The Research Into The Influence Of Public Expenditure On The Quality Of Economic Growth

The relationship between public expenditure and economic growth has been oneof the hot issues discussed in the economics profession, and the level of the TFP(total factor productivity) is an important norm to measure the quality of economicgrowth, however,the rapid growth of China ’s economy is mainly relying on the largenumber of factor inputs such as capital and labor, rather than by increasing the levelof TFP to achieve that, with the deepening of reform and opening up of china, theextensive mode of economic growth is bringing about the waste of resources,environmental degradation, economic structural imbalance and other issues hasbegun to affect our sustainable economic development. Therefore, it is urgent toenhance the quality of economic growth, the key point to improve the quality ofeconomic growth is to accelerate scientific and technological progress, improve thequality of workers, and optimize resource allocation, in other words, all these aredepended on the TFP growth, while the government lead the process of promotingeconomic development and improving the quality of economic growth.this paperresearches the issue of TFP growth from the perspective of the government’s publicspending, has important practical significance and theoretical value to makereasonable fiscal policy in China to enhance the quality of economic growthFristly，for more in-depth study of the impact of public spending on TFP, on theone hand, this paper theoretically has divided the public expenditure into theeconomic expenditure, social expenditure and maintenance expense, then discussedtheir impact on TFP mechanism respectively:economic expenditure influences TFPthrough affecting capital investment;social expenditure influences TFP throughaffecting investment of labor,human capital and R&D capital;maintenanceexpenditure influences TFP by forming informational public goods and leadingtechnology innovation. In addition, in consideration of that there will be a lot offactors affect TFP, this paper has taken the total revenues of local government, FDIand foreign trade into account: fiscal revenue influence the TFP through taxincentives, FDI affects TFP by promoting technology spillover, international tradeaffects TFP by optimizing the allocation of resources, promoting internationalknowledge spillover, and deepening specialization.Secondly， the article also introduces a method of measuring the total factor productivity, which is called stochastic frontier analysis method, including itstheoretical model, estimation and inspection. Also, this paper uses stochastic frontierproduction function model to estimate the TFP level of China’s29provinces in2000-2011, the results of the analysis can be obtained from calculation results: from2000to2011, China ’s overall TFP shows a steady upward trend, but the growthspeed is very slow, China ’s economic growth is still an extensive growth, tomaintain high economic growth of China, TFP must be improved fundamentally.Finally, this paper takes advantage of the ordinary least squares method and thepanel data of eastern, central and western region which have included29provinces todo empirical estimates,given the quantitative results that various factors affect TFPin each area. The empirical results show the result as follows: the economic publicexpenditure of the three regions have an significant positive effect on TFP;the impactof social public expenditure of the three major areas on TFP is different, the impacton the eastern and central regions is significantly positive, but the empirical results inwestern region is negative, which represent not significantly; the impact ofmaintenance public expenditures on TFP is different in the three regions, the easternregion and central region showed no significant positive correlation,but the westregion showed a significant positive correlation. Fiscal revenue has a significantlynegative impact on TFP in eastern area,but the effect on TFP of the west and centralregions are both non-significant.The impact of FDI on the eastern and central regions is significantly positive,while the western region has significantly negative impact on TFP; Foreign Trade onTFP of the eastern and middle western region has significantly positive impact. Allthese results indicate as follows: the influence of China’s local government publicexpenditure on TFP varies between spending content and region, regionalgovernments should improve the financial expenditure structure to promote thequality of economic growth in the region; the influence of fiscal revenue on TFPvaries from different areas, the government should adjust tax policy to localconditions；the impact of FDI on TFP varies from region to region, government needsto strengthen the correct guidance of foreign direct investment; foreign trade is ansignificant role in promoting the quality of regional economic growth,our countryshould actively expand foreign trade investment.