Research On Effect Of Public Investment To Economic Structural Transition

The strategic adjustment of economic structure is the main direction to accelerate the transformation of economic development. While maintaining steady economic growth, how to use public investment to accelerate economic structural transition is becoming an important issue currently for China’s economic development. The positive financial policy was always carried out with the unbalanced economic structure in China’s history. It is easily to make the judgment of "from one to the other", that is the large-scale public investment construction maintaining swift economic growth, and also intensifying economic structure to be unbalanced, threatening the sustainable economic growth. The judgment of the relationship between public investment and economic structural transition will directly affect the sustainability of economic growth and the diretion to promote structure restructuring. Therefor, it is necessary to verify this judgment to make, and tap the structural imbalance of the real source, and then explore a reform path to maintain stable economic growth and public investment policies to promote the restructuring.Based on the practical experience of China’s proactive fiscal policy since1998, by analysing two exactly opposite phenomenon between public investment expansion and economic structural imbalance, this article is going to study these questions:the public investment is conducive to economic restructuring, or curing and strengthening the original unreasonable economic structure? Structural imbalance is the inevitable of the market process or the necessity of the transition process? What are the institutional constraints of public investment and restructuring? Controlling variables of institutional constraints, does public investment have the necessary link between economic growth and structural transformation? How to further deepen structural reforms to promote economic restructuring and optimization? This is also the core of this study. Around these issues, based on the macro background of China’s institutional transition, this article evaluated the status quo of public investment and economic structural imbalance under the framework of public investment-institutional constraints-economic structural restructuring, to explore the impact and constraints of Chinese-style institutional factors on economic growth, public investment and the restructuring based on the empirical analysis of economic growth, public investment and the restructuring mechanism, and then to promote the policy recommendations by the policy simulation.The conclusion of the normative analysis and experience analysis is that under the institutional constraints, public investment curing the economic structural imbalances, but public investment is the main driving force to stimulate economic growth and economic growth promotes structural transformation. Under the current system, economic restructuring problems face the storm of the public investment and the restructuring, the storm of economic growth and structural transformation. But simply to control the scale of public investment and economic growth rate is difficult to promote the restructuring, unless by further deepen structural reforms to lift the constraints of the structural transformation of the institutional factors with the fiscal policy. The specific content is:Firstly, from the phenomenon level the article analyzes of the impact of public investment on economic structural imbalances. Respectively, to explore the effect of public investment on the investment and consumption structure, industrial structure, urban and rural structure on the basis of in-depth analysis of the status quo of investment and consumption structure, industrial structure, urban and rural structure. By constructing the DSGE model with government debt, the empirical analysis of government borrowing is done to analyze the impact of investment financing mode) to the consumer, concluded that the direction of public investment’s impact on consumer is affected by the initial financial of high debt. In the government’s high debt rate, the negative effects of the expansion scale of public investment on the economy is relatively large; the study of relations between public investment and industrial structure, detailed analysis of the industry spill-over effects of public investment and the structure convergence phenomenon in the field of public investment’industry, come to the conclusion that expansion of the scale of public investment has the ripple effect of the secondary industry and public investment increased regional phenomenon of the convergence of industrial structure; the reseach of public investment’s effect on urban and rural structure is by analyzing the urban-rural disparities in terms of infrastructure investment in the field of the government’s investment in the transportation, communication, environmental protection, etc. The conclusion is that the government expenditure structure of the tendency of the city’s increased expansion of the urban-rural gap.Secondly, dig the constraints of the institutional roots of the relationship between public investment and structural imbalances. In the transition economy background, the institutional constraints strengthen the relationship between public investment and structural imbalances, and the initial policy motives are enlarged which had a greater impact on the economic structure and strengthened the institutional roots of public investment and the structural imbalance.This chapter has the following aspects:First, the structural contradictions of the system determine the prevalence of structural problems in economic operation. At present, China is in the drawbacks of economic and social transformation, the old system is still residual, the new system of adapting to socialist market economy is not fully developed, and various conflicts, highlighting the friction, resulting in economic growth and economic structure does not converge and uncoordinated. Gradual reform of the degree of market equilibrium and market efficiency is not balanced, so that the initial establishment of the market mechanism runs sluggish and inefficient. Secondly, financial reform is imperfect, making the transfer payment system in China have more defects. Regional differences in transfer payments have led to a widening of regional disparities. Local government’s "investment heavy and light service" structure of fiscal expenditure caused by the distortions of local public expenditure structure has further distorted the economic structure; Thirdly, the incentives of local governments’ increasing public investment caused by fiscal decentralization exacerbate the difficulty of the Chinese start spending, thereby strengthening and curing the distortion of the local public expenditure structure; Fourthly, special decentralization in China has stimulated growth competition enthusiasm of local governments, FDI competition, between local governments makes China’s industrial structure skewed aggravated due to the highly skewed distribution of the industrial structure of foreign direct investment, thus further distorting the economic structure. Chinese-style decentralization and its local competition framework shaped government spending preferences of the heavy public investment in light of public services, this preference promoted economic growth, also paid a certain price:the income gap between urban and rural areas continues to expand, serious imbalance in the proportion of investment and consumption. Fifth, the asymmetry of the financial authority and powers between central and local makes local revenues can not meet the funding needs of public investment, forcing local governments to raise funds through a variety of hidden, non-standard debt financing channels, resulting in the expansion of the scale of debt and an increased risk of debt. Debt investment failed to change consumer expectations, but to strengthen the institutional constraints of the consumer, and thus failed to resolve the lack of consumer issues.Thirdly, in the framework of public investment-institutional constraints-economic restructuring, empirical analysis is done to analyze the relationship between public investment and economic restructuring. Public investment in the institutional driving force comes from the local government on the economic growth target to chase, so that economic growth is an important a link to examine the relationship between public investment and the restructuring. This chapter constructs a simultaneous equation contained three endogenous variables of public investment, economic growth and the restructuring, controlling several institutional constraints of fiscal decentralization, and the local competition, people’s livelihood and spending.The data of measuring the level of coordination of economic structure uses the total score data of factor analysis to measure the quantification of the economic restructuring. This chapter is to examine the relationship between economic restructuring, public investment and economic growth, and investigated industrial structure, investment and consumption structure, internal and external demandthe relationship between the structure of urban and rural structure and public investment, economic growth. Concluded that economic growth can significantly promote the restructuring, and public investment have a significant inhibitory effect on restructuring, but restructuring can not stimulate rapid economic growth in the short term. Fiscal decentralization and local competition is a significant role in promoting public investment and economic growth, but inhibiting the implementation of the restructuring, the people’s livelihood expenditures can significantly promote the structural transformation. Thus, under the institutional constraints, the economic growth, public investment and restructuring are put into the storm of public investment and the restructuring, and the storm of economic growth and structural transformation. Institutional reform is the only way to promote structural transformation by lifting of constraints restructuring institutional factors.Finally, the policy implications were put froward on economic restructuring. To promote the restructuring, we must deepen the reform to guide with fiscal policy to get rid of the restructuring of the institutional constraints to ensure the positive impact of public investment in restructuring, and to push the sound development of model between growth and structural transformation. On the basis of the normative and empirical analysis of public investment, economic growth and structural transformation, targeted to investigate the lifting of restructuring to achieve the institutional obstacles, and efforts to explore the positive impact on the policy maintain public investment in the restructuring efforts point, while maintaining steady economic growth, help to promote the restructuring of public investment policy recommendations to boost China’s economic sustainable development.