The spatial dynamics of financial expenditure on science and technology in Chinese cities: Financial capacity and government competition

Abstract

Current research tends to concentrate on total financial expenditure, rather than analyzing specific expenditures such as financial expenditure on science and technology (FEST). FEST become an important component of financial expenditure and is still under researched, which little is known about the key factors that have shaped the geographies of FEST at the city level. In this paper, we portray the spatial dynamics of FEST in Chinese cities, and examine the ways in which it is intertwined with institutional, political and economic factors. Our analysis shows that the national FEST scale has experienced a substantial rise in light of the Chinese government's emphasis on science and technology. Local governments spend more FEST scale than central government, but the spatial dynamic of local FEST are geographically uneven. Cities in underdeveloped and developed areas are also continuously increasing the FEST scale. Compared with prefecture-level cities, higher administrative cities spent more financial funds on science and technology. The spatial variation of FEST could be partly explained by two institutional factors: Financial capacity and government competition. Financial capacity is a key factor explaining the uneven spatial dynamics of FEST. Local governments with sufficient financial funds are more inclined to increase the FEST. Government competition will further inspire local governments to increase more FEST scale. Regression results confirm that financial capacity and government competition are both important to explain the geographies of FEST, and the effects of financial capacity and government competition on FEST exhibits time heterogeneity. We argue that ruinous government competition bids fair to become a quagmire of excessive FEST, which may run counter to the goal of demanding strictly controlling excessive financial investment in competitive fields proposed by the State Council.