Economic Growth Between Economy And Institutional Changes

Lots of empirical research has studied links between economy and institutional changes. In order for an economy to flourish, certain legal and social institutions, such as property rights, government policy, trade and finance, must be in place. Since its founding, especially after the 1980s, China has experienced a series of economic reforms, such as the development of non-government-owned industrial economy, the opening-up policy. Unprecedented growth occurred in China, with its economy increase by 9.5% a year. Meanwhile, sharp regional disparity becomes one of the biggest development challenges China is facing, with metropolitan areas of the eastern coast far richer than that of central and western China. Reform along with opening-up†¦show more content†¦Then the thesis uses a Cobb–Douglas production function to make empirical analyses. The thesis eventually reaches the conclusion that institutional change factor has a significant positive impact on economic growth. Gross product will increase by 0.19% when institutional factors increase by 1%. But its contribution to output is twice less than that of capital accumulation. Additionally, according to error correcting model, in short term, the institutional factor are not significant, indicating that institutional changes influence economy development through a long-term channel. The rest of this thesis is organized as below. Literatures review is in Chapter 2. Chapter 3 introduces methology as well as data preparations. In Chapter 4, empirical results are presented and discussed. Conclusion is in Chapter 5. 2 Literature Reviews This chapter reviews relevant academic literatures on the research topic from both theoretical and empirical sides. The first section is a brief introduction of theoretical background, which is primarily about â€Å"æâ€" °Ã§ » Ã¦ µÅ½Ã¥ ¢Å¾Ã©â€¢ ¿Ã§ â€ Ã¨ ® ºÃ¢â‚¬ . The second section presents some empirical studies on identification of institutional factors as well as the relationship between institutions and economic growth. Most studies are based on cross-country data and pay more attention to developed countries. The third section displayed a few facts about China’s economic growth. Then empirical findings on China’s