The fiscal decentralization gives the local government economic participation status. Is there a spatial spillover effect in the process of local government financial expenditure? This paper introduces the spatial econometric model, and applies the 2005-2016 data to test the spatial correlation of the whole country by calculating the Moran’s I index and the Geary index C. At the same time, we use the local Moran’s index to detect the degree of agglomeration between regions. The results show that there is a significant spatial spillover effect between regions. There are policy imitation behaviors in the region and adjacent areas, and there is a high value and high value agglomeration among regions, as well as a trend of low value and low value agglomeration.
Whether there is a competition between Chinese governments on fiscal expenditure? Tax competition has always been the main means of fiscal competition, but with the change of society and the development of time, the preferential tax policy has shifted from region to industry, and the means of local fiscal competition have gradually shifted to the field of expenditure competition, which provides public goods and services [
The financial expenditure is divided into four categories, public management expenditure, science and education expenditure, social security expenditure and economic construction expenditure. In case of the annual population differences and in order to reflect the reality of the situation, per capital level to reflect fiscal expenditure situation is applied.
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It might be due to the acceleration of urban-rural integration process in 2008, breaking the previous discussion in the theoretical stage. The reform of China starts in the rural area, but peaks in cities; the way of prosperity after the first half is not suitable to the reality of urban and rural development. Originally hoping to promote the development of rural areas by urban development, but the reality is that the division of urban and rural and backward rural areas gradually becomes obstacles to the further development of the city. A trickledown effect on the backward areas in developed areas has changed into the consumption on kinds of rural resources. In view of this, the central government rethinks the development mode of urban and rural areas, implements the rural reform centered on the countryside, and passively forces the initiative for farmers, and speeds up the process of urban-rural integration. As a result, the growth of fiscal expenditure has changed accordingly.
There are a lot of spatial correlation standard, Moran index method, Gil coefficient method, local Moran index method, local Gil coefficient method, LM test, LR test, among which the Moran index method, Gil coefficient method can observe the correlation between variables from the whole; local Moran index, local Gil coefficient can gather the detection area; LM test and LR test can further test errors such as the existence of spatial correlation. The research purpose of this part is to test whether there is spatial dependence and fiscal competition among local governments, therefore Moran index, Gil coefficient and local Moran index research are selected.
The Moran’s I index is the first method to be applied to the global cluster test (Cliff and Ord, 1973). It shows that the adjacent areas in the whole study area are similar, different (spatial correlation and negative correlation) are still independent. Moran’s I index calculation formula is as follows: x ¯
I = n ∑ i = 1 n ∑ j = 1 n w i j ( x i − x ¯ ) ∑ i = 1 n ∑ j = 1 n w i j ( x i − x ¯ ) 2 = n ∑ i = 1 n ∑ j ≠ 1 n w i j ( x i − x ¯ ) ( x i − x ¯ ) S 2 ∑ i = 1 n ∑ j = 1 n w i j (1)
The n is the total number of regions in the study; Wij is the spatial weight of the area I and the area J is the adjacent area, which is divided into geographical proximity and economic neighbor. So Wij is divided into geographical weight and economic weight. Xi and XJ are the observation variables of region I and region J respectively, which are the financial expenditure items. X is the average attribute observation variable and S2 is the variance of observed variables.
The range of Moran’s I index is generally between −1 to 1; more than 0 says positive correlation; value close to 1 represents that similar values bond together and less than 0 indicates negative correlation values, close to −1 indicates different attributes bond together. If close to 0, then there is no spatial autocorrelation, no spatial dependence, and no expenditure competition.
A Geary index C is also an index of global clustering tests. A median deviation of the product is used in calculation of Moran’s I index, but the Geary index C accounts the deviation between the values. The calculation formula is as follows:
C = ( n − 1 ) ∑ i = 1 n ∑ j = 1 n w i j ( x i − x j ) 2 2 ∑ i = 1 n ∑ j = 1 n w i j ∑ i = 1 n ( x i − x j ) 2 (2)
The value of Geary index C is generally between 0 and 2 (2 is not a strict upper bound), greater than 1 is a negative correlation, equal to 1, indicating no correlation, and less than 1 indicates a positive correlation, contrary to the Moran’s I index.
