CHINA`S EDUCATION INVESTMENT & ECONOMIC GROWTH

Contribution Rate of China's Education Investment & Economic Growth

Abstract

Attention will be focused on education investment on the background of financial crisis. There are theoretical divergences in the studies on the relationship between China's education investment and economic growth all along. This paper is based on the Time Series Data from 1978-2008 and Granger Causality Test is applied to analysis the relationship. All statistical analysis have been conducted using SPSS. The results show that there is a unidirectional causality from China's education investment to economic growth. That means increasing China's education investment may stimulate economic growth .Naturally, increasing China's education investment will be an effective measure to financial crisis.

Table of Contents

ABSTRACT1

CHAPTER I: INTRODUCTION3

CHAPTER II: LITERATURE REVIEW12

Background12

Effectiveness of the HVE system15

Perceptions of HVE15

Insufficiency of resources17

Investment in tertiary education on the rise18

Main contents of human capital theory21

The effects of education investment for China economic and social development25

CHAPTER III: RESEARCH METHODOLOGY31

Variables and Data31

CHAPTER IV: RESULTS & DISCUSSION34

Unit Root Tests and Co-Integration Test34

Granger Causality Test35

CHAPTER V: CONCLUSION39

REFERENCES42

ENDNOTES49

CHAPTER I: INTRODUCTION

Financial crisis is clearing the globe. Chinese government is making large efforts to take a sequence of assesses to stimulate the economy. Financial commerce, genuine land parcel, construct and agriculture are taken into concern first, but education investment has often been neglected. This paper will aim on the connection between China's education investment and financial growth. If expanding China's education investment can stimulate financial development, then education investment should be an productive assess to command financial crisis. Thus on the backdrop of financial crisis, it has significant very shrewd significance and theoretical significance to study the connection between China's education investment and financial growth. (Appleton 2000)

The connection is habitually the warm theme in learned field. Denison (1967) suggested that education investment used a large leverage on development of finances for the first time. Berthelemy and Varoudakis (1996) held that investment in education could enhance financial development and development by boosting undertakings that can help apprehend up with foreign technological progress.

In 1979, China embarked on a stepwise method of institutional transformation, beginning with the introduction of the house blame scheme in country areas. During the country's ongoing method of transformation from a centrally designed finances to a market finances, there have been foremost dissimilarities in the financial development patterns skilled by distinct provinces. Indeed, there are substantial variations between the distinct provinces in periods of natural assets, geographical position and the promise for financial development. As a outcome, those provinces (including municipalities and autonomous regions) that have accomplished higher than mean development rates have tended to be intensified in the to the east district, where the stride of financial development has been much more fast than in the west.

Government principles which have tended to encourage unbalanced development supportive the east have directed to the general acceleration of financial development in the to the east district, and have produced in important alterations in the assistance which one-by-one provinces had before been making to the Chinese finances as a ...