The Influence Of Productive Expenditure On Economic Growth In Western Region: A Comparative Analysis

Issues related to economic growth has long been a hot issue of common concern to economists, and how to achieve sustained economic growth is the goal of the efforts of governments. Since the reform and opening up, China’s achievements in economic development has attracted worldwide attention. In the process of rapid economic development, China is also facing the problem of uneven regional development, particularly between the eastern and western provinces. To alleviate regional economic disparities, government fiscal policy uses a variety of methods and tools and increases financial resources to the western region, most of which for productive fields. Thus, has these financial resources, especially productive expenditure, played a role in the western region’s economic growth? What is the role? This is worthy of further verification.In the research of relationship between productive fiscal expenditure and economic growth, productive fiscal expenditure is firstly defined as the part of fiscal expenditure, which can make changes in the macro-production function and increase the steady economic growth. Secondly, based on the classical endogenous growth theory and regional economic convergence theory, theoretical analysis in this article explains flows and stocks of productive expenditure and their relations with the regional economic growth. Thirdly, on the basis of theoretical analysis, this article uses1993-2010panel data to establish municipal empirical model, using GMM estimation method on empirical test of the relationship between the flow and accumulation value of productive expenditure and economic growth. At the same time, contributions of productive expenditure on economic growth between eastern and western regions are also compared. Finally, this article proposes policy recommendations to adjust and improve financial expenditure in the western region.