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Fiscal Pressure and Public–Private Partnership Investment: Based on Evidence from Prefecture-Level Cities in China

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  • Junjiao Gong

    (College of Business, Wenzhou University, Wenzhou 325035, China
    Wenzhounese Economy Research Institute, Wenzhou University, Wenzhou 325035, China)

  • Yingyu Lu

    (College of Business, Wenzhou University, Wenzhou 325035, China)

  • Yang Xu

    (Inspection and Maintenance Department, Sinopec South Chemical Company, Nanjing 210096, China)

  • Jincun Fu

    (College of Business, North Minzu University, Yinchuan 750030, China)

Abstract

Public–private partnership (PPP) policy is essential to alleviating the local government debt burden and improving resource allocation efficiency. This paper empirically examines the impact of fiscal pressure on PPP investment in Chinese prefecture-level cities from 2014 to 2019 using the ordinary least-squares (OLS) module. Moreover, we also investigate how fiscal pressure influences PPP investment and test the influenced mechanism from other perspectives. The results show the following. (1) Fiscal pressure on the government has a significant positive effect on PPP investment at the prefectural level. (2) The marketization process is the mediated effect of the relationship between fiscal pressure and PPP investment. Fiscal pressure will stimulate the regional marketization process, thus promoting PPP investment. (3) Fiscal pressure has a significant positive effect on PPP investment in the middle region, while the effect is not significant in the eastern and western regions. Meanwhile, the effect is not significant in central cities, but there is a significant positive effect in ordinary cities. (4) The effect of fiscal pressure on PPP investment is not significant in the private reward mode of government payment, but there is a significant positive effect in the mode of user payment and feasibly insufficient subsidies. Our studies could also provide practical suggestions for sustainable development of PPP policy and solving the fiscal pressure of the current economic recession under the COVID-19 pandemic.

Suggested Citation

  • Junjiao Gong & Yingyu Lu & Yang Xu & Jincun Fu, 2022. "Fiscal Pressure and Public–Private Partnership Investment: Based on Evidence from Prefecture-Level Cities in China," Sustainability, MDPI, vol. 14(22), pages 1-15, November.
    • Handle: RePEc:gam:jsusta:v:14:y:2022:i:22:p:14979-:d:970986
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