The Institutional Change And Economic Growth Of Shanghai

Since the rise of the institutional economics, system’s influence on economic growth is more and more concerned. Whether in developed or developing countries economic growth is the theoretical verification of system economics. To quantify the system’s contribution to economic growth, institutional economists after Coase gradually brought the institutional factor into the economic growth model, so as to enable us to see the important role of institution to economic growth.Since the rise of the institutional economics, system’s influence on economic growth is more and more concerned. Whether in developed or developing countries economic growth is theoretical verification of system economics. To quantify the system’s contribution to economic growth, institutional economists after Coase gradually brought the institutional factor into the economic growth model, so as to enable us to see the important role of institution to economic growth.Since the reform and opening up, China’s GDP nearly increased by10%annual. In addition to inputs of labor and capital and other contributions, institutional change on economic development also made much contribution to it. Reform is actually a process of institutional change. Reform is the process of transformation from a centrally planned economy to an open market economy, including fiscal, financial and administrative changes in the macro economy, and changes of personal and corporate awareness or behavior in microcosmic. The institutional transformation changed our mode of resource allocation, and resource allocation efficiency is also improved, correspondingly, the economic growth mode has changed.Because of the superior geographical position, Shanghai became the center of China and the Asia Pacific region in early twentieth Century. Through the reform and opening up, etc. series of institutional change, the status of Shanghai as the economic center of the Far East has been further strengthened. Study of Shanghai institutional change has significant affect on economic growth, not only can reveal the important role of institutional change and economic growth, and can be beneficial to the economy of Shanghai for further development, what’s more, it will provide a theoretical reference for the economic development in other areas of china.This paper combines theory with practice, first of all relevant literature on the theory of institutional change and economic growth theory have been combed, inspected the domestic and foreign scholars who put the system into the empirical analysis of economic growth model; finally used system index of economic growth model to test economic data of Shanghai, suggesting an important role of institutional change to economic growth.The full paper is divided into five parts:The first part is the introduction. From the system changes of the China’s reform and opening up, it puts forward the research topic of the relationship between institutional change and economic growth, in other words, institutional change is an important factor of economic growth. The paper reviewed the relevant literature about the system analysis, institutional change and economic growth theory and empirical analysis of the institutional change and economic growth at home and abroad. At the same time, it defined the research contents, research methods and research routes.The second part specifically pointed out the major institutional change of Shanghai since the reform and opening up.The third part of the study focuses on institutional change, the economic factors and economic growth since reform and opening period of economic boom in Shanghai.The fourth part is the empirical analysis. At first by using the factor analysis method I obtained composited indicator of institutional change, and then using the Cobb-Douglas production function, carried on Shanghai’s economic data for empirical study to quantify the regime change on the positive role of economic growth in Shanghai. It verified the fact that institutional change of Shanghai has played an important role in Shanghai’s economic development.The fifth part is conclusion. First, with the operation of market mechanism and the transformation of government functions, government intervention in the economy is less and less. The price signal reflected the relationship between supply and demand very well. The blindness and randomness of economics is cut down. Thus the economic system changes have weakened the Shanghai economic cycle fluctuation. Second, through the empirical analysis on the economic growth of Shanghai City, this paper supports the new institutional economists view--system is the determinant of economic growth conditions. Third, the various factors of production in Shanghai have been improved by reform. Mechanism of market price of products and services began to form, technology investment was increased and the financing channels were expanded. With greater growth rate and more efficient non state-owned enterprises began to develop. Fourth, comparison of Shanghai city system reform period and the cycle of economic growth we can see that there was an association in Shanghai’s economic growth and institutional change, and it can be proved by the empirical analysis. Thus institutional change is an important driving force for economic growth.For institutional change to promote economic growth, more researches about the country or in some provinces. This paper takes Shanghai city as an example to illustrate the role of institutional change on economic growth. By introducing the model of system index the study conducts empirical verification that institutional change has an important role in economic growth in34years of shanghai. That is the main innovation of this article, at the same time, it can also provide a new strategy for regional economic development. However, with the advance of globalization, in an increasingly open world economy, system plays a more and more role in economic performance. Globalization is one of the new variables in Shanghai and China’s institutional change, economic growth is also affected by it. In this sense, analyzing institutional change and economic growth is meaningful and necessary to expand this paper from a global perspective.