*5.1. Possible Mechanisms of Higher Education on Green Economic Development*

This paper evidenced that higher education plays a significant role in developing a green economy. In order to better understand these underlying mechanisms, Figure 1 summarizes several possible channels of the corresponding impact. First of all, from the perspective of economic development itself, the human capital theory has brought education to the attention of economists and it has been unanimously recognized by academia that education can improve the total factor productivity and promote economic growth by enhancing the general quality of human capital. Institutions of higher education, undoubtedly, have been considered as cradles for top talents, which help to improve the labor quality by providing human capital to the economy.

**Figure 1.** Mechanism of how higher education influence green GDP.

Apart from forming human capital, higher education also promotes economic development by accelerating industrial optimization and upgrading industries from labor-intensive to capital-intensive, and finally to knowledge- and technology-intensive [35]. A timely optimization of industrial structures

is of great significance not only for economic progress, but also to ensure a smooth and sustainable operation of the green economy, during which nations can reduce their consumption of energy resources and control the costs in the environment. Indeed, among the many factors affecting industrial upgrading, well-educated workers with sufficient knowledge and skills who can adapt well to highly advanced technology-intensive industries make a fundamental and critical difference. Higher education, by engaging talented people who are in pursuit of knowledge and skills, is an essential prerequisite for industrial upgrading. In this way, higher education plays a leading role in the optimization of industrial structures so as to achieve sustainable economic growth.

Another possible channel is that higher education inspires individuals to acquire knowledge and open their minds in order to pioneer new discoveries and bring about technological, managerial and institutional innovations. These innovations lead to progressive methods of production for all walks of life and drive new demands for a larger size of the economy. Furthermore, these innovations streamline production processes to improve the efficiency of the green economy [36].

In this way, through three distinct channels—high-quality human capital, talented people for industries, and innovations in knowledge and technology—higher education is critical for green economic growth.

#### *5.2. Implications for Sustainable Development: Taking China as An Example*

Higher education not only contributes greatly to expanding the size of economies, but more importantly, it helps to promote economic growth in a more environmentally friendly way. This is particularly meaningful for countries facing challenges in sustainable development. The context in China, whose development path was found problematic and not sustainable, has been discussed in our research as a typical example.

Over the past four decades since the reform and opening up, China has maintained a high economic growth rate, which can be attributed to either the institutional reform or the large population. However, it has been in a precarious situation considering the serious environmental pollution, waste of resources, and the aging of population, etc. Fortunately, the Chinese economy has started to pay attention to the sustainability of its economic growth, not just striving for higher productivity. The society now stipulates that people should seek comprehensive development instead of simple growth in GDP, aiming at sustainable growth in a socialist market economy. With this principle, its development path has been adjusted from three dimensions, the first and most obvious of which is to slow down the growth rate and develop at a modest pace. At the same time, it emphasizes continuous optimization and upgrading of industrial structures. Another noticeable characteristic is to shift the driving force from factor- and investment-driven to innovation-driven. Data of China's first three quarters in 2018 depicted a better economy with higher quality and more optimized structures. Specifically, consumption contributed more to economic growth than investment, service sector grew faster than the secondary sector with high-tech industries and equipment manufacturing standing out, and energy consumed by per unit of GDP declined noticeably. China's tertiary sector has contributed substantially to the economic growth, accounting for more than half of the total industries (Figure 2), and its proportion is predicted to increase steadily in the future. Overall, China has grown from a large agricultural country to a world factory, after which it has developed as a technologically innovative economy by creating wealth through science, technology, and culture.

**Figure 2.** Changes of Chinese industrial structures.

As for the educational investment in China, before the year 2000, its educational expenditures were less than 2% of GDP, which was much lower than the average level worldwide, not to mention in comparison with the spending in developed countries. However, China's current investment in education has increased to more than 4% for six consecutive years, of which expenditures in higher education constituted about 1.4%, equivalent to most developed countries. This, with no doubt, is a positive signal for China's future development. By transforming the advantage of a large population in China into the feature of high-quality talents, higher education will definitely play a crucial role in China's sustainable development in the future.
