The Spillover Effect Of Inverted U-shaped On Urban Infrastructure Investment And Enterprise Efficiency

Since the reform and opening up, China’s infrastructure construction has made remarkable achievements. At the national level, from 1979 to 2007, the national infrastructure total investment reached 29 trillion yuan, an average annual increase of up to 19.9%; At the city-level, urban roads, public green spaces, city water, city gas and other municipal facilities, has made rapid progress. But it is worth noting that at that time, China’s manufacturing economy of TFP and the rate of return on capital output shaw another deteriorating scene.However, considering the economic benefits of urban infrastructure investment we also should consider its negative impact. The traditional IS-LM model of public investment on the "crowding out" private investment is also an important aspect.Given China’s large institutional background to the "land finance" for the support of the local government investment and financing urban infrastructure mode, what impact on the efficiency of enterprises will become a key issue of concern in this article.Firstly, through analysis on both demand and supply of urban infrastructure, thus taking into account the premise of "land finance" crowding-out effect, and proposed that "inverted U-shaped" hypothesis may exist between urban infrastructure investments and enterprise efficiency; then build dynamic panel models. In controlling regional and firm heterogeneity,explanatory variables quadratic terms and cross multiply items are introduced. The empirical results show that, due to the "land finance", there is a certain degree of "inverted U-shaped" features between urban infrastructure investments and enterprise efficiency and the features are more evident in large cities and non-state-owned economy.Finally, combined with the actual situation of China’s economic development, some suggestions for the local government on urban infrastructure are put forward.