Education, Human Capital And Economic Growth

In the twentieth decade of last century, Adam Smith was the first person who gave a definition to human capital and realized that human capital could have an impact on economic growth. Later on, quite a lot of economists getting interested in studying human capital and its positive effect on economic growth, for example, Theodore Schultz and Gary Becker tried to use human capital theories to explain all the existing economic phenomenon, meanwhile, they tried to find out how human capital drive the economic in a right way. Furthermore, the empirical result from Robert Lucas and Robert Merton Solow’s study pointed out that education is the most important resource of human capital stock.This paper started with the introduction of background information and current economic situation in China, stated the reason and significance of this study. Then, the introduction of the development of economic growth theory and human capital theory is the theoretical basis of this paper. Some human capital models are explained in detail, meanwhile, the definition of human capital and economic growth was made clear as well. After that, the study focused on the education, human capital and economical growth in China, some evidence and figures shows that currently China invested more and more in education and human capital, and it did improve a lot on Chinese human capital stock. However, there are still some problems that government needs to pay more attention to. At last, the most important part of this paper is the empirical research about the connection between human capital, labor, physical and economic growth based on the figures of China related indicators from year1981to2011. Besides, this paper also calculated China human capital stock by using the "number of years of education" method. From the results of the empirical research, human capital is contributing even more than physical capital in regards of economical growth.As a conclusion, some reasonable suggestions regarding government human capital strategy and education improvement was given based on the result of theoretical analysis and empirical research.