The Influence Of Public Investment To Income Disparity Between Varied Regions

Public investment is the organic component of national macroeconomic policy system, it plays a vital role in the economy and also widened the disparity of regional economic development. This thesis quoted the Theil index as the index of measuring regional income gap, and decompose the index.Since Reform an Opening, it has rapid economic development in China. The government agree that the public investment is very important to improve local economic development. Both from the vertical growth rate, and the horizontal investment mode, public investment has rapid development. But, while public investment rising in high speed, the regional income gap is under constant enlarging too, which is an important issue for developing country. The statistic data shows that China has already become one of the most income inequality countries.People can’t help to link these two phenomena together. Whether the development of public investment cause the enlargement of regional income gap or not? If they have relevant relations, is it a positive correlation or negative correlation between public investment and regional income gap? Will such relevant relation change in different regions? And public investment consist of far more, which factor influent the region income.So it’s necessary to considerate public investment exercised an influence over region income gap. It has reference value to reducing regional income gap by rationally adjusting and optimizing the structure of public investment.In this paper, the object of research is the regional income disparity of three economic zones. According to the literature, theoretically proved the effect of public investment on regional income, take a descriptive statistical analysis on public investment and the regional income disparity. From the data, we find they change in unison. Then, empirically research the effect of public investment on regional income disparity, and analyze the reason of this effect. The path of empirical analysis is as follows:1.Do a descriptive statistical analysis on public investment and regional income. Calculate the Theil index and observe the changes, then divide the Theil index into different stages with the method of sequential clustering.2.To analyze the factors of regional income disparity from different angles, select quantifiable indicators and make a model. Use the data from1991to2010to do a analysis of time series. With the method of gradually adding variables, remove some variables which is not significant. Make a optimal model for sequential studies.3.To explore various areas of public investment impact of income gap by region. And use the data from1991to2010to do a analysis of time series.4.To research the effect of public investment on regional income disparity. Public investment is divided into three parts:investment in infrastructure, public services and education. After a multiple regression, find the effect of each part, and analyze the reason, give some policy proposals.Above4points around public investment effect of regional income disparity study, step by step, linked together, draw some important conclusions:1.The income gap of China is widening,mainly due to the regional income gap is widening. There is a big difference on the distribution of public investment.2. On the national scale, public investment causes the enlargement of regional income the total gap.Within the three regions, public investment has significant influence on intra-regional income gap. And they all have positive correlation.But FDI have different influence on intra-regional income gap. It doesn’t have significant influence to the western, and have an negative correlation with the eastern and the middle.3.Education enlarge the regional income gap in the eastern, and the other factors don’t have significant influence. Infrastructure construction and public service have an negative correlation with the regional income gap, another way of saying it is that can reduce the regional income gap in the western. And in the central region all the factors are not significant.This paper put forwards the polices and suggestions in order to regulate China’s regional income disparity from micro-perspective. The micro-perspective proposes the suggestions about Eastern Region, Central Region and Western Region respectively in order to promote the healthy and sustainable development of national economy via the regulation of China’s regional income disparities. Compared with other articles, this article mainly has the following features:1.The researches of public investment are mainly focused on the relations between economic growth. This paper analyzes the relations between public investment and regional income disparity. As a result, we find that there is a positive relationship between public investment and the Theil index, public investment enlarge the regional income disparity.2.Most scholars ignore the differences of public investment when they research the effect of public investment. In this paper, public investment is divided into three parts:investment in infrastructure, public services and education. With the result of analysis of time series, find the different effects on regional income disparity of each part. Make a theory suggestion, and get the point of emphasis of each region’s investment.This paper also has many defects and the insufficiency. Due to data accessibility, the article just select the1991-2010yearly data, data length is still insufficient; Public investment includes a large content, the measured method of public investment is not necessarily accurate in this paper. These may lead to the empirical results are not accurate enough. And there are too many factors affecting the region income gap, so paper only gets qualitative analysis of public investment, not specific impact on the region income gap. At last all the factors are not significant in the central region, so in-depth explore the influencing factors of income gap in the central region is my follow-up research.