Can Human Capital Growth Promote China's Industrial Return On Capital?

Return on capital(ROC)is one of the indicators to measure the performance of an economic unit,and there has been deviation between the continued growth trend of ROC in China and the theoretical expectations.This article speculated that human capital is one of the explanations for this deviation.Existing research literatures had done lot of research on the relationships of human capital and economic growth,but few of them deem ROC as a bridge between them.With that set as a starting point,this article makes regression analysis using regional and industrial data to explore the mechanism of human capital.This paper measures China's regional and industrial returns on capital,and then use system GMM method to analyze the impact of human capital on the ROC.The results showed that:(1)on the whole,China's industrial return on capital is on an upward trend,but in 2012,Return on capital generally declined,the negative impact of excessive investment appears.Return on capital is much higher in the Eastern region than in the Midwest high,among the three major industries,capital-intensive industry has highest average return on capital,the next is labor-intensive and resource-intensive;(2)The industrial density curve is changing from a single vertex and narrow peak to a flat one,which proved the gap of return on capital within region and within industry is widening.The year 2012 is a little special,in eastern region and capital-intensive industry,which have higher rate of ROC,the gap is narrowed,which indicated that in later development stages,the value of ROC became similar;(3)Because characteristics of various regions and sectors are not all the same,human capital plays an active role only in the eastern region and capital-intensive industry.It is related to the uneven distribution of human capital;(4)Technological advances have a stable role in promoting the economy,which explains why ROC is high while the capital investment is also high,In the future technological advances will become one of the main driving forces to increase the ROC;(5)Our nation's high capital investment is accompanied by high ROC.However,according to the existing theories,capital deepening has an inverted U-type impact on gross output.Capital deepening will promote economic growth at first,but at certain stage,capital efficiency will deteriorate,negative impact will appear.However,the empirical results showed that continued investment capital have no adverse impact on the Chinese ROC,which indicates that China is at the turning point of inverted U-shaped curve,it might be anticipated that continued high investment may cause the ROC fall off,China needs to find new promoting factors of ROC as soon as possible;(6)state-owned enterprises avoid market competitions because of monopoly powers.However it still can't change the the fact of their efficiency,the increasing number of state-owned enterprises will disrupt market order and hamper the ROC;(7)Foreign companies have spillover effect and crowing-out effect.Foreign investment's impacts on the ROC are different due to their various skill levels.The empirical results showed that using the policy of attracting foreign capital in the market for technology is unsatisfactory,but brought great competitive pressure to local companies.