Studies On Growth Mechanism Of Institutional Change: Theory, Model And Application

The performance of economic growth has essential impacts on the living ofpeople. However, on the one hand, main stream studies in growth theory lackincise analysis of institution; on the other hand, researchers who focus oninstitutional factors to explain economic growth fail to apply mathematicreasoning and model deduction in their works. This thesis aims to combine themodern economic growth theory with related institutional factors. In respect thatthe high-speed economic growth in China since reform is within the context ofinstitution reconstruction, the research is expected to better reason theachievements in China, thus contribute to the further research of growth theory.Based on the definition of institutions and rules, the article develops a basicframework that combines the dynamics of institutional change and mathematiceconomics. The framework assumes institution as an endogenous variable ofeconomic development and analyzes the productivity of institution and itsapplication mechanism. Furthermore, the framework discusses the definition,origin and process of institutional change and classified institutional change asneutral, labor promotive and capital promotive. When distinguishing theimposed-change and induced-change of institutions, the correspondingmathematic model to describe external and internal institutional change areestablished. Thus, the social institution accumulative equation is achieved bysumming up these two types of institutional change.Applying the social institution accumulative equation, a growth model withconsumer optimization is constructed. The article draws some value conclusionthrough observation of steady state, comparative static characteristics,transitional dynamics, saddle point stability, convergence patterns, convergentspeeds and other basic parameters. The research uses phase diagram to disclosethe whole picture of transitional behavior and saddle point path. Using thelogarithm linearization the author acquires the analytic resolution of convergentpath during transition. And MATLAB program is used to perform the convergentspeeds. Specifically in the field of institutional change and economic growth, themodel forecasts that imposed-change and induced-change not only has leveleffects and growth effects on economic growth, but also has significant impact onthe convergent speed.- III -In case of dissipation about the imposed institutional change, the articlefurther focus on the result of induction factor reaching its marginal value. Anendogenous growth model based on institutional change then is established. Asthe model demonstrates, as long as the effects of induced institutional change areevident, economics is still able to achieve sustainable growth. The outcomes arenot Pereto optimal, but the social optimum can be attained in a decentralizedeconomy by subsidizing purchases of capital goods.The review of the practices of other reconstruction countries and East Asiaregion indicates that only 'good' institutional change can facilitate the economicgrowth. Thus five benchmarks to evaluate institution achievements are generated.The definition, characteristics and origin of institutional change inefficiency areargued in succession. Such issues as the prisoner's dilemma of institutionalchange, path dependence and client-agent problem are also investigated. Sincegovernment mechanism is so important to economic growth, ten feasible waysbased on the idea of good governance is nominated.The reform and driving growth performance in China provides a naturalexperiment for the normal growth model. A set of market-oriented developmentindex is built to describe accumulated institution by principal component analysis.The article quantitative evaluates the extents of the two institutional changessince 1978 and identifies the correlativity and causality between institutionalchange and economic growth. The research indicates that insti...