The Research Of Local Intergovernmental Fiscal Expenditure Competition Strategy Interaction Which Based On Public Services Supply

With the continuous deepening of China’s economic system reform and gradualspeeding up of marketization process, the cross-regional flow and optimalconfiguration of resource factors get unprecedented opportunities. Due to spatialaggregation or diffusion effect of public services making the factors flow betweenregions constantly, the local governments will compete for attracting factors ofproduction fiercely on fiscal expenditure. If a jurisdiction’s fiscal expenditure leveland structure is more effective, under the pressure of competition, other jurisdictionsare likely to imitate the spending behavior of the jurisdiction, which leads to theexpenditure structure and level convergence (this is called the complementaryspending competition strategy). Conversely, when the jurisdiction’s fiscal expenditurelevel and structure is more effective than other regions, it will form a differentiationstrategy interaction with other areas(that is the alternative spending competitionstrategy).In the Game competition for attracting resource factors, the local governmenttakes what kind of strategy to promote the region’s social and economic developingsoundly and rapidly, which has become a hot research issue in theoretical and practicalcircles at home and abroad in recent years.The spatial aggregation or diffusion effect of public services and what impact itdoes on factors’ spatial distribution, which have yet to form effective research systemso far. In this context, this paper takes the research of public services’ spatialaggregation or diffusion effect as a starting point, and is divided into three main parts.First part based on the systematical illustration and analysis of the spatial economicstheory and existing research about public services, researches the factorscross-regional flow which caused by the public services supply and regionaldevelopment gap normatively. That provides theoretical support for subsequentresearch on local government’s strategic interaction of spending competition onpublic services. Second, it investigates the current situation of fiscal expenditure inour country realistically on account of public services supply, and introduces theorigin of the financial competition. Last part tries using Space Durbin Model, to doempirical research on the strategic interaction of public investment fiscal expenditurecompetition among provincial governments through two different weights matrix,which regards the regional economic space correlation analysis as the research clue. Thus for local government making public services supply development strategyprovides the basis of the theory and policy.This paper’s main results show that the local market amplification effect and priceindex effect of public services will promote the factors’ spatial agglomeration, and itsmarket crowded effect will disperse factors distribution, impeding factors spatialconcentration. The strategic interaction of public investment competition which hasstrong homogeneity tendency among provincial governments, gives priority to thestrategic complementarity under economic and geographical distance weight matrix.Besides, in mutual imitation strategic interaction, the level of spending strategicinteraction based on economic endowment is greater than the one under thegeographic adjacent locations that mainly caused by the spillover effect and yardstickeffect. The innovation of this paper is that it elaborates the three kinds spatialaggregation or diffusion effects of public services and which influence they do onfactors’ spatial distribution systematically for the first time, and further it discussesthe influence which the public services do on the factor spatial equilibriumdistribution and regional disparities. Besides, based on the view of public servicessupply, it researches the strategic interaction of fiscal expenditure competition amonglocal governments by using spatial Durbin model under the different spatial weightmatrixs.