The Way Of Institutional Innovation Acting On Economic Growth And Quantitative Research

The innovations of institution help to incerease the effective supply of factors, which have great impact on China's rapid economic growth during the process of China's reform. However, the mechanism and the extent of institutional innovation acting on economic growth have not been well dicussed, especially the impact of instituional innovation on labor allocative efficiency, capital allocative efficiency and technical efficiency has not got enough attention, which makes the contribution of instituional innovation to economic growth understimated. Therefore, this article choose the way of institutional innovation acting on economic growth and quantitative research as the subject, analyze the importance of institutional innovation from the perspective of factor productivity.By analyzing the role of institutional innovation played in dominant economic theory and institutional theory, linking it with the researches of economic development strategies, two-tier system by scholars at home and abord, we point out that domestic scholars lay too much stress on the innovations of technology, while ingnoring the demand of economy for institution innovations.Existed studies mainly concentrate on the summary of principles and characteristics form the economic data as well as social phenomena, while ingnoring the incentives of factors brought by China's institution innovation, which can improve their quantity and effiency. China's reform has brought rapid growth of GDP, meanwhile, the differences of regional economic growth have been increased drastically, which can also be attributed to institutional innovation. Therefore, a theoretical assumption is raised in this article: institutional innovation is the source of China's rapid economic growth, it can improve the efficiency of China's economic and financial system; the differences of regional institutional environment lead to the differences of regional economic growth.The reform of household registration system and state-owned enterprises have great improtance on the large-scale migration of rural surplus labor force, promoted the development of labor market from scratch since the economic transition. The implementation of appointment and appraisal system have established the market-oriented incentive and restraint mechanism, the quantity and allocative efficiency of elements have increased significantly in labor market.On one hand, the urban labor-force participation ratio has dropped because of the change of traditional employment system. However, the migration of rural labor to cities ensure the stability of the country's total labor-force participation ratio, it balanced the labor supply and demand. On the other hand, in a free labor market, labors migrate from agriculture sector with low productivity and return to industrial and service sectors with high productivity and return brings the improvement of labor allocative efficiency.There's an controversy about the primary and secondary relationship between the development of financial system and economic growth. In order to confirm that financial institutional innovations can improve the efficiency of capital allocation, and have a significant impact on economic growth, and put forward our views on the controversy, this article take the capital allocative efficiency into the research framework of financial development and economic growth. We measure the capital allocative efficiency of 29 provinces in China in period of 1995-2007 applying slacks-based efficiency measure model, and test the relationship between financial development, capital allocative efficiency and economic growth using panel co-integration analysis. The result indicate that the capital allocative efficiency in China is fluctuant increasing as a whole. Co-integration relationship do exist between financial development, capital allocative efficiency and economic growth; financial development, capital allocative efficiency have positive impact on economic in nationwide, but for different region there is "threshold effect":the promotion effect do exist in east and middle China but not for the west China.Many scholars take the technological progress as the main reason for China's economic growth, we point out technological progress is important, but the technical efficiency has more significant impact on the steady growth of economy. As to verify the impact of institutional innovations on technical efficiency from the perspective of empirical study, we construct a three-stage DEA model to take institutional environment into efficiency measure model in this article, and the model is used to measure the technical efficiency of 29 provinces in China from 1995 to 2007 before and after adjusted by institutions. It has also analyzed the relationship between regional technical efficiency and growth differences. The main findings are as follow:the technical efficiency in China is fluctuating increasing as a whole; the pure technical efficiency of east, middle, west regions in China is convergent, the low technical efficiency of western china is mainly due to scale inefficiency. Ownership reform, economic opening and the reform of taxation system are benefit for the improvement of technical efficiency. After adjusted by institutional factors, the differences between regional technical efficiency gradually increase which shows that institutional factors play an important role in balancing regional economic development.For a detailed description about the way institutional innovation acting on the economic growth, this article construct a theoretical model, make an quantitative study on institutional innovations'contributions on economic growth. The result indicate that the institutional innovations' impact on Chinese economic growth has been underestimated; economic growth of China mainly depends on the input of institutional factors, as it called "efficiency pattern", but the impact of institutional innovations on eastern area is decreasing, government should focus the next institutional reform on the middle area and western area in order to construct a free economic environment and improve the allocative efficiency.