China's Case Study of the Empirical Analysis of Insurance Promoting Economic Growth

The impetus of the world's economic growth has changed after the global financial crisis and the driving factors of the consumptive demand have been main topics of much discussion. The imperfectness of the social security systems, the precautionary saving motive and the imbalance of high saving rate and low consumption rate have been the obstacles for sustainable growth of china's economy. An endogenous economic growth dynamic model with a generalized capital containing insurance consumption goods is developed in this study. Results show that the mechanism of the insurance in promoting the economics growth and stabilizing the economic is very complicated. It is found that insurance either enters into the production field in the form of production cost or enters into the consumer fields in the form of family and government service consumption, as a small part of embedded investment in materialized labor cost and living labor cost. VAR and VEC models are build from china data and the dynamic effect model that the embedded insurance consumption can promote the economic growth is validated. It is found that the more educated people would have higher insurance consumption rate, resulting that the contribution of the embedded insurance consumption of the living labor is larger than the contribution of the embedded insurance consumption of the materialized labor and the contribution of the physical capital. It is also found that the promotion effect of insurance consumption on the economic growth is gradually increased with a long duration.