Human Capital And Institutional Change Relationship Study

Reform and increase, transform and development are challenges our country faced since when our economic system changes the planned economy to market economy. And this come down to a pair of important concepts in new institutional economics, they are institutional change and economic performance. But the writer pays attention to those factors that cause the institutional change and economic growth. We often say that no innovation, no development. But what causes innovation? Who orients innovation?North, who initiated the new institutional economics, gave his own explanation. The pressure of population and resources causes the changes of relative prices of production elements and thus raises the demand for institutional change. Institutional innovation comes from the governors not electorates. But if a wide view is taken on the institutional change process of main countries in the world, we could find some discrepancies. The increasing rate of population in developed countries has already become very low or even zero, but institutional changes did not stop. In addition, the theory that institutional innovation comes from the governors not electorates could not count for the reforming process in China. For the well-known institutional innovation, the household contract responsibility system, is an outstanding innovation oriented by presents not governors. Therefore to broaden the main forces of institutional innovation is a meaningful attempt to enrich institutional change theories. And that's why this article introduces human capital into institutional change.Human capital falls into a wide category in economics. The writer divided it into two kinds according to whether human capital bears the spirit and capacity of innovation. If human capital has the spirit and capacity of innovation, then it is Idiosyncratic Human Capital, if not, it is Coessential Human Capital. Learned a lot from the entrepreneur innovation theory of Schumpeter, the writer believes that entrepreneur in a broad sense is a kind of Idiosyncratic Human Capital. And entrepreneur consists of economic entrepreneur and institutional entrepreneur. The institutional innovation of economic entrepreneur from the bottom to top combined with the institutional innovation from institutional entrepreneur from top to bottom would give rise to institutional change and economic growth. People in a society could capture potential accrual opportunity through spontaneous institutional innovation as long as government, especially central government did not interfere. If government seized these opportunities by force through administrative means to get forthgoer's advantage, the institutional innovation could be damaged. Thus the credible commitments made by government are very important because integrated legislation is a strong insurance for the innovation of human capital. Only when the institutional innovations of economic entrepreneur and institutional entrepreneur would not fall under exoteric obstacles and free from the worries about frequent changes of public policies could the institutional innovation carry out successfully. Just because of the above-mentioned reasons, the writer tries to integrate credible commitment with human capital and institutional change. Constitutional legislation could be regarded as credible commitment and it created a balanced institutional environment. Thus human capital could search for exterior profits and pursue institutional innovation and that creates institutional change and economic growth. To prove this hypothesis, the writer uses those institutional changes experienced by U.S.A, China and Russia as analyzing cases because these three countries are representative. Further research demonstrates the opinion held by the writer. And the writer gives some advices about China further reform on the basis of case study at last. The structure of this thesis displays: The first chapter is an introduction which includes proposal of issues, theoretical development and research pulse, research visual angle, aim and me...