The correlations between intellectual capital investment and economic growth: Evidence from 20 provinces & cities of China

Based on Cobb-Douglas production function, this paper estimated the roles of intellectual capital investment and fixed assets investment in economic growth of 20 provinces and cities in China during 1990–2005. A system of indicators measuring the intellectual capital investment and fixed assets investment were designed and the intellectual capital investment was calculated. Their impacts on economic growth were analyzed via regression, cointegration and panel cointegration analysis separately. It shows Beijing ranks first on the output elasticity to intellectual capital investment (0.73), followed by Guangdong (0.56) in regression model, and the output of intellectual capital investment tends to increase in cointegration model. Additionally, the output of intellectual capital investment is a little higher than that of fixed assets investment. It indicates that the main driving force of economic growth since 2000 is intellectual capital investment.