Journal on Policy and Complex Systems
until the late 1970s , when Cultural Revolution ( 1966 – 76 ) ended . Only after Deng ’ s Reform and Opening up Policy in 1978 , China began to quickly develop its economy , open to foreign investment and global markets . On the top-right corner of the panel , we show actual and simulated paths of human capital dynamics from 1960 to 1980 . Both lines have the same trend and the difference at levels is minimal , indicating the simulation matches reality very well . Due to the low level of economic development , there were very limited resources to be used for education in the early 1960s , so the overall level of human capital was relatively low . With great damage to higher education and enhancement to basic education , the impact of the Cultural Revolution on popular education varied among regions , and formal measurements of literacy did not resume until the 1980s . From the graph , we can see a slow increase in human capital during the two decades from the best data available , and the simulated trend coincides with it .
Figure 2 . Real versus Simulated China Case .
Turning to the second row of the graphs , the left one plots the actual and simulated paths of the fertility rate in China during the two decades . The blue line shows a small increase at the beginning , then a constant large decrease until 1980 . The simulated orange line captures the general trend , but misses the detail during the mid-1960s . It is not surprising that the fertility rate starts at a relatively high level in 1960 , and there were lags in demographic change . China ’ s post-1949
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