The Research On Public Finance Expenditure Of Western China Regional Government And Economic Growth

It's of great importance to study economic growth, especially for China whose economy has kept sustainable and fast development since implementing the Reform and Opening Policy. The role of China government should be adjusted along with the rapid increase of China economy while the gap of per capita income between east and west of china has been enlarged. Finance expenditure for the public economic activity has an important influence on the economic growth of the whole nation especiallycertain regions.Under the background of the Eleventh Five-Year-Plan and Sixth Government System Reforming, the dissertation based on current relevant theories making a research target of the relationship between public finance expenditure and economic development, deeply investigates the mechanism of public finance expenditure acting on economic growth, sets up the mathematical model between them and gives empirical analysis with corresponding data of west and east China, and also applies the method of combination and comparison of qualitative and quantitative analysis, regulation and positive analysis, theory and practice, logic and history, follows the principle from commonality to particularity, from theory to application and goes through the evolution of public finance expenditure as well as integrates the knowledge of economics, econometrics, public finance and regional economics.The dissertation further enriches the theory of public finance and regional economic, also provides theoretical support for the reasonable adjustment in public finance expenditure in western China and will contribute to the compatible development of regional economics. Four approaches are included in the dissertation as follows:A foundation has been laid for further research through research of related theories about public finance expenditure and economic growth that include analysis and description of public finance expenditure evolution.Under the dual restrains of resource and demand, the function mechanism of public finance expenditure on economic growth is studied based on the classical economics and Keynesian theory.The mathematic model between the scale and structure of public finance expenditure and economic growth is constructed based on the model of Barro's public product theory and the research of governmental effects on regional economy growth.A econometric model between public finance expenditure and economic growth was established based on the former mathematic model. Corresponding conclusion is approached through the empirical analysis of data in west and east China.The conclusions of research above are as follows: First, based on theoretically analyzing the effect of public finance expenditure on economic growth, public finance expenditure stimulates both short-term and long-term economic growth effectively, especially the former one.Second, gap in economy between east and west of china has deflated for the implementation of Western Development Policy. Since implementing the Reform and Opening Policy, Unbalanced and Uncompatible Development Policy which puts more emphasis on economy development in the east has been carried out, contributing to the more obvious gap. Western Development Policy has been implemented since 1999, aiming at the gap filling. Gap of nominal GDP per capita between east and west of china has been decreasing since 2004, which shows the effect of Western Development Policy.Third, there is a positive correlation between the scale of public finance expenditure and economic growth. And one percent increasing in west public finance expenditure results in 0.0467 percent increasing of economic growth while that in the east will be 0.2933 percent.Fourth, structure of public finance expenditure is related to economic growth. Public finance expenditure on infrustructure is negatively con-elated to economic growth. However, that on science, education, culture, hygiene and administration is positive. Meantime, public finance expenditure on education, hygiene and scientific research should be highly emphasized for the potential contribution to economic growth.The dissertation investigates the impact of public finance expenditure on economic growth in west China. And some suggestion on increasing public finance expenditure in west China is addressed. Several approaches of innovations are achieved in the dissertation:Firstly, innovation of perspective is created in the dissertation. Compared to the qualitative analysis of correlation between public finance expenditure and economic growth in west of China, the dissertation studies the correlation with empirical analysis.Secondly, innovation of theory is done in the dissertation. on the dual points of resource and demand view, the function mechanism of public finance expenditure on economic growth is studied based on the new Keynesian theory and is given directly with the help of diagrams.Thirdly, innovation of mathematical model is done in the dissertation, when constructing the mathematical model between public finance expenditure structure and economic growth, the term of public finance expenditure structure is added to Barro's production function.