Does the Equalization of Public Services Effect Regional Disparities in the Ratio of Investment to Consumption? Evidence From Provincial Level in China

Abstract

Insufficient equalization of public services and coexistence of high investment and low consumption are two major dilemmas facing the high-quality development of China’s economy. This study first evaluated the level of equalization of public services by provincial panel data from 2013 to 2017. Then econometric models were constructed to investigate the effect of the equalization of public services on the regional disparities in the ratio of investment to consumption (IC). Results show that the overall level of equalization of public services in China is low and there are large regional differences. Average values of the relative level of equalization of public services show an increasing trend in order of the eastern, central, northeastern, and western regions. The ratio of IC in China also exhibits large regional differences. Public education significantly negatively affects the IC in China, and the effects exist in the eastern and central regions. The seven evaluation criteria of equalization of public services in different regions have different effects on the ratio of investment to consumption. Therefore, according to the characteristics of the relationship between the equalization of public services and the ratio of investment to consumption at the whole or regional scales, a reasonable pathway should be selected to improve the current situation of high investment and low consumption and promote high-quality and sustainable development of the Chinese economy under the new normal.