The role of provincial government spending composition in growth and convergence in China
China’s development policy since 1978 has differed across regions. With rapid aggregate growth has come widening regional inequality. The fiscal decentralisation reforms in 1994 shifted political pressure onto provincial officials to boost local growth through local public investments. These investm...
| Main Authors: | , , , , |
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| Format: | Article |
| Language: | English |
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2020
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| Online Access: | https://eprints.nottingham.ac.uk/60860/ |
| _version_ | 1848799814850969600 |
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| author | Luintel, Kul B Matthews, Kent Minford, Lucy Valentinyi, Akos Wang, Baoshun |
| author_facet | Luintel, Kul B Matthews, Kent Minford, Lucy Valentinyi, Akos Wang, Baoshun |
| author_sort | Luintel, Kul B |
| building | Nottingham Research Data Repository |
| collection | Online Access |
| description | China’s development policy since 1978 has differed across regions. With rapid aggregate growth has come widening regional inequality. The fiscal decentralisation reforms in 1994 shifted political pressure onto provincial officials to boost local growth through local public investments. These investments affect regional convergence by counteracting regulatory frictions in factor accumulation, and can also determine steady-state growth. However, the effect of public spending allocations across physical and human capital on growth and convergence processes is empirically unexplored for Chinese provinces. We take provincial time-series data on public spending by category, finding local public spending and its components augment convergence rates differently across regions. Spending on education and health contributes significantly more to growth and convergence than capital spending, confirming that the public capital-spending bias is not a local growth-optimising strategy. We suggest a policy of aligning local government promotion incentives to human capital targets to correct local resource misallocation. |
| first_indexed | 2025-11-14T20:41:39Z |
| format | Article |
| id | nottingham-60860 |
| institution | University of Nottingham Malaysia Campus |
| institution_category | Local University |
| language | English |
| last_indexed | 2025-11-14T20:41:39Z |
| publishDate | 2020 |
| recordtype | eprints |
| repository_type | Digital Repository |
| spelling | nottingham-608602020-06-10T09:01:04Z https://eprints.nottingham.ac.uk/60860/ The role of provincial government spending composition in growth and convergence in China Luintel, Kul B Matthews, Kent Minford, Lucy Valentinyi, Akos Wang, Baoshun China’s development policy since 1978 has differed across regions. With rapid aggregate growth has come widening regional inequality. The fiscal decentralisation reforms in 1994 shifted political pressure onto provincial officials to boost local growth through local public investments. These investments affect regional convergence by counteracting regulatory frictions in factor accumulation, and can also determine steady-state growth. However, the effect of public spending allocations across physical and human capital on growth and convergence processes is empirically unexplored for Chinese provinces. We take provincial time-series data on public spending by category, finding local public spending and its components augment convergence rates differently across regions. Spending on education and health contributes significantly more to growth and convergence than capital spending, confirming that the public capital-spending bias is not a local growth-optimising strategy. We suggest a policy of aligning local government promotion incentives to human capital targets to correct local resource misallocation. 2020-05-06 Article PeerReviewed application/pdf en cc_by https://eprints.nottingham.ac.uk/60860/1/Ec-Mod%20Final2020.pdf Luintel, Kul B, Matthews, Kent, Minford, Lucy, Valentinyi, Akos and Wang, Baoshun (2020) The role of provincial government spending composition in growth and convergence in China. Economic Modelling, 90 . pp. 117-134. ISSN 02649993 China ;Growth convergence; Fiscal policy; Capital expenditure; Public spending composition http://dx.doi.org/10.1016/j.econmod.2020.04.024 doi:10.1016/j.econmod.2020.04.024 doi:10.1016/j.econmod.2020.04.024 |
| spellingShingle | China ;Growth convergence; Fiscal policy; Capital expenditure; Public spending composition Luintel, Kul B Matthews, Kent Minford, Lucy Valentinyi, Akos Wang, Baoshun The role of provincial government spending composition in growth and convergence in China |
| title | The role of provincial government spending composition in growth and convergence in China |
| title_full | The role of provincial government spending composition in growth and convergence in China |
| title_fullStr | The role of provincial government spending composition in growth and convergence in China |
| title_full_unstemmed | The role of provincial government spending composition in growth and convergence in China |
| title_short | The role of provincial government spending composition in growth and convergence in China |
| title_sort | role of provincial government spending composition in growth and convergence in china |
| topic | China ;Growth convergence; Fiscal policy; Capital expenditure; Public spending composition |
| url | https://eprints.nottingham.ac.uk/60860/ https://eprints.nottingham.ac.uk/60860/ https://eprints.nottingham.ac.uk/60860/ |