Study Of Public Expenditure Efficiency And Influencing Factors Of Local Government In China

Public expenditure is an important tool for achieving public fiscal policy, reducing regional disparities and promoting social justice. Government has increased public expenditure year by year after its implementing tax, but its overall and regional public expenditure efficiency varies considerably. Public expenditure efficiency has become an unavoidable problem of China’s local government.Study on the evaluation of the government’s public expenditure efficiency and its impact factors is of great significance, which contributes to the change of government public service function, conducive to the formulation of public and regional policy. This article focuses on research in differences of public expenditure efficiencies of different regions and policy influence factor of public expenditure efficiencies. Based on the panel data of28provinces in China from1995to2009, the paper analysis dynamic change of regional public expenditure efficiencies and influencing factors by using two-stage framework of DEA-TOBIT and DEA-Malmquist index calculation.It is concluded that, first, the efficiency of public expenditure in China exists significant regional differences among three areas:the efficiency is higher in eastern and middle areas, and is lower in western area. Second, further decomposition of public expenditure shows that the effectiveness in middle area benefit from the two factors of the pure technical efficiency and scale efficiency; The eastern part has appeared polarization, namely, a high pure technical efficiency and scale efficiency of a low; The efficiencies in western part are both low. Third, government scale has a significant negative correlation with the efficiency of public expenditure, however, population density and market level have a clear positive correlation with the efficiency of public expenditure, meanwhile, economic growth, private investment and public spending efficiency are positively related. Fourth, public fiscal policy helps increase the efficiency of public spending and reduced the eastern, central and western regions differences,however, it is maybe as a result of the west part efficiency enhance and east efficiency drop. Comprehensive full-text, this article explains from the decomposition of internal efficiency and policy factors why public expenditure efficiencies changes in western and eastern regions since2003.Based on the above, this paper makes recommendations for improving the efficiency of public expenditure, including changing government functions, developing targeted regional public fiscal policies and strengthening related mechanisms. Finally, this article has made further study prospects. Believe that this article will have a great significance to the public fiscal reform, promoting the equality of basic public services and reducing regional development disparities.