Are there demonstration effects of fiscal expenditures on higher education in China? An empirical investigation

Spatial spillover of local general higher education expenditures on sustainable regional economic growth: A spatial econometric analysis

“…Both theory and causal observations suggest that expenditure spillovers are a widespread feature of many services provided by local governments [ 54 ]. We assume that the spatial spillover of LGHEs occurs through the following mechanisms: (a) the transferability and portability of knowledge itself; (b) the cross-regional flow of the population; and (c) commodity trade and investment exchanges [ 29 ].…”

“…In China, higher education expenditures have been found to be the driving force behind China’s economic growth [ 29 , 30 ]. Moreover, higher education input is an important source and driving force of technological innovation that will further promote economic growth, although there is a certain lag [ 31 ].…”

Measuring the provincial supply of higher education institutions in China

“…A few years before the expansion, the fiscal decentralization of HEIs placed the responsibility of financing higher education on local governments (State Council, 1993). Specifically, provincial, or municipal governments became mostly responsible for the development of HEIs under the purview of local governments, and the central government remained financially accountable for universities administered by the central ministries (Tang, 2020;Wu & Zhu, 2021). 5 The 211 and 985 projects thus predetermined that the selected universities would receive much higher funding per student from the central government fiscal budget than lower tier institutions which would have to rely disproportionately on local resources.…”

“…The higher education expansion created a dramatic rise in college students, which in turn forced local governments to spend more in order to meet the teaching and research needs of HEIs. Provinces that could not keep up with the growth rate of university students experienced a decrease in their expenditure per student in provincially administered HEIs, which was considerably lower than in the 211/985 universities (Han & Xu, 2019;Wu & Zhu, 2021). The shortage of financial resources for higher education resulted in universities competing for limited amounts of provincial government funding.…”

“…Other funding sources include tuition and fees, social donations, and income from commercial businesses held by universities (Wang, 2001). Despite these additional financing channels, fiscal funding from governments continues to be the most important funding source for HEIs especially since the share of tertiary education costs shared by governments is on the rise (Wu & Zhu, 2021). 6 While central HEIs are at a higher hierarchy than local HEIs, there is further stratification within central and local HEIs.…”