The Impact Research On China’s Fiscal Decentralization To Local Government Investment In Science And Technology

With the development of economic globalization, science and technology innovation has become the core of the competition in comprehensive national strength.Science and technology leading role has become increasingly apparent in promoting economic growth. Therefore, China increases investment in science and technology,especially significantly increases the investment of government.Since the implementation of fiscal decentralization, the central government decentralizes power to local government gradually. So local governments have corresponding authority. But with the developing of financial decentralization, every government has intensified the competition for their own economic interests.In essence, this competition can improve social welfare. But because China’s promotion incentive is GDP as evaluation indexes, the local government will pay more attention to infrastructure construction which can rapid drive economic growth, thus ignore the supply of public products which will improve the level of social welfare.However, there is certain difference between technology and other social public product.It can not only improves the welfare of society as a whole, but also has made a great contribution to our country’s economic growth.At the same time, investment in science and technology can directly participates in production activities as a production factor, but compared to infrastructure, it takes longer time to produce economic benefits. In the background of Chinese fiscal decentralization, when local governments consider their achievements appraisal target and term limitations, this paper tries to research and explore these questions: how will they make the decision about the degree of fiscal expenditure on science and technology?And what effect does financial decentralization have on regional government technological investment.In this paper, the date is from 1997 to 2013 China 30 provinces as a sample. First of all, the paper analyzes the current situation of our government investment in science and technology from the total amount,structure and space. The data shows that the Chinese government is stepping up its fiscal expenditure on science and technologyyear by year, and the absolute growth of local government investment is greater than the central government in science and technology. At the same time, the investment structure of the central and local government is changing gradually, the responsibility of the government financial investment in technical innovation has increasingly relied on the power of local government. In addition, there are lots of differences among each region in development situation and the trend of the gap are widening gradually.Secondly, in order to reflect all the information of fiscal decentralization comprehensively and accurately, this article selects the multidimensional fiscal decentralization index, and uses a principal component analysis(PCA) to compound combined index of fiscal decentralization. Finally, in this paper, we use panel model in-depth analysis of the relationship between financial revenue decentralization,financial expenditure decentralization, financial revenue autonomy, financial expenditure autonomy, comprehensive financial decentralization and the government technology investment.The results show: Different fiscal decentralization indexes and the combination of fiscal decentralization indexes have a promoting effect on the local government investment in science and technology. The impact of the level of economic development to the local government investment is non-linear growth trend in science and technology.The promotion of foreign trade can also promote government investment in technological innovation. But the rivalry of the governments can hinder the local government investment in science and technology to a certain extent.