Regional Disparities And Fiscal Expenditure

As Chinese economy growing faster and faster, district disparities are also widening in China. This problem draws eye of the whole society including governments. Besides The Western Development Drive and Harmonious Society et al, a lot of fiscal efforts have been put in to narrow these disparities, but the effect is far from good. By contract, the development levels between districts trend to be diverging. This surprising find shows we can't say that earlier researches on the relationship between regional disparities and fiscal expenditure are enough. Further approach on this relationship is prospective and meaningful, not only theoretically but also practically.To start with, we gauge the economic gaps among different parts in china, and then analyze regional discrepancies of fiscal capacity, fiscal expenditure and public services. Since it is the case that economic gaps will not disappear naturally in short term, to guarantee equality across nation, transfer of central government as well as local fiscal expenditure better center on providing public services. And following empirical studies show that more public are the parts of transfer and fiscal expenditure, more efficiently governments promoting economy to grow. To make fiscal expenditure more public can ensure equality, and is efficient at the same time. In view of international comparisons, several theoretical recommendations are made, preparing for future reform in fiscal expenditure.The contribution of our study consists of five aspects. First of all, strictly prove that public-oriented fiscal expenditure evolution is capable of attaining equality and efficiency norms. Secondly measure district economic disparities with a series of mathematical tools. Thirdly, empirically check the influence that transfer has on district economy convergence, and find that fiscal capacity transfer promotes economy most efficiently. Fourthly, for the first time, discover expenditure has nonlinear effects on economic growth. Further more, public services expenditures on education, public health and technology have polynomial (degree=2) acceleration effects on economic growth, that is, the acceleration is positive when the promotion is speeding up and negative when it is slowing down. Finally, adopt totally new numerical method for comparison of transfer systems in many countries.Fiscal expenditure public evolution will ensure equality, and accelerate economic growth more efficiently. In coordinating growth nationally and building harmonious society, fiscal expenditure should be more public. It is public finance that most accords with harmonious society.