The Study On The Regional Economic Effects Of Public Investment And Its Differences

Public investment as one of government macro-control policies, plays an important function of regulating the economy.However, due to the extent of regional economic development and the different emphases of government policy in different regions, the impact of public investment’s size and structure on economic growth has regional differences.At the beginning of reform and opening up, China’s unbalanced development strategy has brought rapid development of China’s economy, but also leed to a serious imbalance of regional economic growth.In China,the regional economic development gap continues to widen.Data shows that in2012China’s GDP per capita in the east were1.91times of the central and1.61times of the west.China’s regional economic growth disparity caused by many reasons,and the government public investment is one of the most direct and the most important factors on regional economic development gap.Therefore, the study on the the regional economic effects of public investment and its differences has an important significance on China’s overall economic growth and coordinated regional development.Based on the theory of public investment and economic growth, this paper analyzes the regional economic effects of public investment and its differences, using data from1995to2012.In the first, this paper defines the content and scope of public investment, and introduces the basic theory of public investment and economic growth, and studies the influence path of public investment on economic growth.Secondly, this paper studies the overall effect of the economic growth of public investment in the East, Central and West in China and their differences.On the base of analysis of the current situation of China’s public investment in the East, Central and West and regional economic development,this paper uses Johansen cointegration test based on VAR model and threshold effects regression model to have a study on economic growth effect of public investment and optimal scale in different regionals.According to the results of public investment’s economic growth,output elasticity of public investment in the Eas、Central and West are32.36%、36.42%and60.97%.It reflects that public investment has the greatest impact in the West, and has the least important impact in the East.According to the research of the optimal size of public investment, the optimal size of the public investment in the East, Central and West are10.84%,14.85%and26.42%.And the actual scale of public investment in the East exceeds the optical size since2004,while the investment in the Central and in the West exceeds their optimal scale only in individual years.It says that public investment of the East surplus,and the Central and the West are lack of public investment.In the third, the effect of economic growth of China’s public investment structure in different regionals and its differences are studied. On the brief analysis of the structure of the public investment in the East, Central and West of our country, this paper uses cointegration test of VAR system to analyze regional economic growth effect of different public investment project,and then uses threshold regression model to study the regional optimal size of different investment projects.The results of the regional economic growth effect shows that output elasticity of public investment on Health and Social work in the East, Central and West are64.55%,55.34%and42.95%.Obviously, public investment’s output elasticity is different in different regions.The same conclusion applies to other public investment industries, namely that the output elasticity of public investment on the all industries studied in this paper have regional differences.The study on the optimal scale of different investment project shows that the optimal size of public investment on the six industry studied in the West are larger than that in the East and Central.lt explains that public investment has extremely importance to economic growth in the West.Finally, on this paper’s study,some suggestions of public investment and regional economic coordinated development are put forward.It is necessary to control amount of public investment while optimizes public investment structure in the East.It is also necessary to increase investment in education and technology industry of the East. The Central and the West should appropriately to expand the scale of public investment, and increase investment in infrastructure, education and science and technology, health and social work sector.The three regional should adjust their size and structure of public investment while focusing on regional public investment fair to maximize the important role of public investment in the leading role in the economic growth and in the coordination of regional economic development.