An Empirical Study On Impact Of Legality On Economic Growth

The fourth plenary session of the 18th Communist Party of China (CPC) Central Committee announced a communique, which focuses on "comprehensively advancing the rule of law" in China. The general target is to form a system serving "the socialist rule of law with Chinese characteristics" and build a country under "the socialist rule of law". The conference stressed that the vitality and authority of law lies in implementation, and people's rights and interests need legal protection. China's economic growth slowed, comprehensively advancing the rule of law contributes to the development of the market-oriented reform, which means the long-term development of the market economy needs the law to back it up. According to the research of the foreign scholars, China's legal system isn't well developed, yet it has one of the fastest growing economies, namely China's mystery. Most studies set up cross-section model based on national level data, Conclusion may be biased due to special historical and cultural background of different country. Studying the impact of the rule of law on economic growth in the specific historical environment of a country will be practical significance.In this paper, firstly, the legal and economic growth of domestic and foreign literatures were collected and compared. the theory of China's mystery, which is proposed by foreign scholars, shows particularity of the rule of law and economic growth of China. Secondly, I make a qualitative analysis of the rule of law and economic growth, including the theory of economic growth, the economic analysis of law and the mechanism of impact of legality on economic growth. Thirdly, this paper uses two indices, the protection of consumer and creditor, to measure legality so as to analyze the current situation of the rule of law and economy in different regions, which includes the measure of legality, the tendency of level of legality and economy. Lastly, based on China's provincial panel data from 1999 to 2009 and the augmented Cobb-Douglas production function, I study the impact of legality on economic growth in regional and national level. Setting up panel data model is to study the regional difference of impact of legality on economic growth; Spatial panel data model, considering the existence of space effect, is to analyze the impact of legality on the economic growth on the national level.The conclusion of empirical study mainly:(1) The rule of law and economic levels exist regional differences, the level of legality in eastern region is significantly higher than those in the central and western regions. The time series of the protection of consumer exist convergence effect, while the time series of creditor protection exist dispersion effect. (2) The impact of CR on economy growth is most pronounced in the central, while the impact of CP on economy growth is most pronounced in the western region. It showed that the impact of legality on economic growth of central and western regions is greater than that of eastern region. (3) There is a positive relationship between legality and China's economic growth. In comparison, the impact of CR on economy is greater than CP. (4) Legality contributes to economic growth in China, though there is regional difference of the impact of legality on economic growth, therefore, to some extent, disagree with the statement of China's mystery on legality and economies.