Do Local Fiscal Expenditures Promote the Growth of Profit-Seeking Enterprise Numbers in Neighboring Areas?

Abstract

In order to allocate resources and formulate policies effectively, governments and enterprises often need accurate geographical information on profit-seeking enterprises. This study explores the impact of local fiscal expenditure and environmental regulation on the number of profit-seeking enterprises in Taiwan’s counties and cities from the perspective of spatial econometrics, and analyzes data from 2001 to 2019. After comparing the explanatory power differences of various spatial econometric models, the spatial Durbin model, with spatial and time fixed effects, was used to explore the direct effect on the number of local profit-seeking enterprises, and the spillover effect of the number of local profit-seeking enterprises in different geographical locations on neighboring regions, especially the spatial spillover effect of local fiscal expenditure and labor and environmental regulations. This paper discusses the decision-making choices of local government regarding the competition strategy of environmental regulation, and finally provides the policy implications for the government as a reference.

Keywords

• spillover effect
• fiscal expenditure
• spatial autocorrelation
• spatial Durbin model