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Implementation Mechanism and Experience Identification of the Role of Public Expenditure Efficiency in Upgrading the Industrial Structure

【Authors】
ZHANG Quan
【WorkUnit】
ZHANG Quan (Southwest University of Political Science and Law, 401120;
Jilin Provincial Finance Research Base, 130117)
【Abstract】

How to promote the upgrading of industrial structure is an important challenge for China's economy when entering the new normal. In this paper, we construct a general static equilibrium model of industrial structure upgrading that contains the public expenditure efficiency, and examine the implementation mechanism. Theoretical research finds that public expenditure efficiency increases the Engel effect on the industrial structure by affecting the level of household income, and, if the constraint conditions are met, promotes the upgrade of agriculture to non-agricultural industry, labor-intensive industries to capital and technology-intensive industries in the manufacturing industry, and the consumer service industry to the producer service industry in the service sector. The theoretical discovery and implementation mechanism are verified by the experience analysis based on the 35 large and medium cities in China. The research opens up a new perspective for achieving an upgraded industrial structure in China. This paper suggests that the government should change the way of thinking from the emphasis on “public expenditure” to the emphasis on both “public expenditure” and “public expenditure efficiency”, especially on improving the public expenditure efficiency in middle and lo-income areas.

JEL:E62,H50,P43

【KeyWords】
Public Expenditure Efficiency, Industrial Structure Upgrading, Income Level, Mediation Effect