The Research On The Relationship Between Local Fiscal Expenditure And Economic Growth In The Eastern Region Of China

Along with the advancement of fiscal system reform, China’s fiscal system gradually makes the transition from the highly centralized type to the local decentralization type, local government fiscal decision-making power gradually independent, has become the main body of the region economic interests and relatively independent decision-making unit, the effect of local government for regional economic growth gradually enhanced. Since China’s reform and opening up, our country implements the unbalanced regional development strategy based on the theory of gradient transference, the eastern region achieves rapid development, both economic aggregate and fiscal expenditure scale are greatly increased, the total amount and scale are far above the central and western regions. In this background, how effect do local fiscal expenditure and its structure in the eastern of China on the region’s economic growth? The article mainly analyzes the problem, and trying to make a solution.The article begins with the analysis on the theoretical logic of fiscal expenditure and economic growth, by making a comparison of the eastern region of China and China, analyzes the present situation of local fiscal expenditure and economic growth in the eastern region of China, on this basis, the use of Barro endogenous economic growth model and the modified Cobb-Douglas production function, empirically study the relationship between economic growth and local fiscal expenditure and its structure in the perspective of theory and empirical, and draw the following conclusion:(1) The local fiscal expenditure and GDP in the eastern region of China maintain steady growth, its growth rate is higher than the same period level of China, in recent years, local fiscal expenditure in the eastern regions of China mainly concentrated on two areas of education and the people’s livelihood, the focus of fiscal expenditure gradually make the transition from the investment priority in social infrastructure to the investment priority in the fields of education and the people’s livelihood. (2) In constructing the theoretical model of fiscal expenditure and economic growth, can be discovered that there is an optimal fiscal expenditure scale, which can maximize the economic growth rate; Under the condition of the fiscal expenditure scale established, can promote economic growth by optimizing the structure of fiscal expenditure. (3) By studying the data from 1993 to 2013 of 11 provinces and cities in eastern areas, the influence coefficient of local fiscal expenditure to economic growth in the eastern region of China is 0.257, and the statistical result is significant, the optimal proportion of local fiscal expenditure in the eastern region of China is 25.7%, namely, when the proportion of per capita fiscal expenditure scale accounted for per capita GDP in the eastern region of China is 25.7%, the eastern region can acquire the biggest economic growth. (4) By studying the data from 2007 to 2013 of 11 provinces and cities in eastern areas, the relationships between local fiscal expenditure and economic growth, respectively, are that the influence coefficients of general public service expenditure, education expenditure and other fiscal expenditure on economic growth, respectively, are 0.171, 0.128 and 0.0884, the statistical results are significant; The influence coefficients of science and technology expenditure, culture sports and media spending, social security and employment expenditure, urban and rural community affairs spending, agriculture forestry water transaction expenditure, transportation expenses, public safety spending and health care expenditure on economic growth, respectively, are 0.0329,0.0133, 0.0767,0.0128,0.0204,0.00969,-0.0283,-0.0198, the statistical results are not significant. (5) By studying the data from 2007 to 2013 of 11 provinces and cities in eastern areas, the relationships between local fiscal expenditure and its optimal fiscal expenditure proportion, respectively, are that the proportions in the average of general public service expenditure, the average of education expenditure, the average of science and technology expenditure and the average of social security and employment expenditure account for the total fiscal expenditure are all below its optimal proportion of fiscal expenditure, fiscal expenditure proportions for them are all insufficient. The proportion in the average of culture sports and media spending account for the total fiscal expenditure is consistent with its optimal proportion of fiscal expenditure; The proportions in the average of public security spending, the average of health care spending, the average of urban and rural community affairs spending, the average of agriculture forestry water transaction expenditure, the average of transportation expenses and the average of other fiscal spending account for the total fiscal expenditure are all higher than its optimal proportion of fiscal expenditure, fiscal expenditure proportions for them are all too high.