Development Strategy, Endogenous Contract Institution and Long-term Economic Growth
ZHU Dandan1, FU Caihui2, LV Chaofeng3
1.School of Economics, Sichuan Agricultural University
2.Institute of New Structural Economics, Peking University
3.School of Public Finance and Taxation, SouthWestern University of Finance and Economics
Abstract：This paper introduces incomplete contract and endogenous institution into the economic growth model including R&D innovation and studies the impact of the catch-up development strategy of heavy industry on economic growth under the condition of incomplete contract with the framework of endogenous growth. Research shows that the biased development strategy of heavy industry will reduce the economic growth of a country by affecting the contract institution and the wide application of incomplete contracts amplifies its negative impact on long-run growth. The empirical results based on the crossterm econometric model show that the biased catch-up strategy of heavy industry will reduce the economic growth of the provinces (cities) in China, that is, excessively biased catchup strategy has a “restraining effect” on economic growth; contract execution efficiency is the intermediary mechanism of economic development strategy affecting regional economic growth. The government should gradually transform the biased development strategy of heavy industry into a comprehensive development strategy, constantly improve the contract institution and improve contract execution efficiency, so as to improve the speed and quality of economic growth and alleviate the regional development gap.
2023, Vol. 43 
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