Government Education Expenditure, Third-party Spillover Effect and Economic Growth in China

Jiangyi Qi

doi:10.5539/jsd.v9n2p145

Abstract

This paper investigates the impacts of government education expenditure on economic growth in China taking into account the spatial third-party spillover effects. After the theretical analyse, a spatial panel estimation model based on the augmented Solow model is applied by using province data in China during 2007 and 2013. The results reveal that (1) In a whole, Government education expenditure in China has significantly positive impact on economic growth, but expenditure in different educational level shows different results. Government education expenditure in below high-education is positive related to local economic growth, whereas the effect of education expenditure in high-education is insignificant. (2) Neighboring government education expenditure shows spatial spillover effects on local economic growth, and spatial spillover effects in two education level is different. (3) Other input factors of third-governmet also have spatial effects. Some policies about education and economic development are proposed. Meanwhile this study recommends that corporation relationship among regions is very important.

Highlights

The relationship between government expenditure and economic growth are discussed widely, especially the government education expenditure
This paper investigates the impacts of government education expenditure on economic growth in China taking into account the spatial third-party spillover effects
We examine the effect of contiguous education factor on local economic growth from different education level

Summary

Introduction

The relationship between government expenditure and economic growth are discussed widely, especially the government education expenditure. Scholars have devoted significant attention to the function of education expenditure on economic, but studies mentioned above ignored the influence of “location” which is an indispensible factors because spatial dependency exists between various regions. The contribution that for the universal research may be as follows: Firstly, using spatial econometrics method to examine “neighborhood” and “location” factors This econometric methodology allows us to estimate the coefficients for each independent variable, and to account for spatial effects among regions. Besides the spatial effect of education, we investigate the spatial effect of other independent variables The outcomes have substantial implications for China’s regional policy: The rest of this paper proceeds as follows: Section two gives the hypothesis through theoretical analysis, Section three shows the empirical model and its properties. Section four uncovers the findings of the study; and section five contains the conclusion of the paper and recommendations

Theoretical Bases and Hypothesis

Empirical Models and Properties

Model Estimation and Discussion

Conclusion and Recommendation