In recent years, China’s rapid economic development has been accompanied by an increase in education spending, resulting in the accumulation of human capital. However, there is ongoing debate regarding whether and how education expenditures have fostered innovation in science and technology (S&T). This study uses panel data from 31 Chinese provinces, cities, and autonomous regions from 2006 to 2015 to look at the relationship between education spending, human capital development, and S&T innovation. It seeks to shed light on this problem. Our results reveal that education expenditure has a significant positive impact on S&T innovation, and human capital accumulation plays a mediating role in this relationship. Specifically, an increase in education expenditure can not only enhance the innovation ability of the educated but also strengthen their ability to accept and apply new technologies, leading to the transformation and transmission of knowledge. Furthermore, our study shows that education expenditure has a greater impact on S&T innovation than capital formation. The findings of this study have important policy implications. Given that education expenditure is an effective means of promoting S&T innovation, it is recommended that the Chinese government continue to boost investment in education, enhance the convenience of education consumption, and advance education supply-side reform. Additionally, policymakers should consider the structure of education expenditures and how it affects innovation, as well as the different impacts of household and public expenditures, education consumption, and education investment on the economy. In conclusion, this study provides evidence supporting the important role of education expenditure in fostering S&T innovation in China. By investing in education, China can continue to build its human capital, promote economic development, and advance social progress.
This paper investigates the impact of local investments in education on the economic growth of different regions in China. It examines both the direct and indirect effects of financial investments in education. It analyzes the role of human capital and intellectual capital as mediators in the relationship between education and economic growth. The study utilizes a panel data model and a model of mediating effects to conduct an empirical analysis using data from China between 2000 and 2018. The findings indicate that local financial investment in education significantly impacts economic growth, although the magnitude of this effect varies across regions. Investing in education directly stimulates economic growth and indirectly promotes it by accumulating human and intellectual capital. Therefore, increasing investment in education and nurturing innovative, high-level talent are crucial steps towards achieving high-quality economic development in China. The literature review reveals that investment in education has been extensively studied concerning economic growth, with scholars emphasizing the role of human capital in the production process and the positive effects of education on worker productivity and income equality. However, educational investment’s impact on economic growth has shown variations in different countries and regions. Some studies suggest that excessive development of higher education may hinder local economic development, while others highlight the positive impact of educational inputs on human capital quality and technological innovation. To examine the causal mechanism explicitly, this paper proposes a causal inference model based on mediating effects, considering both human capital and intellectual capital as mediating variables. The research methodology includes a baseline regression model and a model of mediating products, employing panel data techniques and instrumental variable estimation to address endogeneity issues. The results of the baseline regression analysis support the positive relationship between local financial investment in education and economic growth, controlling for other factors such as capital stock, labour force, urbanization rate, trade dependence, and population growth. Furthermore, the mediating effects model suggests that education investment indirectly influences economic growth by enhancing human capital and promoting technological innovation. These findings contribute to a better understanding of how education affects regional economies in China. In conclusion, this study highlights the significance of education in driving high-quality economic development in China. It emphasizes the importance of increasing investment in education and fostering the development of innovative and highly skilled individuals. The findings provide valuable insights for policymakers and stakeholders seeking to promote sustainable and inclusive economic growth through education reform and targeted investments in human capital.
scite is a Brooklyn-based organization that helps researchers better discover and understand research articles through Smart Citations–citations that display the context of the citation and describe whether the article provides supporting or contrasting evidence. scite is used by students and researchers from around the world and is funded in part by the National Science Foundation and the National Institute on Drug Abuse of the National Institutes of Health.
hi@scite.ai
10624 S. Eastern Ave., Ste. A-614
Henderson, NV 89052, USA
Copyright © 2024 scite LLC. All rights reserved.
Made with 💙 for researchers
Part of the Research Solutions Family.