The Effect of Local Government Science & Technology Expenditure on Regional Technological Progress: Empirical Evidence from Fujian Province, China

Using the data of Fujian Province over the period 1978-2008, this paper employs cointegration and Granger causality testing approach to study the relationship between Technological progress and Local government expending on Science and Technology. The empirical estimates show that Local government expending on Science and Technology and total factor productivity (TFP) has the long-term stability and balanced relations, as every 1% increase on expenditure will contribute to 0.2473% increase on technological progress level. From a policy standpoint, the results suggest that Local government should give more support to science and technology to stimulate technological change.