Research On Public Investment Efficiency In China

China is now in the economic system during the transition period from planned economy to a market economy. With a high-speed increase of the level of economic development, the demand of social infrastructure, social security, basic education, environmental protection and other public goods and services increased accordingly. Now the scale of public investment shows a expanding trend to meet these needs and to create a better environment and conditions for the accumulation of social capital. However the factors which determine public investment efficiency is multi-facted. What is the optimal scale of public investment? What is the efficient allocation of public investment expenditures between industries? How about the public investment of our country at this stage? How to deal with the relationship between the public investment spending and resident consumption, and private investment spending, and other private sectors? Public investment won’t promote China’s sustained, healthy, stable growth until we can solve these questions. Because we can’t improve the efficiency of public investment if we can’t have a comprehensive and correct understanding of these factors that influence public investment.In this paper, we analyze the efficiencies of public investment in China’s economic growth, the structure and scale of public investment in China to evaluate the efficiency of China’s public investment.Investigated from the theoretical and empirical analysis, we find that, with public investment expanding in recent years, the economic efficiency is lower and lower conversely.In this paper, when we inspect the structural efficiency of public investment in China through static and dynamic perspectives, we divide the total spending into socio-economic construction expense, social culture and educational expenses, and maintenance expenses by its function.In the static point of view, these components of public investment spending have different economic effects, their output elasticity were0.35,-0.15and-0.32. On one hand, the spending on the socio-economic construction has the largest output elasticity, and meanwhile it has the largest proportion in the public investment spending, which accounts for more than3/4. On the other hand, the proportions of the other two parts to total public investment expenditure have a downward trend, which is consistent with the fact that the output of these two components is negative. As a result, from these two points, China’s public investment is efficient.From the dynamic aspects, we examine the impact of total fixed asset investment in electricity, gas and water production and supply, as well as total fixed asset investment in the transportation, storage and communications industry on economic growth. These two parts effect the GDP in different directions and the effects are cyclical, but over time each part of the investment will promote a large-scale economic growth. From this point, we can also conclude that the public investment structure in China is efficient.Then, this paper analyzes the scale efficiency of China’s public investment, and gets the optimal scale is that the expenditure should account for8%of the GDP. Compared China’s actual size of the public expenditure with the optimal one between1997and2010, the scale of public investment in China has been much higher than the optimal value since2003, there is over-investment. Therefore, we can conclude that China’s public investment is scale non-efficient.Finally, by analyzing and comparing the public investment efficiency among China’s31provinces and autonomous regions, we can find that there are also some unreasonable phenomenons in the public investment distribution. The non-efficiency of public investment is in general among these areas, which will hinder the healthy economic development of these areas, and should arouse the attention of the national local government.In summary, although there are still some problems and deficiencies, the total quantity, structure, scale of China’s public investment spending are efficiency, and be able to guarantee our economy’s sustained, steady and healthy development.