Economic Freedom and Sustainable Economic Growth:China's Test(1978—2008)

The relationship between economic freedom and economic growth is tested since the reform and opening up based on the framework of neoclassical growth theory.The empirical results show that economic freedom will increase economic growth.Economic freedom not only directly impact on economic growth,and indirectly impact on economic growth through physical capital and human capital.Sub-index shows that trade freedom,rural-urban migration,financial freedom and nationalization is conducive to economic growth,and inflation,tax burden and local government intervention is not conducive to economic growth.The GMM method of dynamic panel data shows that economic freedom is the Granger-casualty for economic growth and the inverse causality does hold.This shows that economic freedom is not simply to promote system construction;There is an interactive logical evolution between economic freedom and economic growth.