The local Moran’s I (Anselin, 1995) is used to check whether there are similar or different observation values in the local area. The local Morlan index of area I is used to measure the correlation degree between the area I and its adjacent regions. The calculation formula is as follows:
If I is greater than 0, it represents a high value-high value, low value-low value cluster; and if the I is less than 0, the low value-high value, high value-low value cluster is expressed.
The article from 2004 to 2016 the provincial dynamic panel data to study from 2005 to 2004 as the base, the relevant financial data in 2016, the main source of “China Statistical Yearbook” and the “statistical yearbook”. Because Chongqing was divided into municipalities in 1997, for the sake of uniformity of the caliber and the length of the dynamic panel data, the last 12 years were selected as the year of analysis.
eight | 2005 | 2006 | 2007 | 2008 | 2009 | 2010 | 2011 | 2012 | 2013 | 2014 | 2015 | 2016 | |
---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Moran’s I | 0.122* | 0.15** | 0.138* | 0.147* | 0.169** | 0.21** | 0.192** | 0.202** | 0.209** | 0.199** | 0.175** | 0.161** | |
Geographical | Geary’s C | 0.713** | 0.69** | 0.719** | 0.733** | 0.732** | 0.713** | 0.751** | 0.751* | 0.745** | 0.753* | 0.758* | 0.768* |
Moran’s I | 0.548*** | 0.574*** | 0.523*** | 0.42*** | 0.36*** | 0.252*** | 0.169** | 0.118* | 0.121* | 0.11* | 0.171** | 0.191** | |
Economic | Geary’s C | 0.45*** | 0.428*** | 0.463*** | 0.54*** | 0.587*** | 0.684*** | 0.745** | 0.784* | 0.773* | 0.775* | 0.729** | 0.706** |
Moran index of economic weight is more significant than the geographical weight of Moran index, especially in 2005, 2006, 2007 and 2010. The index is more than 0 and close to 1, P values are less than 0.01 which strongly rejects the null hypothesis, therefore, among the total fiscal expenditure competition, economic space correlation strategy behavior contributes a larger impact on the region. The region selects strategy imitation. Considering Geary s C index, from 2005 to 2016, there is significance, but economic spatial similar regions is more significant than the geographically adjacent areas, indicating that in the total financial expenditure competition, the area is more affected by economic spatial area. The index is less than 1, indicating that there is a significant positive correlation in similar regions. The strategic mimic behavior is selected in the area whose result is consistent with the Moran index.
are geographically adjacent areas; Qinghai, Ningxia, and Tibet also belong to the adjacent geographical place. However Beijing and Tianjin belong to the Beijing-Tianjin-Hebei economic developed areas, while Qinghai, Ningxia and Tibet are economically backward areas. These five areas are similar in total fiscal expenditure, indicating that the central government tries to achieve the equalization of the public level of service through the transfer payment for Qinghai, Ningxia and Tibet. It also can be seen in these three places, besides central government related preferential, similar fiscal competition strategies are utilized. The fourth quadrant is high value-low value type, including Shanghai and Inner Mongolia, indicating the existence of spatial heterogeneity in the two regions. Most provinces and cities are located in third quadrant, low value-low value provinces and cities, including Eastern, central and western regions. The fourth part includes Jilin, Gansu, Heilongjiang and Sichuan.
The calculation of Moran index, Gil index and local Moran index can draw the conclusion that the total fiscal expenditure of 31 provinces in China has strong spatial dependence, which is not only affected by the geographically adjacent area, but also affected by the economically adjacent area, and the fiscal expenditure behavior is competitive.
Wang, Y.Y. (2018) Whether There Is a Competition between the Interprovincial Governments on Fiscal Expenditure. Open Journal of Business and Management, 6, 454-461. https://doi.org/10.4236/ojbm.2018.62033