Research On Poverty Reduction Effect Of Fiscal Expenditures In China

Alleviation of poverty not only helps to maintain social stability,but also helps to promote long-term economic growth.For China,who adhering to the road of building socialism with Chinese characteristics,alleviation of poverty is definitely something inherent in the realization of common prosperity of the whole society.However,alleviation of poverty is a global problem.In spite of the fact that most regions in China were out of poverty and built moderately prosperous society after China's three decades of rapid economic development due to the reform and opening up,a few localized areas are still caught in the poverty trap,especially in minority areas.The central and local government expenditure is an important tool to solve the problem in poor areas.After President Xi Jinping put forward the important thoughts to take targeted measures in poverty alleviation,the key issue to be addressed urgently is to maximize the poverty alleviation effect of fiscal expenditure under the current fiscal anti-poverty policy.In view of this,the impact of fiscal anti-poverty policy on income and welfare are studied in this paper,and a case study on the poverty alleviation result of fiscal anti-poverty policy in Tibet-a typical poor minority area-are provided.This paper focused on the study of the mechanism of how expenditure policy realize poverty alleviation,and proposed the path to maximize the poverty alleviation effect of fiscal expenditure accordingly.Specific issues studied in the paper are as follows:First,the basic situation of poverty in China and the historical evolution of fiscal policies to reduce poverty.Through the collation and analysis of relevant data,the current poverty problem in China are summarized,and the historical evolution of fiscal policies to reduce poverty are recalled.Taking Tibet-a typical poor minority area-as example,the causes of poverty in some areas are summarized from the economic and non-economic perspective.Conclusions show that:China's current poverty has three major problems:Firstly,the urban-rural income gap is widening,poverty in rural areas is more prominent;Secondly,the internal income differences of urban and rural residents are both increasing,individual income gap becomes more obvious;Thirdly,regional development imbalances,which is particularly serious in minority areas.Three main reasons leading to the current problem of poverty in China are lack of physical capital,human capital shortage and social capital shortage.Tibet's capital formation,savings accumulation,levels of human capital and technology and other aspects are below the national average,making it easy to fall into the poverty trap as described in the theory of development economics;area characteristics,the number of family members,population structure,the sectors engaged by key personnel,educational level and family-owned social resources are important factors causing poverty in Tibet.Through reviewing the historical process and basic issues of Chinese poverty,it is found out that the effect of fiscal policies to reduce poverty shows marginal decrease,poverty alleviation is becoming more and more difficult currently,fiscal policies to reduce poverty is entering a crucial stage.Second,the mechanism of fiscal expenditure on the poverty alleviation.By sorting out the literature,a theoretical framework for poverty alleviation effect of fiscal expenditure is constructed,and the mechanism of income effect and welfare effect of fiscal expenditure in poverty alleviation is analyzed.Furthermore,based on China's impoverished rural areas,by regress panel data analysis from 1999 to 2006 in 29 provinces,the empirical research on the income effect of fiscal expenditure to reduce poverty is conducted.Meanwhile,based on Chinese rural poor groups,with reference to features and capabilities dimensions of Sen,by applying entropy method and set pair analysis,the function index,welfare index and general well-being index of key poverty counties are estimated during the year of 2002 to 2010,the welfare effect of fiscal spending on poverty reduction is explored.Conclusion:(1)Rural poverty is a long-term problem,returning to poverty again and many other issues happened as well.The key point of fiscal spending is not only to address the urgent need of some group but also strengthen the self development capacity of poor people.(2)Since 2002,the total level of social welfare in key poverty counties are rising,the average annual growth of function index,capability index and general well-being index are 6.7%,11.1%and 8.9%.In the initial years,capability index was lower than function index,but reversed from 2004.(3)Welfare increase has two kind of impact on poverty alleviation.On the one hand,the welfare effect can directly improve the production and living conditions of the poor,and indirectly improve the market conditions and production conditions of the poor,thereby forming a virtuous circle:reducing poverty? enhance the welfare? reducing poverty.On the other hand,the high level of welfare encourages leisure,which greatly affected the willingness of employment of welfare recipients and employment status,welfare frauds emerge in endlessly,welfare dependency even pass in the intergeneration,long-term poor families enter into "poverty trap".Last but not the least,through the research on Tibet-a typical poor minority area-the causes of minority areas trapped in poverty for a long time,as well as the optimal path of expenditure to reduce poverty,are analyzed.Conclusions show that:lag of economic development is the root of overall poverty in Tibet Autonomous Region;families' fertility,mortality and level of education are all closely related to the families' poverty level,Per capita GDP is the best in fiscal expenditure "poverty alleviation",followed by the rural per capita income,mortality and population with primary education or less.Thus,all levels of government should put the improvement of public welfare in priority while reducing poverty through fiscal expenditure,and focus on the income increase of farmers and herdsmen in the development of economy,centering on education and construction and accumulation of human capital.Through the study of the above three main issues,this paper reviews the development process of China's fiscal expenditure policies to reduce poverty.Under such policies,by studying the mechanisms of the income and welfare effect of fiscal expenditure,the causes of poverty in minority areas such as Tibet and possible path to reduce poverty by fiscal expenditure are studied.Relevant conclusions have important policy implications:one is to promote the economic development of the poor areas and another is to improve the welfare level of the poor groups.