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A Study of the Differences in the Supply of Public Goods in China and the Convergence in Economic Growth

Author: ZuoJianXiong
Tutor: YinXiGuo
School: Chongqing University
Course: Industrial Economics
Keywords: The supply of public goods Regional differences GMM Convergence of Economic Growth
CLC: F812.45
Type: Master's thesis
Year: 2013
Downloads: 2
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Abstract


The growth of public expenditure in China has exceeded the growth of GDP since1998; the18th CPC National Congress has declared that, to improve the socialistconstruction the government would provide more public goods. These phenomenaindicated that the government has increased investment in the supply of public goods,but social voices and academia research are still focusing on the problem of insufficientsupply of public goods. The one hand was the high-speed growth of governmentspending, on the other hand was severely criticizing the insufficient supply of publicgoods, the real reason for this phenomenon is the regional differences in the supply ofpublic goods. Then to study the relationship between the difference of the supply ofpublic goods and economic growth and its convergence has important theoretical andpractical significance with the problem of public goods supply in China’s economicgrowth and reduce regional development disparities.This paper mainly includes: Combed the domestic and foreign research literatureon public goods supply and economic growth relationship, and had a short review of therelevant literature. Drove the relationship between public goods supply and economicgrowth form Theoretical model, analyzed the effects of public product supply oneconomic growth, and analyzed the effects of public product supply on the convergenceof economic growth. Measured the differences in supply of public goods in China withGini coefficient, GE0, and Theil’s index, summarized the differences in the change intrend of public goods supply, decomposed the difference to have a better analysis of thedifferences within their group and inter-group differences in the changes. Construct aneconometric model on the basis of theoretical analysis to test the relationships of publicgoods supply, regional economic growth and its convergence; in those tests we stillconsidered the long-term economic effect model and area effect. At last draw out theconclusions and policy recommendations based on the theoretical and empirical studies.The theoretical model has proved that the supply of public goods has a promotingeffect on economic growth; the supply of public goods affected the economic growthwith reducing costs, structural effect, adjusting the economic cycle, improving theenvironment and etc. And the supply of public goods still affected the convergence ofeconomic growth with capital, technology, labor productivity and etc. Measure of thedifferences in the supply of public goods has showed that differences of public goods supply has totally declined, but changes of the supply of public goods in different areasare not the same, differences within the region is a major problem that we may face within the future. The results of econometric tests show that the economic growth of Chinatotally has a significant conditions β convergence, and the Sub-regional test shows thatthis conditions β convergence is more significant in Eastern region. The supply ofpublic goods has a significant effect on the long-term economic growth; some of thesepublic goods played different roles in the economic growth of eastern, central andwestern regions in China.

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CLC: > Economic > Fiscal, monetary > Finance, the state's financial > China's financial > Financial income and expenditure > Expenditure
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