An Empirical Study of the Economic Institution Transition and the Efficiency of Chinese Economic Growth

Abstract

Based on the functional model of economic institution and economic growth, and using the panel data of all Chinese provinces, the paper does some empirical study on the efficiency of economic institution transition and Chinese best economic growth path. It shows that: First, the economic institution is the fundamental cause of economic growth. Second, the economic institution is endogenous. Third, whether the economic institution is efficient or not depends on the individual or the group with the control right of the economy. Fourth, the empirical analysis shows that the economic institution is important to Chinese economic growth, and economic institution transition is efficient. In the other words, in recent years, the reform of the state-owned corporation, the economic policy adjustment, Chinese reform of the Marketization is successful. Fifth, because of the civil war of several decades in 1900-1949 and the worse economy, and in 1949-2006, The market power is weak and the government is powerful in China, all this makes the Chinese economy to be in control of Chinese government, namely, Chinese government chooses the way of economy, motivating investment, and makes reform and openness. Sixth, the model of the governance model and the empirical study prove that there exists the best economic institution in the process of the economic growth, and the Chinese government governance can make the best economic growth with the goal of the economic growth, the data is that the coefficients that R2=0.99, A-R2=0.99, DW=2.78, F-statistic=0.0000 and the significance under different levels (1%, 5%, and 10%), and it shows that the economic institution can explain the growth of China's economy. Furthermore, and the economic institution has a positive contribution to the promotion of economic growth, that is, the process of China's economic institution evolution is identical to the efficient direction of the economic growth, other is that We use the control power indexes of the government, such as Marketization level, Financial Revenue, output of state-owned economy, and that the high-level fitted feature points out the government is dominate in the process of economic governance. This is identical to the fact of China's economic development. Furthermore, e index of the macro-economy governance structure is significance under the 10% significance level, and the coefficient is negative, which means that there maybe exists an optimal governance structure Owing to the success of Chinese economic growth; we can make the conclusion that both of the market and the government can make the economy grow efficiently