This study examines the paradoxical effects of institutional inputs and educational spending on urban competitiveness and economic growth within China, emphasizing the unforeseen negative impacts of such investments during periods of swift urban transformation. Employing a mixed-methods approach, including text frequency analysis and panel data regression performed using Stata 17.0, the research investigates the complex relationships among institutional inputs, education expenditure, technological adoption, and urban economic growth across Chinese provinces from 2011 to 2024. The findings reveal that, despite substantial increases in educational funding across various regions, productivity growth has lagged considerably. This paradox stems primarily from misalignment between market demands and the output of human capital, where extended schooling years have not translated into proportional economic gains. Regional analysis demonstrates significant variations in how education investments affect urban competitiveness, with eastern, central, and western regions exhibiting distinct patterns and challenges. This study underscores the necessity for context-sensitive policies that better align educational systems with regional labor market requirements while addressing the structural inefficiencies that currently limit the economic returns on educational investments. © 2025, Tomas Bata University in ZlÃn. All rigths reserved.
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