Research On Local Government Competition And High-quality Economic Development

Under the background of new era,local government competition and high-quality economic development are the major determinant and objective function of China’s economic development.Whether the two can achieve a “win-win” effect is not only related to the construction of efficient public service system,national governance system and governance capacity modernization,but also determines the future success of China’s economic transformation.As the space for competitive modes such as taxation and land supply continues to shrink,the main competitive strategies of local governments have gradually expanded to fiscal expenditure.How to establish and optimize the competition rules of local government fiscal expenditure,maintain the original competitive advantage,and guide it to compete for high-quality development is also the development direction of China in the future.The system of high-quality economic development indicators should be based on the new development concept,and a complete index of high-quality economic development should be constructed from the five dimensions of "innovation,green,openness,sharing and coordination".In this paper,both the newly constructed high-quality economic development index and the traditional total factor productivity are adopted to improve the evaluation basis of high-quality development from the perspective of high-quality development results and efficiency.Empirically,based on the panel data of 283 prefecture-level cities in China from 2003 to 2016,this paper tests the interactive form of fiscal expenditure competition between local governments by using the two-regime spatial auto regression model,and then constructs a SLX model to empirically analyze the impact of fiscal expenditure competition on high-quality economic development.The study found that: The fiscal expenditure competition intensity among neighboring prefecture cities within the same province is significantly higher than that among neighboring prefecture cities located in different provinces.This shows that the main motivation of fiscal expenditure competition of local governments in China should be attributed to yardstick competition mechanism.Meanwhile,resources flows and spillover effect exist only in small geographical areas and in economically adjacent cities.What’s more,the fiscal expenditure competition among local governments has significantly improved the local economic quality index,inhibited the total factor productivity,and made the neighboring cities form the vicious competition of fiscal expenditure for the limited financial resources.After a series of robustness tests,the above conclusions are still valid.The analysis of heterogeneity shows that the social fiscal expenditure competition promotes the development of high quality economy more than the non-social fiscal expenditure competition.The conclusion that the competition of fiscal expenditure affects the economic quality development index is only established in the eastern and central regions,and there is no "Competition for High-quality Development" in the western regions.The distorting effect of fiscal expenditure competition on total factor productivity is higher in western regions than in eastern and central regions.Mechanism analysis shows that inter-governmental fiscal expenditure competition inhibits total factor productivity through the transmission path of capital factor market distortion.