The Impact Of Institutional Change To China’s Economic Growth

Since the birth of Economics, the study on economic growth is always the research thateconomists pay close attention to. Many scholars have put forward their own opinions on it,but their studies mostly focused on the production factors. Until the School of NewInstitutional Economics which Coase, North as the representatives appears, people begin torealize the important role that institutional changes on economic growth plays.The thirty years’ development history of China’s reform and opening-up can prove theview of the School of New Institutional Economics. China’s annual GDP growth rate was only6.4%from1949to1977, but from1978to2010this rate was9.9%. In1978, as the turningpoint, the most important change in our country is the reform and opening-up policy. And theempirical research and practice both proved that the high speed of China’s economic growthis closely related with the institutional innovation. As the institutional innovation is thespecific expression of institutional change, and the economic reform of China is not a generalsense of improvement, but the transition from plan to market, so China’s economic reformprocess is the process of institutional change. In a word, the institutional change has played avery important role on China’s economic growth.This paper mainly from Theoretical and empirical aspects to study the Impact ofInstitutional Change to China’s Economic Growth and then put forward the correspondingpolicy suggestions according to the existing problems. The paper divides into four parts:The first part is introduction. It mainly introduces the research background, theory andrealistic significance and the innovation and shortage.The second part is a review of related literature on the theory of institutional change andeconomic growth, and the recent research about the impact of Institutional change to China’seconomic growth. It aims at extracting the factors that influence economic growth andinstitutional change from each theory, and try the best to comprehensively summarize theimpact of institutional change to economic growth. At last it combines the reality of Chinaand references from other scholars’ research, lays a foundation for the next part of the paper. The third part is the key part of this paper. At first it makes a summary review of thehistory of China’s institutional changes and economic growth and then from the aspects ofproduction inputs, technological progress and institutional factors to elaborate the theoreticalrelationship between institutional changes and China’s economic growth. At last, it uses timeseries data from1978to2010to establish econometric model. In the model it uses acombination of principal component analysis, co-integration test, and the method ofregression analysis to make econometric research between them, in order to reveal and verifythe impact of institutional change to China’s economic growth.The fourth part is the institutional defects in our country and the corresponding policyrecommendations. This part elaborate the problems in the light of the variables such asproperty index, marketing index, opening-up index, government intervention index, laborinput, material capital input, human capital input and technological development that relatedto the econometric model in the last part, then put forward the corresponding policyrecommendations. Because these indicators are remarkable through econometric test, so thequestions are more targeted, and the policy recommendations are also relatively moreeffective.