On the Dynamic Relationship Between Human and Physical Capital and Economic Growth in China

Based on the data from 1978 to 2010 of china,this paper analyzed the correlation between human capital,material capital and economic growth using cointegration test and Grainger causality test and on the basis of the VAR and VEC models,studied the dynamic correlation of the three variables by using impulse response function and the method of variance decomposition.It shows that there exists a long-term equilibrium relationship and a short-term dynamic relationship between human capital,material capital and economic growth in our country.Chinese short-term economic growth mainly depends on material capital investment and the investment of human capital has hysteresis effect while in the long terms,the elastic of material capital on economic growth is higher than that of human capital,but human capital has obvious externality on material capital and can accelerate economic growth through dual channel.