The Pulling Effect On Water Conservancy Investment On The National Economy In Shaanxi Province

Water conservancy construction as public infrastructure is a part of the nationaleconomic and social development, the function of water conservancy investment is veryimportant to the national economic development and the increase of domestic production,water conservancy investment can be developed for other industries to provide basicproduction conditions. The development of water conservancy construction has promotingeffect on the growth of the national economy, and to a certain extent, it will become thenational economy "bottleneck", the development of the water conservancy development cannot keep up with the national economy. Therefore, It is necessary to study water conservancyinfrastructure to stimulate economic growth, that is of great importance to determine the waterinfrastructure investment direction. The study of these problems promotes the waterconservancy construction foundation in Shaanxi province, and improves the present situationof water conservancy construction, realizes the basic work for the development of oureconomic.Based on the data of Water Conservancy in Shaanxi Province in1985-2011, this paper doempirical analysis on the relationship between water conservancy investment and GDP byusing some econometric methods, including vector autoregression (VAR) model，Grangercausality test, impulse response and variance decomposition，and also uses the Cobb-Douglasproduction function to estimate the output elasticity of economic growth which is triggered bythe investment of fixed assets in Shaanxi Province, then based on those previous analysis, thispaper estimates the contribution of water conservancy construction investment on economicgrowth and the expanding employment opportunities, and give the appropriate policyrecommendations.The research shows that:There exists a two-way causal relationship between waterconservancy investment and economic growth. GDP is the Granger cause of waterconservancy investment, and water conservancy investment is the Granger cause of GDP.That means water conservancy investment has a long-term growth effects on economicgrowth, and it has a strong impetus to the development of the national economy. In return,economic development has a significant role on the investment of water conservancy. By drawing a response of GDP to the water conservancy investment, it shows that the newinterest rate difference of the standard deviation are more sensitive in the previous period,which has been very volatile and keep in a positive effect phase, and then the response degreeof GDP on I has gradually weakened. First, The new interest rates response of a standarddeviation of water conservancy investment on GDP is in a positive phase, it graduallyincreased after the second period, and then stabilized after the fourth phase. Consistent withthe previous Causality test, water conservancy investment’s effect on promoting economicgrowth is more obvious in a relatively short period. Overall water conservancy investment hasa role in stimulating the economy, which indicates that with the accelerated process of waterconservancy investment, GDP has been stimulated. From the variance decomposition of GDP,the effect of GDP on its own of its own has a strongest contribution on the beginning, andlater it dropped at63.23%at phase10; the contribution of Water Investment on GDPgradually increased, and reach36.77%in phase10; from the results of variancedecomposition on water conservation investment, the contribution of investment in waterconservancy on itself has a strongest contribution on the beginning, and than dropped at87.75%in phase10; the contribution of GDP to investment in water conservancy is graduallyincreasing, and it reached10.27%in phase10, indicating that with the development of thenational economy, we should strengthen the support of China’s water conservancy investment.Based on previous verification, this paper uses the Cobb-Douglas production function toestimate the output elasticity of fixed asset investment on economic growth of ShaanxiProvince, and estimate the contribution of water conservancy construction investment on thepromotion of economic growth and the expanding of employment, and found that the increaseof water conservancy investment can promote the national economy and employment inShaanxi Province, the effect on national economy is gradually increasing, but the effect onemployment is increasing first but reducing later.