The Effect Of Education On Economic Growth: EBA Model Based On The Provincial Panel Data

Education has always been an important factor in economic growth, and it’s also beenone of root reasons for the persistence of a country. Education not only provides a largenumber of highly qualified labor forces, but also promotes developments of its relevantindustries. Since the reform and openness, investment in education has been increasingyear by year in China, and it’s more and more important in economic development. Therelationship and the interaction between education and economic growth have been ahot issue.Based on the education economics and the endogenous growth theory, domestic andforeign researches about the role of education in economic development have beensystematically sorted firstly. Secondly, according to Chinese actual situation, economictheories have been used to analyze the mechanism of education affecting economicgrowth, and then we introduce the EBA models and select provincial regions panel datafrom1990to2011to test measures of economic growth that have "robust" impact oneconomic growth in Chinese each region. Finally, some policy recommendations hasbeen presented to promote the comprehensive development of education and to achievesustainable economic growth according to the theoretical and empirical analyses.Results of horizontal analysis are as follows:(1) the number of graduates in theeastern part of regular higher passed the "robust" test of EBA, because the highereducation plays an important role in conveying thousands of professional human capital,especially high-quality workers, and the important effect on regional economy is verysignificant.(2) Education spending in eastern region also passed the "robust" test ofEBA, indicating its interference "robust" influence on economic growth. On the onehand, the spending on educational funding has been increasing in recent years in China;on the other hand, regional increased educational funding caused an improvement infaculty and an enhancement in qualified teachers which provides a vital force foreconomic growth.(3) Other variables in eastern, central and western regions are notpassed the test, indicating that they do not have "robust" influence on economic growth.Results of longitudinal analysis are as follows:(1) only in the eastern region thenumber of higher graduates has passed the "robust" test, because highly qualifiedworkers are more willing to find a chance in relatively prosperous eastern region, whilethe number of higher graduates’ effect on economic growth are not significant for amassive loss of human capital in the central and western regions.(2) Only in eastern region, the education spending has passed the "robust" test, because economy isrelatively backward in the central and western regions caused a less budget spending ineducation and a weak educational foundation which greatly restricted the economicdevelopment in central and western regions. Besides, inter-regional educationcooperation and exchanges between regions are too few, which also cause a great gapbetween eastern, central and western regions.