Education Funding Resources, Human Capital And Growth: An Empirical Analysis In China

It has been widely recognized and accepted that higher educational investment will hence the human capital and economic growth in endogenous growth models. But educational fund resource cannot expand immensely because of the limitation in fiscal capability. All of these have caught a lot of attention in our society and caused a discussion to the performance in the growth of educational investment. Based on the previous work of Azariadis and Drazen (1990), we focus our attention into the inner relations among education funding resources and economic growth in China. This paper fully considers the conflict between the growing demands of education and the growing speed of education funding resources, and the effect of the public educational investment which formed by personal human capital in the process of long-term economic growth in China, then, we study the relationship between education funding resources and growth by using the panel data from 1996 to 2005 in China. The conclusion shows that the physical capital and human capital investment are the main factors in present economic growth in China. The educational investment, no matter the government education funding resources or the non-government education funding resources, even has negative effect to the human capital accumulation. So it is better to maintain the growth speed of education funding resources at a reasonable scope which can neither affect the physical capital investment, nor the normal development of education, and improve the efficiency of educational investment by adjusting its' structure and transmission mechanism to promote economic growth.