Regional Fiscal Expenditure On Public Goods And The Effectiveness Of Public Goods Supply

Public finance has been playing an important role in China's market economy reform since 1978.There has been a huge change in China's property right structure:a new form of mixed property right structure has been set up with the shareholding reform of enterprises,which ended the era of public property system in planned economy times,and it has brought about the multi-property right reform and the establishment of modern enterprise system.The transformation of China's property right structure has also required the government to transfer its role in economy growth and society development,and it is the institutional motivation of China's public finance transformationAccording to the empirical facts of developed countries,the governmental expenditure on public goods would grow like a 'semi-U curve' as the improvement of economy growth Meanwhile,the transformation of governmental expenditure scale would also cause its internal structure to lean more on the supply of regional public goods,and it is very likely to bring about the inflection point of the effectiveness of public goods supply.We found that the proportion of China's governmental expenditure of GDP has been rising consistently and we presume that the inflection point of China's regional public goods supply would be around the corner.This paper evaluated the effectiveness of the supply of public goods on livelihood of Chinese regional governments from 2007 to 2017,with the method of Factor Analysis(FA).We found that there has been a major difference among the effectiveness of the supply of public goods on livelihood of different provinces.Those provinces(or municipality cities)with higher GDP growth rates like Beijing,Shanghai,Guangdong,Zhejiang and Jiangsu would be more capable of supplying regional public goods to their residents,while those with lower GDP growth rates would perform badly according our evaluation.Moreover,some provinces(or municipality cities)would improve the status of public goods supply with the help of financial transfer payment among regional governments.It revealed that economic capability was not the only factor that affected the supply of regional public goods.The results of our empirical study showed that governmental fiscal expenditure on livelihood would have Crowding-in Effect on the effectiveness of the supply of regional public goods on livelihood while governmental fiscal expenditure on economy growth would bring about inverse effects.The opening-up status would be negatively correlated with the effectiveness of regional public goods on livelihood,and fiscal decentralization would have a negative correlation while fiscal responsibilities would have a positive correlation.The promotion of urbanization would increase the effectiveness of regional public goods on livelihood and promote the general status of the supply of public goods of the whole region.Whether regional economy status had positive or negative correlation was not clear,and there has been no evidence showing that financial transfer payment and population factors would have obvious correlation with the effectiveness of regional public goods on livelihood.