Public capital stock and regional economy in China

Abstract

This paper examines the relationship between public capital stock and economic growth in different regions in China. A time series analysis is used to estimate the dynamic relationship between public stock and the productivity of the regional economy. The short-run and long-run impacts from public capital stock on the growth of the regional economy are also examined. This research finds that there exist bilateral causal relationships between public capital stock growth and economic growth in China. The public capital stock does have an impact on regional economic output. However the aggregate public capital stock does not have nay effect on private capital stock growth. The investment in public capital in a specific region benefits all the regions. The spillover effects take place when the public capital in a specific region generates positive impacts and spread them to other regions.