Rural Public Expenditure and Poverty Alleviation in China: A Spatial Econometric Analysis

Abstract

In China, one of the most important reducing poverty means is continuous and large-scale public financial investment. This paper investigated the structural differences between rural public expenditure (namely, education, health, social security, infrastructure, living environment) and poverty in 27 provinces of China in 2010-2016 from the spatial econometric perspective. The results showed the structural differences in poverty reduction effects of government spending are very obvious, indicating that expenditures on education, health care, social security and infrastructure have all shown good poverty alleviation effects, while living environment spending has no significant effect on poverty reduction. We further find that government spending not only promote poverty reduction in the region, but also reduce poverty in economically and geographically similar areas, which suggests that future work should look more closely at whether and how the effect of government spending on poverty varies by structure. Thus, the findings established in this paper have significant implications for targeted poverty alleviation measures in China through government spending policies.