Research On The Impact Of Reasonable Allocation Of Human Capital And Physical Capital On Economic Growth

Chinese economic has changed into new situation,along with the slow growth rate.The drive of economic growth transformed from investing production factors to improving factors' efficiency.It has played an important role in economic innovation to improve the allocation efficiency of production factors.Scholars focus on seeking impetus of economic growth with the changing of economic drive.In addition,China has suffered an aging society and changed the structure of population,which lead to the decrease of labour force.There is no doubt that China can't only depend on cheap and massive labour force to spur economic growth.It is very wise to consider the quality of labor force.In 2017,financial expenditure on education only amounted 30259.5 billion yuan,but the material investment increased to 38741.71 billion yuan.Obviously,the latter is 19 times the former.It brings us a series of thoughts about human capital and material capital.Comparing to high material capital,whether human capital is plausible or not.What is the best allocation between material capital and human capital?What does the best allocation affects the economic growth?In order to make the research about material capital and human capital more specific,we extend the research to industries' level.So the research is conducive to understand the allocation between material capital and human capital on industries' level,and its' effects on economic growth.The paper includes the following processes based on literature.Firstly,we introduce three industries' material capital and human capital in the economic growth model,and induce the best allocation between material capital and human capital in three industries.Secondly,we calculate the stock of material capital and human capital respectively.They are contributed to calculate the actual allocation ratio of material capital to human capital,and provide data for following empirical analysis.Thirdly,the output elastic of material capital and human capital in three industries are acquired by ordinary least square(OLS)and Generalized method of moments(GMM).According to these output elastic,we can get the best allocation ratio of material capital to human capital from 1978 to 2015.Then,we calculate the distortion between material capital and human capital,which is measured by actual allocation ratio deviation from the best allocation ratio.Finally,we adjust the actual allocation ratio of material capital to human capital to the best allocation ratio,and compare the actual output with the potential output under the best allocation between the two kind of capital.Conclusions can be listed as follows.(1)If we are able to allocate the ratio of material capital to human capital in three industries,the economic would be improved effectively.Only by adjusting actual allocation in three industries to optimal allocation,can we reduce output losses by 5.12%-27.03%.(2)There is misallocation between material capital and human capital in three industries.Specifically,material capital are more invested,but the human capital are less invested From the view of misallocation trend,primary industry shows 'U' model,and secondary industry and tertiary industry present improving in recent years.(3)Only considering material capital and human capital respectively,we found that material capital plays an important role in economic growth,although it's effects on development are gradually weakening.On the contrary,human capital investment have less effect on economic growth.So when government should conform the rule to make some measures,which is that appropriately slowing down the investment in material capital and increase the investment in human capital at the same time.