Institutional Quality,Human Capital And Economic Growth

Since the reform and opening up,China's economy has developed rapidly through utilizing the population advantage of low-cost labor force.However,in recent years,the advantage of low-cost labor has been gradually weakened.The transition from"demographic bonus" to "bonus of human capital" is a new breakthrough for China's economic growth.While China's economy continued to grow,China's regional economy also showed significant regional differences.There were differences in the development of the four major regional plates such as "taking the lead in the east,revitalizing in the northeast,rising in center,and developing in the west".Based on Neoclassical Economic Theory,Lucas Economic Theory and Institutional Economics Theory,this paper studies China's economic growth from the perspectives of institutional quality and human capital level.At the same time,this article compares the four major regional plates and puts forward suggestions for reducing regional economic differences.Based on the related researches both at home and abroad,this paper constructs the index system of institutional quality through principal component analysis from four aspects of the degree of marketing,the degree of opening up,government and market's relationship and industrial structure,and measuring institutional quality index of 30 provinces from 1997 to 2014;At the same time,this paper uses the average years of education as proxy variables of human capital level.Through the combination of theoretical analysis and empirical research,the article discusses the relationship between institutional quality,human capital and economic growth.In theoretical analysis,in the past studies on the institutional quality,human capital and economic growth,the quality of the institutional and the level of human capital are generally completely independent variables.This paper draws on the previous research and found that the improvement of the institutional quality and increases the accumulation rate of human capital.The improvement of the institutional quality has the double dividend effect of "efficiency effect" and "allocation effect" on human capital.In this paper,we put the double effect of institution on human capital item into the model by the form of cross items.Based on the panel data of 30 provinces in China during 1997-2014,we find that the quality of institution and human capital had significant positive effect on economic growth,and the dividend effect of institutional quality on the "efficiency effect" of human capital did not play,even inhibited the increase of output increment per capita.Giving full play to the "allocation effect" of institutional quality on human capital is the key to economic growth and reducing the regional economic disparity for the central and western regions.