Research On The Effect Of Government Investment With Industrial Relation Analysis

As a developing country, China has to depend on government investment to pull the economic growth and social progress in a long time. How to earn more economic and social benefit through limited government investment? We must know the continued comprehensive effect of government investment in different industry sector and the effect is very different from other developed countries. Based on the perspective of industry association and IO(short for Input-Output) research method, this paper especially studied two main contents:On one hand, we discussed the direct pull effect of national economy and the influence of GDP composition because of the government investment; On the other hand, we considered the indirect effect of social development due to government investment under the point of carbon emission reduction; in addition, we also analyzed the influence on Chinese neighborhood countries in East Asia due to Chinese government investment.The significance of this topic is stated as follows:(1) Practical significance. Nowadays, the purpose of government investment is transformed from economic growth to social coordination and the investment mode began to transform from traditional developing investment to public investment. Under the perspective of industry association, this thesis studied the differentiated influence of national economy due to government investment on different sector, and then tried to draw direct and right policy to optimize government investment structure. The results would be the key link for economic steady development and for economic fluctuation reduction. Meanwhile, this research could help Chinese to maintain the economic development sustainable. On the background of the new period and new development idea, it is very important and meaningful for making appropriate project to national economy, social development and macroeconomic control policy for Chinese government.(2) Theoretical significance. This paper, especially studied the direct and indirect effect of government investment to social development, did more research and contribution in public finance theory and10theory, because it combined some new aspects and method, like studying new aspect of government investment, easing the multiplier hypothesis of existed government investment theory and innovating public investment theory. And used IO analysis, mathematical programming model, econometrics and statistical method as research tools, and also considered Chinese government investment characteristics.Therefore, it is very important in practice and in theory to study government investment effect based on prospective of industry association.There are seven chapters in this paper. The first chapter is introduction. The second chapter is the research of relationship between government investment and economic development. The third chapter is the analysis of government investment effect under the circumstance of over capacity. This fourth chapter is the effect of government investment based on resident consumption and industry structure. The fifth chapter is the effect of government investment carbon emission reduction based on IO optimization model. The sixth chapter is the effect of government region investment based on several countries IO model. The seventh chapter is conclusion and prospect.The contribution of this paper can be concluded as follows:(1)It quantified the pull effect on economy affected by government investment, and the function affected by added value structure. From the output value fluctuation of single industry caused by government investment, this paper aimed to establish a model that can show the influence on Chinese economic development affected by the direction and strength of government investment based on IO model. In order to quantify the economic pull effect caused by government industry investment through IO relationship, the paper considered the situation of industry sector excess capacity, set up variable which could express excess capacity and did the empirical research result effect with this variable. On the basis of this model, we discussed the effect on different industry sector caused by government investment and then find the right industry which need help in order to achieve the economic development purpose. Meanwhile, this research found the top ten revitalization industries that can deal with the financial crisis with the specific industry department in IO table, and calculated the degree of national economic combination caused by national invested top ten industries based on this model.(2) This paper mainly studied every sector distribution of added value caused by investment, based on resident consumption and government investment multiplier. From the prospective of supplement, we constructed an endogenous resident consumption variable IO model, which used added value proportion matrix,IO related conduction route and Keynes multiplier conduction process. This model constrains the limitation on calculation of national economy effect caused by public investment in existed model and can do empirical research easily. Combined Chinese IO table in2007, we calculated the IO multiplier and consumption expansion effect, analyzed its contribution to government investment output, quantified the distinctive effect in different sector caused by government investment, studied the distribution among industries of economic growth caused by government investment and calculated the effect of national economic development when tackling the financial crisis based on central government partial new budget in2009. At the same time, this paper counted the MPC in average of Chinese resident based on resident income and expenses quarterly.(3) This paper studied the indirect effect of social development caused by government investment. From the prospective of carbon emission reduction, we established and optimized the model based on IO analytical technology. In the premise of ensuring the economic growth smoothly, this paper, based on Chinese economic growth rate over the years, tried to acquire the key constrained index in legal range and then calculated the carbon emission reduction contribution caused by industry structure adjustment and technological level promotion. All of the work above is very important, because it can study the influence on industry structure and technology caused by government investment, quantified the energy saving and emission reducing effect of government investment and also calculated the government investment amount needed by achieving the goal of energy conservation and emission reduction, and evaluated the sector which has to use the funds in prior.(4) This paper chiefly calculated the regional economic effect caused by government investment. Based on IO theory, this paper established regional IO model, resolved the three effects including inner regional multiplier, regional overflow and feedback effects in detail, and explained the economic meaning of every effect. Combined the data in Asian IO table, this paper studied Asian industry structure, explored the IO related feature and change of every economics in Asia, calculated the influence of added value and its composition in Japan and South Korea affected by Chinese government investment and measured the overflow effect and feedback effect of the whole region caused by government investment.