The Study On Public Capital Investment Effectiveness Of China’s Unbans

Endogenous Economic theory tells us that capital is the basic elements to promote theprocess of economic growth and urbanization. if it doesn’t have the physical capital, humancapital, knowledge or technological progress is difficult to promote economic growth, sowe can see the importance and basic significance of capital. The increase in capitalinvestment is the most important source of economic growth for developing countries. Thegovernment’s public investment is to promote capital formation, economic growth, animportant factor to promote urban development in developing countries. In the Westernclassic theory of public investment is assumed to be the main non-productive publicinvestment and is to provide better facilities and services for the private investment. Thuspulling effect of public investment on private investment becomes an important aspect ofthe public investment in research in the field.Since the reform and opening up, the rapid advance of the process of urbanization inChina, urbanization and urban economic development is also facing prominent problem,scholars have studied the Yangtze River Delta and the Pearl River Delta size distribution ofcities Temporal and spatial variations，they assumed that the size of these small andmedium-sized cities growing faster than the size of the big cities and mega-cities grewmore slowly (Puying Xia,2009; Zhanghong Ou et al,2006). Above the city’s urbanizationdevelopment due to the difference, from the public capital-effectiveness analysis of thisphenomenon, pointed out that the reason for the difference of the traditional big cities andthe urbanization of the emerging medium-sized cities.This paper from the perspective of public capital investment effectiveness, to explorethe causes of above phenomenon, through empirical test, confirmed that the super city inthe eastern and western key cities public capital investment have negative effects, while inmedium-sized city have positive effect in the east, to further study on the reason why thereare differences in various areas in public capital investment effectiveness. Through VARmodel, we can further conclude that public capital in the eastern city has significant crowding out effect, in the east secondary cities also have crowding out, but less thaneastern cities, while crowding out effect in the Midwest city is obvious. Finally, we drawthe corresponding policy suggestions：rationalization of city size and promoting theurbanization process; reasonable distribution of public investment, improving theefficiency of public capital; continuing to increase public investment in west cities andnarrowing the gap between regional economy; encouraging private capital into state-ownedmonopoly industries and weaken the crowding out effect.