The Effects of Political Factors on Chinese Local Governments’ Science and Technology Budget Expenditure: Focusing on Party Committee Secretaries and Level of Public Corruption

Long Piao ․ Jeong Rae Jo ․ Fanbin Kong

Abstract

Among a host of countries that have been accelerating public investment to gain first mover’s advantage in critical scientific technological areas, China’s remarkable speed and accomplishments of S&T development has been not only a subject of intense international recognition in recent years but also intensifying U.S-China rivalry. While such achievements were in large part a product of supremely streamlined nationwide policy implementation structure of the country, it has also been subject to disturbances from increasing political uncertainties in its local governments originating in large part from the central government’s enforcement of anti-graft policy. Given the unique confluence of these dynamics that affect China’s S&T development, this study aims to analyze the effects of political factors on Chinese local government’s science and technology budget expenditure. For this purpose, we construct a 1998 – 2016 panel data of relevant variables and perform empirical analyses using fixed-effects and random-effects models. Independent variables in this study include the level of public corruption, appointment of a central government official to party committee secretaryship, party committee secretaries’ number of years in office, age at the time of appointment and level of education. The results of our analyses indicate that the level of public corruption and party committee secretary’s level of education have significant negative effects on local governments’ S&T expenditure while appointment of a central government official to position of the party committee secretary has a significant positive effect. On the other hand, the number of years in office was found to have a non-linear, U-shaped relationship, indicating the need for more stability in provincial leadership. Among control variables, per-capita GRDP, the level of market opening, the level of fiscal independence and the proportion of S&T spending in preceding years’ total expenditure had positive effects of statistical significance.

Keywords Chinese Local Governments․Public Corruption․Party Committee Secretary․Science and Technology Expenditure

6.Long Piao Jeong Rae Jo Fanbin Kong