Fiscal Expenditures, Spatial Spillover Effect and Services Growth: The Analysis of Spatial Durbin Model Based on Central City Data

Hao Hongjie

doi:doi:10.16538/j.cnki.jsufe.2017.04.007

Abstract

Nowadays the problems of backward development in central cities’ services are very outstanding in China. Local fiscal expenditures have not only direct and indirect effects on the local services growth, but also spatial spillover effects on the neighbor cities’ services growth. Using the panel data at central city level and spatial Durbin model, this paper makes an empirical analysis of the impacts of local fiscal expenditures on local services growth and its spillover effects on the neighbor cities’ services growth. It arrives at the results as follows: firstly, total fiscal expenditures, education expenditures, science & technology expenditures, and public transport expenditures have positive effects on local services growth, but their spatial spillover effects on services growth in other cities are significantly different, namely the spatial spillover effects of total fiscal expenditures and education expenditures are positive and the spatial spillover effects of technology expenditures and public transport expenditures are negative; secondly, through regional analysis, from a perspective of promoting the overall development of national services, the eastern cities need to increase science and technology expenditures, the central cities should give priority to the infrastructure expenditure, and the western cities should increase education spending first. In short, in order to promote the overall development and optimizing layout of service industries in China, governments of central cities need to improve the fiscal expenditure policy supporting the development of services, dynamically optimize the fiscal expenditure structure, and improve the system of financial transfer payment and the regional fiscal policy coordination mechanisms.