Research On Effects Of Public Infrastrueture Investment In China

Since adopted the policy of reform and opening-up, China has been experiencing fast economic expanding and public infrastructure investment has made undeniable contributions to our country’s economy. However, China covers a large territory so the economic development in China (mainland) is not unproblematic. With the expansion of public investment scales and growing extension of investment levels, the issue about unbalanced spatial structure of public infrastructure investment is gradually highlighted. The differences in investment level and growth rate among different regions lead to the different degrees of "polarization" phenomenon. Overall, the distribution of public infrastructure investment demonstrates the obvious regional characteristic:the eastern region is strong, the central region is nest, the western region is weak. There are also different effects of public infrastructure investment on regional economic activity, and on one hand, this has further boosted economic growth in some regions but has marginal effect or even negative effect in some regions on the other hand. These differences are basically consistent with those of economic development in China’s eastern, central and western regions. The regional structure contradiction of public infrastructure investment therefore not only prevents function display of public investment but also restricts the economic balanced development among regions. What’s more, as an important basic public service item, if the supply of public infrastructure is unequally distributed, many kinds of livelihood issues and factors leading to social instability will emerge. Hence it will badly hinder the development of economy and the construction of a harmonious society.In the area of public economics, scholars usually put emphasis on the research of the public infrastructure investment effect on economic growth but neglect concern with the effect on employment and private investment; usually pay more attention to the effect of national level but pay less attention to the effect of regional level and regional spillover effect. Therefore, it is necessary to carry out a systematically study on the mechanism and effect of China’s regional-level public infrastructure investment on output, private investment and employment, which will help us to have a clearer understanding of the role of public infrastructure in economic development.This paper is aimed at our country’s current economic situation and the research defects of public infrastructure investment problem to analyze the following questions: How has the overall development of public infrastructure in China been since the reform and opening-up? How are the differences of investment level and growth status among different regions? What is the mechanism of action about public infrastructure investment to output, employment and private investment? Is there a spillover effect of public infrastructure investment among provinces? How are the effects of public infrastructure investment on provincial output, employment and private investment? What is the effects distribution and does the distribution cause inequalities among provinces? What are the factors that affect the distribution of public infrastructure investment’s level and effects?The economic effect of infrastructure investment is one of the important contents of economic theoretical and empirical analysis and has gained great attention from scholars and practical field. It is of great significance that clarifying and comparing the behavior and effect of regional level public infrastructure investment in China in the context of boosting domestic demand. This paper includes7chapters, except the first chapter, the second and third chapter are analysis bases; the fourth, fifth and sixth chapter are research on theoretical analysis, empirical analysis and reasons for the differences analysis of public infrastructure investment effect separately; the seventh chapter is the part of the conclusions and policy recommendations of this paper; specifically: Chapter1is introduction, which mainly presents research problem origins, research methods and ideas, defining the related concepts.Chapter2is literature review, which clears up theoretical and empirical researches on public infrastructure investment both at home and abroad.Chapter3is an overview of public infrastructure investment in China, which is designed to objectively describe the basic facts of public infrastructure investment since the reform and opening-up in China by using a series of data. Firstly, this chapter briefly describes the total amount of public infrastructure investment and the development of infrastructure stock from1981to2010. The data shows that the total amount of investment and all kinds of infrastructure stock all have a rising trend, the the percentages of public infrastructure investment to total investment in fixed assets and to GDP both improve constantly year by year. Secondly, based on the calculating of provincial data, it is found that public infrastructure investment is concentrated highly in eastern provinces, however, lowly in central and western provinces. Finally, based on the shift-share analysis, this paper examines the growth situation of regional public infrastructure investment by using the2001-2010data of the31provinces in China. The results show that:the growth speed of public infrastructure investment generally lags behind the average growth speed of other industries in China and demonstrates time and regional characteristics obviously, that is the development sequence from the east regions to the west.Chapter4is the theoretical analysis for public infrastructure investment effect, which analyzes and