In The Transition Period, Openness, Institutional Quality And Economic Development

Since the reform and opening up, China’s economic construction has made greatachievements, and in the same time, the openness degree is also rising. In2009, due tothe impact of the global financial crisis, foreign trade volume has a large decline.However, in2010, the total foreign trade volume has a quick recovery. It can be saidthat openness plays a vital role in China’s economic development.During the thirty years of reform and opening up, China has also spawned a seriesof institutional changes, such as the household contract responsibility system, theimplementation of the income distribution system, the attempt of the debt-equity swapand the implementation of the fiscal revenue-sharing, as well as the reform ofstate-owned enterprises etc. these institutional changes greatly mobilized the enthusiasmand initiative of the people’s production, and no doubt played a role in promotingeconomic growth.These objective facts fully show that market-oriented reform and opening up playsan indispensable and indelible role in promoting China’s economic growth.In academia, it is generally agreed that the deepening of professional division andexpansion of market scale are two important factors to achieve "China miracle".Although we generally agree that the openness and institutional quality factors willpromote economic development, but we still need to support the conclusion of thistheory by empirical tests. Based on this background, this paper is to explore therelationship between the openness to the outside world, institutional quality andeconomic development. As the domestic literature about the combined analysis of thesethree is rare, this paper attempts to use a lot of theory and methods in regionaleconomics, international economics, institutional economics, econometrics anddevelopment economics, and empirically analyses some factors that affect economicdevelopment. Hopefully this will help expand the theoretical research in economicsperspective, and on the other hand, hope that it is also conducive to multidisciplinarymutual penetration.In the article, we firstly introduce the overall development situation of China’seconomic openness to the outside world. In the third chapter we construct opennessdegree to foreign trade and openness degree to foreign direct investment, and then the indicator to measure the economic opening-up degree, and through a combination ofsome table and chart analysis find: economic openness degree has significantdifferences between the three regions of eastern, central and western China, but basicgeographical pattern has not fundamentally changed in recent years. The opennessdegree of the eastern region is in the ups and downs, while the openness degree of thecentral and western regions remains stable, and the volatility is quite small. Then in thefourth chapter, introduce the institutional quality’s measurement issues and its variousproxy variables. Finally, give some empirical analysis and policy recommendations.BY using provincial panel data in the years1999-2010, this article carries onempirical analysis based on the fixed effects, pooled regression and GMM dynamicpanel model. In all these equations, the degree of openness significantly affects thegross domestic product (GDP) of these provinces and autonomous regions. The twoproxy variables representing institutional quality are sometimes significant andsometimes not significant, and sometimes even show the opposite sign.At present, China is not only in the period of transition to the market economy, butalso in the post-crisis era. Therefore, a comprehensive and profound understanding ofthe relationship between the openness to the outside world, institutional measures andeconomic growth is particularly important.