Based On The Grey System Theory In The Evaluation Of The Effect Of Local Government Investment In China

As the central government carrying out fiscal decentralization system, the right ofautonomy and economic power of local government gradually increase and itsimportance in the region and the national economic development is prominent. Localgovernment investment is an essential tool for local governments to control the market,which plays a decisive role in the economic growth, the allocation of resources,environmental protection, people’s livelihood improvement, etc. But in the economictransition period, on the one hand, the local government investment has promoted theregional economic growth, adjusted the structure and improved employment and so on,realizing double destinations of the economic effect and social effect; On the other hand,because of the existence of imperfect performance evaluation system, there is aphenomenon of compared and blindness investment in the process of one-sided pursuitof GDP growth, limiting the rational allocation of resources and hindering thedevelopment of economy. At present, in order to improve the regional comprehensivecompetition strength, the local government actively pursues a policy of investmentstrategy. In this background, evaluating the effect of local government investment helpsprovide theoretical guidance and policy basis for local government investment, so as togive full play to the functions of the government investment and to promote thecomprehensive, balanced and sustainable development of regional economy.This article uses the grey system theory and the grey relational analysis method toevaluate the effect of China’s local governments’ investment. Firstly, the grey systemtheory in the applicability of the evaluation of the effect of local government investmentis discussed. The results indicate that it is helpful to expand the thinking of evaluationof the effect of local government investment and it has certain significance forpopularization. Secondly, the grey relational analysis method is suitable for dealing withuncertainty, small sample and multivariable situations which provides a new empiricalmethod for evaluation of the effect of local government investmentThrough the theory review and analysis of the effect of local governmentinvestment at home and abroad, the theoretical framework of local governmentinvestment effect is built, the connotation of the local government investment effect isclarified and the category of local government investment is specified. Thus it designs aset of effect indicators basic framework about local government investment which is constituted of the overall objective layer，the efficiency evaluation（including the effectof economic growth、structural adjustment、infrastructural construction、environmentalprotection and people’s livelihood）as well as the basic index layer. On this basis, it usesthe local government investment effect evaluation model of grey relational analysismethod on the empirical analysis of local government investment by taking the fivecentral cities as an example. The results of comprehensive analysis: Beijing’sinvestment effect is best, Shanghai and Guangzhou is the second best, Tianjin andChongqing at the end. The results of single analysis: the single effect of the fivenational central cities presents obvious imbalance. Through the analysis, it finds thefactors, which affect the various municipal government investment effects, and verifiesthe effectiveness and applicability of the grey relational analysis model. Finally, it findsout problems and puts forward some countermeasures and Suggestions according to theevaluation results.