Measure The Effect Of Institution Innovation During Economic Growth

We always focus on economic growth in latest decades. It is valuable to research economic growth and to establish the related policy that analyzing and measuring the effect of economic growth factor. The paper builds the index to measure the economic growth, and builds the economic growth model endogenous institution innovation. We measure the institution innovation contribution rate to economic growth.The paper chooses ownership, the rate of transaction cost and markerlization for building institution index. The rate of country owner assets is selected to show the ownership. The rate of transaction cost points to the proportion of transaction cost in all cost. Subdividing marketlization, we get nine indexes. The nine index is the proportion of financial revenue in GDP, the proportion of non-state economy's productive value in all productive value, the proportion of non-state investment in fixed assets in all investment in fixed assets, the proportion of the employment in non-state economy in all employment in city-employment, the proportion of the foreign capital in GDP, the proportion of the number patent application and authorization GDP (to reflect the property right institution), the proportion of importation and exportation in GDP. We synthesize the nine indexes into one marketlization. Then we synthesize ownership and transactions cost and marketlization into institution index.The paper builds a economic growth model, including capital, labor, knowledge, institution. Capital and knowledge are computed with Perpetual Inventory Method, and give attention to stock and additional. Through measuring, we get the contribution of the factors to economic growth. The result shows that institution contribution to economic growth is big during 1978 and 2002. The result validates the conclusion that institution is important to economic growth.In the end, we analyze the result and give some suggest to accelerate the economic growth.