Research On The Effect Of Hunan's Fiscal Expenditure On Regional Economic Convergence

The long-term goal to a region is sustainable economic growth and balanced regional development, the effects of movement expenditure on regional economy have become the focus of economic research. Regional economic development theory gives the powerful explanation to the trend of regional economy gap,the factors which lead to the trend, and the reason of Government's intervention in regional economic .In 1994, the reformation of tax system was going on. Since then, the policy of fiscal expenditure has been an important one to adjust the regional economy. Now the regional economic disparity in Hunan province is larger. To know whether current fiscal expenditure in Hunan province has normal effect on converging the regional economy, this thesis describes that there is large regional economic disparity in Hunan Province, as well as the eastern, central and western part in Hunan Province divided by the level of economic development. Then based on the data of per GDP growth recorded from 1995 to 2007, making the data of per GDP from 1994 to 2006 as the initial variable and screening out the total fiscal expenditure and the number of financial expenditure structure as the control variable, it examines the convergence of regional economic development by using the least square method since 1994 in Hunan province.The result shows that there is no absolute convergence in Hunan province and the eastern part, but in central and western parts it exists club convergence; total financial expenditure has effect on converging the regional economy in Hunan province, as well as in eastern, central and western parts; the number of fiscal expenditure structure differently impacts on the convergence of regional economic development.Finally, on the basis of the conclusions by empirical analysis, the policy suggestions put forward in this paper are given on the total fiscal expenditure and the number of fiscal expenditure structure, such as reasonably protecting the scale of fiscal expenditure, maintaining the scale of capital expenditure, adjusting the supporting of agricultural production expenditure, optimizing the social culture and education expenditure, improving the social security expenditure, reducing the size of administrative costs and so on.