An Empirical Research on the Relationship between Education Investment and Economic Growth for Shandong Province

This paper does a dynamic analysis to the role of the investment in education in Shangdong Province in promoting economic growth during the period between 1979 and 2005 based on the Estate-space Model. The results shows that the overall investment in education is less or inadequate during the past 27 years until 2005 in Shangdong province. Besides, as the expansion of the universities and the students the quality of higher education exist the problem of declining. These two factors result in that the role of the investment in education in promoting economic growth is not obvious or facing the trend of being weakened. In my opinion, effectively improving the proportion of education funding to the total provincial fiscal expenditure, adjusting the direction of government investment in education and narrowing the gap of government investment in education between urban and rural areas can gain a sustained, rapid growth of the national economy.