian financial crisis, China is facing the pressure of appreciation while the labor cost is growing constantly in the context of global competition. However, china's industrial structure appears to upgrade and its foreign trade maintains to rise continuously. Therefore, to research and analyze the reasons of the international competitiveness's improvement of China is of great significance for making policy of RMB exchange rate and keeping the economy growing stably and continuously.This paper has the conclusion that the investment of human capital is the main reason of the improvement of china's international competitiveness. First of all we analyze the way how human capital promotes the international competitiveness with the theories of human capital international competitiveness and endogenous economic growth. We consider that in an open economic system, the investment of human capital has played an important role in reinforcing the capacity of china to undertake global industrial transfer, improving the efficiency of "learning by doing" and promoting industrial upgrading. Then we make description on China's International Competitiveness, and explain the changes of China's International Competitiveness from the perspective of labor costs and labor productivity. In addition, we do further study on the effect of human capital on the productivity of China. After that we analyze the level of human capital development through comparing some indicators such as the enrollment, the level of education people have attained, as well as the relative rate of the level of economic development and human capital. We found that the level of human capital development of China has increased rapidly after the 90's, even exceeded the world's average level, which has a close link with the growing of labor productivity in China in the same period. Through the analysis of china's actual condition, we consider that China's human capital has made great progress through labor competition under the condition of the dual economy's transition, government support and family investment, which is also the main reason for the level of china's human capital to be higher than other countries with the same level of economic development.Based on the analysis of the situation of human capital development and the mechanism of how human capital promote the international competitiveness, we use the ratio of export dividing by nominal GDP as the dependent variable, and human capital, population structure, FDI, real effective exchange rate and the world demand as the independent variables to do empirical research through panel data model and time series cointegration. Empirical results show that, the changes of both labor quantity (population structure) and quality (human capital) have significant impacts on the international competitiveness, but the quality factor'influence seems to be much greater. In addition, human capital is particularly important to developing countries'economy and trade for it always performs to have apparent benefits to these countries' development. Furtherly, there is different effects of human capital on different countries, which is very significant on china. Empirical results support this paper's argument that human capital development is the important reason of the continuous increase of china's international competitiveness.According to the results, this paper argues that China is gradually changing its economic pattern of depending export driven by low-cost and to achieve the conversion from a country with large population to high human capital level with the transformation of dual economic structure and the conversion of labor from unskilled to skilled. The more education the labors attain, the more the labor productivity and bargaining power of workers would be increased. It makes space for wage rising and nominal exchange rate appreciation of China. China should pay great attention to education development and reinforce the accumulation of human capital in order to promote technological innovation, speed up the transformation of economic development pattern and remain the competitiveness to develop stably.