The Study On Human Capital And Fujian' Economic Growth

To achieve economic growth, full employment, price stability and the international balance of payments are four goals the government's macroeconomic control. It is obviously that economic growth is the most important one. With the advent of the knowledge-based economy, more and more people are aware of the importance of sustainable development, and the effect of the human capital has become increasingly significant in economic development. The human capital is regarded as the engine of economic growth due to making other factors of production yield increasing returns. The success of developed countries and newly industrialized countries in their economic development has also proven the argument.Took Fujian province as research sample, this paper analyzes empirically the effect of human capital in economic growth basing on human capital and new economic growth theory. Making use of 1978～2005 economic data of Fujian province, the article successfully estimates the human capital and physical capital every year in the period. And then the paper introduces Econometrics methods to analyze the problem. First of all, applying unit root test and co-integration test to make sure the time series of human capital and economic growth is stationary and that there is a long-run stable relationship between the two variables. Secondly, adopting the Effective Labor model and Lucas' human capital spillover model that are commonly used in new economic growth theory to estimate the output elasticity of human capital and contribution rate of human capital to economic growth. After doing those jobs, the paper argues that Fujian province's economic growth is driven mainly by physical capital which making greatest contribution to growth of the province, approximately 50%. By comparison, the contribution of human capital to growth is not very significant, nearly 29.3%, even if considering its spillover effect. However, the paper also concludes that the output elasticity of human capital average level is 1.012 which is far greater than 0.51, the output elasticity of physical capital. The conclusion suggests that the human capital investment in Fujian province is weak but it still possesses great potential in economic growth. From the perspective of the scientific development concept and transformation of economic growth mode, the conclusion will give us helpful inspiration.Finally, the paper proposes some advices to boost the human capital investment and economic growth according to the qualitative and quantitative analysis conclusion. These advices are as follows: Enhance the status of human capital in the strategy of economic development; Develop education to speed up human capital accumulation; Establish the basic medical care system covering all over the province; Strengthen on-the-job training to improve intelligence and skills of the workers; Encourage labor force to migrate freely to establish a unified labor force market.