infers how does public infrastructure investment affect economic growth, employment and private investment through applying to the basic theory of the investment, infrastructure, output and employment and the beneficial thoughts of western scholars. This Chapter provides theoretical basis for following text.Chapter5is regional effects of public infrastructure investment and provincial distribution, which is the focus of the study. This paper illustrates the test result of the regional effects of China’s provincial-level public infrastructure investment on private investment, employment and output and quantifies the provincial distribution of the effects by using the1990—2010time series data of28provinces in China and also by creating VAR models. Empirical results show that:there is a spillover effect of provincial public infrastructure investment in China; public infrastructure investment has been a powerful instrument to promote economic performance in most regions; at the aggregate level, direct effects from the local public infrastructure investment are more important than the spillover effects from public infrastructure investment elsewhere; in addition, the effects are distributed unbalanced across regions so that the eastern regions benefit the most while the central and western regions get less obviously.Chapter6is the reasons that cause the regional differences of public infrastructure investment effect. This chapter firstly summarizes the status of China’s provincial public infrastructure investment effect, and it turns out that the eastern region leads in the central and western regions in terms of the absolute value of effect data or in the relative value of the effect distribution. Then it points out that the public infrastructure investment effect is mainly caused by public infrastructure investment differentiated configuration. And then I constructed a theoretical model of endogenous factors affecting public infrastructure investment. I made a quantitative decomposition for factors affecting differentiated configuration of the provincial public infrastructure investment, and the results show that the income level, the public service environment and the public services quality are important factors of the inter-provincial public infrastructure investment. The endogenous factors of the differentiated configuration of the inter-provincial public infrastructure investment can infer endogenous reasons for regional public infrastructure investment effect, so that I put forward with targeted policy recommendations to optimize the public infrastructure investment effect in China.Chapter7is the conclusions and suggestions.This part is used for summarizing the main conclusions of full dissertation as well as bringing forward related policy suggestions. The policy suggestions contain:encouraging high public infrastructure investment rates and restructuring investment regions.Innovations of this dissertation are mainly reflected in research perspective and research method.Innovations of research perspective mainly embody on:Firstly, in Chapter3, on the basis of the analysis of public infrastructure investment’s overall flows and stocks for the past30years in China, the research perspective focuses on eastern, central and western regions and31provinces (municipalities and autonomous regions) level, and this paper comparatively analyzes the regional public infrastructure investment in the development of the three aspects of the investment flows, capital stock, investment growth, and there are differences. The results show that:the general public infrastructure investment in the economically developed eastern part of the province gathered high, lower in the central and western regions, however, the central and western regions public infrastructure overall increased in the proportion of investment of the past10years. Compared with the existing literature, this paper puts the analysis perspective advanced to the provincial-level administrative units. This study fills a certain extent the lack of research in this field.Secondly, most literatures studying on the effect of public investment or infrastructure investment are based on the perspective of eastern, central and western regions in China and analyze different regional effects of public infrastructure investment on regional economic activity. However, this dissertation put research perspective on the effects of China’s provincial-level public infrastructure investment on private investment, employment and output and quantifies the provincial distribution of the effects by using the1990—2010time series data of28provinces in China and also by creating VAR models.Innovations of research method mainly embody on:Firstly, based on the shift-share analysis, this dissertation examines the growth situation of regional public infrastructure investment by using the2001-2010data of the31provinces in China. The results show that:the growth speed of public infrastructure investment generally lags behind the average growth speed of other industries in China and demonstrates time and regional characteristics obviously, that is the development sequence from the east regions to the west; the industrial mix effect is the main factor of deciding the level of public infrastructure investment in every province.Secondly, with a theoretical model of public infrastructure investment’s endogenous factors, the dissertation analyzes factors affecting public infrastructure investment based on the decomposition method of Shapley Value. The study shows that disparities of provincial public infrastructure investment are mainly due to differences of revenues, environment of public services and quality of public services. Therefore, narrowing income disparities, improving the quality...