Study On The Promotion Of The Institutional Factor Role In Economic Growth

Laws and source of economic development are always one of the hot topics studied byresearchers and governments all over the world. However, institutional factors have been ignoredby the mainstream theories, and have been taken as an exogenous and given constant for a longtime. They are consequently considered as trivial and non-crucial for the economic growth bytraditional economic theories. Contrary to such flaw of traditional economic theories, in thispaper, the author tries to explain the role of institutional factors in the development of nationaleconomy by both theoretical and empirical aspects, in order to interpret more pertinently theprime power of the economic growth from a new angle and with an interdisciplinary researchmethod.For giving a direct view to the issues analyzed, the author focuses on two countries with asimilar history and national conditions, China and India, through the way of comparing theirinstitutional environments and then studying the dissimilarity of their economic performances aswell as that of their modes of development. In the macroeconomic level, this paper illustrates thesimilarities and differences of institutional environments and those of development processes inboth of the two countries. Moreover in the microeconomic level, the analysis is based on thecurrent situations in the sectors such as the manufacturing, the software industry, the financialindustry and so on.On the basis of the above mentioned studies in this paper, the conclusion can be drawn asthe followings: firstly, institutional factors play a crucial role in the economic development.Secondly, the positive effect of institutional factors is not unaltered. A suitable institutionalenvironment and arrangement contribute effectively to promote the economic growth. However,it doesn’t mean that they could be held by only copy the successful experience of institutionalfactors from other countries. Thirdly, a positive effect of institutional factors on the economicgrowth is a systematic project. Its realization requires multi-institutional factors coordinated andefficiently combined.