Human Capital Formation And Transformation In Economic Transition

In light of the theory of human capital being promoted by T. W. Schults and Gary. Beker and about Inkeles'modernization theory of human being, which set up a theory basis for throw light on economic activity and phenomena from human being themselves. Founding on the others' researching outcome, the article answered the question on evolution of petty farmer idea and planned economy idea towards market idea, and on conversion of practice knowledge that was formed in traditional farming and planned economy fitted in with market economy. At the same time, the article explained the economic transition on the sights of market idea and market action competence . zhejiang gained the great achievement and West region's underdevelopment in the economic transition, which proved the significance role on market idea and practice knowledge for region transition and development.Peoples' idea and practice knowledge are human capital if we think the elements that were embodied on oneself body and had a contribution for output is come under the human capital notion. First, peoples' idea affects their propensity to save and consume and invest, and difference attitude on risk, which are impacted on the economic situation. Second, idea directly impacts the economic outcome through affecting peoples' investment of labour. At last, in a phase the flock idea promoted teamwork between members in a region, in another phase a collective might been locked in a underdevelopment equilibrium situation when a flock idea has been come into being. The article explained the market idea's formation and diffusion in a region through evolutionary game theory. In light of Amartya.sen's understanding, there is 90% knowledge belongs to tacit one, and these knowledge can't be transferred and diffused effectively by education and training. For diversity economy patterns, people formed difference practice knowledge and skill for the purpose fitting in with the economic action. Transition from traditional farming economy and planned economy to market economy, we not only need transformed physical assets and institutional ones but also do human capital. As to transformation for human capital, firstly we need transformed the practice knowledge that belongs to 90% of all knowledge. However, for the tacit feature, practice knowledge was limited by institutional affinity and cultural proximity in transferring and diffusion. At the same time, everybody's some rational consideration also limited conversion for practice knowledge in traditional farming economy and planned economy.A regional development and transition is a evolutional course all in all because market idea formation is a evolutional one and practice knowledge need people spend a lot of time for imitation and diffusion between peoples. Regional economy has been finished the transitional stage when the rate of market participation tendency "1", in other words, everybody in region has been converted from traditional fanning economy and planned economy towards market economy.