Higher education investment, human capital, and high-quality economic development

Lianfeng Ma, Yufei Gan and Ping Huang

Finance Research Letters, 2025, vol. 71, issue C

Abstract: While extensive research has examined economic growth in China, the complex relationship between knowledge-based inputs and comprehensive development remains poorly understood, particularly at the provincial level. Previous studies have largely focused on traditional economic indicators, overlooking how education investment and human capital collectively shape multidimensional development outcomes across China's diverse regions. To address this gap, we construct a novel development index incorporating innovation, sustainability, and social progress metrics, analyzing panel data from 31 Chinese provinces (2000–2020) through two-way fixed effects models with instrumental variables. Our findings reveal that higher education investment significantly enhances comprehensive development, with this effect amplified in regions with greater human capital accumulation. Notably, regional heterogeneity analysis demonstrates stronger investment effectiveness in eastern provinces compared to central regions, while western provinces show no significant relationship. These results underscore the importance of regionally differentiated approaches to educational investment and human capital development, offering valuable insights for policymakers seeking to promote balanced growth across China's economically diverse landscape.

Keywords: Regional development; Education policy; Human capital accumulation; Economic transformation; Development indicators (search for similar items in EconPapers)
JEL-codes: H52 I25 O15 R11 (search for similar items in EconPapers)
Date: 2025
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Persistent link: https://EconPapers.repec.org/RePEc:eee:finlet:v:71:y:2025:i:c:s154461232401448x

DOI: 10.1016/j.frl.2024.106419

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