Shaanxi Province Investment In Human Capital On Economic Growth Empirical Analysis

Since the Chinese Reform and open-up policy, China has been going through a rapid growth in economics; meanwhile, the increases in economy of different areas are not balanced, which shows a huge difference in economic growth rate and level, GDP, structure of economy and labour productivity, especially for the natural resources advantages and the economic growth advantage between east and west area. As a big educational province, Shaanxi province is full of human capital; however, the level of development of Shanxi Province is lower than that in some eastern provinces. It has been proved by new economic growth theory that human capital is an exogenous variable for the economic growth as well as an important resource for the consistent development in a country or some regions.This paper is based on the model of efficient labour, using data of investment in capital and human capital from 1995 to 2008. This paper does the analysis on the relationship between the economic growth and human capital as well as capital, doing the deeper analysis on how education, on-job-training, health care and flow of labour influence the economic growth.First of all, this paper fully introduces the human capital theory, including the generation and development of human capital, the relationship between human capital and economic growth and the current analysis of impact of the investment of human capital on economic growth, which build the foundation and the evidence for this ana-lysis.Second of all, this paper defines the human capital and the different ways of the investment in human capital:education, on-job-training, health care, the flow of labour. This paper introduces the characteristics of investment in human capital, how the different ways of investment in human capital affect the economic growth as well, which construct a basic framework for analyzing how different investment in human capital impact the economic growth.Third, by choosing general index and rational data analysis, this paper is based on the assumption that educational investment is considered to be human capital; the 1.5% of total wage of employed workers as human capital; the public expenditure of local government as human capital; the product between the number of flow of labour in rural area and total income as human capital. From these assumption, this paper analyzes how different ways of investment in human capital contribute to the economic growth, concluding that the elasticity of physical capital is greater than the elasticity of human capital, which is 0.638 to 0.367, obviously physical capital mainly contributes to shaanxi'economic growth. From all the different way of investment in human capital, this paper concludes that on-job-training contributes to the increase in economy, health care negatively affects the economic growth.; however, education and the flow of labour do not play an important role to influence economic growth, which appears some existing problems, such as lack of expenditure on education, on-job-training, health care, inefficient structure of investment and disadvantages of the cutting of labour market.Finally, based on the specific problems of investment in human capital, this paper suggests some policies, which provides a efficient method to contribute to the increase in the rapid growth of human capital in Shaanxi province.