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Scale Determinants of Fiscal Investment in Geological Exploration: Evidence from China

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  • Linna Lu
  • Yalin Lei

Abstract

With the continued growth in demand for mineral resources and China's efforts in increasing investment in geological prospecting, fiscal investment in geological exploration becomes a research hotspot. This paper examines the yearly relationship among fiscal investment in geological exploration of the current term, that of the last term and prices of mining rights over the period 1999–2009. Hines and Catephores' investment acceleration model is applied to describe the scale determinants of fiscal investment in geological exploration which are value-added of mining rights, value of mining rights and fiscal investment in the last term. The results indicate that when value-added of mining rights, value of mining rights or fiscal investment in the last term moves at 1 unit, fiscal investment in the current term will move 0.381, 1.094 or 0.907 units respectively. In order to determine the scale of fiscal investment in geological exploration for the current year, the Chinese government should take fiscal investment in geological exploration for the last year and the capital stock of the previous investments into account. In practice, combination of government fiscal investment in geological exploration with its performance evaluation can create a virtuous circle of capital management mechanism.

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  • Linna Lu & Yalin Lei, 2013. "Scale Determinants of Fiscal Investment in Geological Exploration: Evidence from China," PLOS ONE, Public Library of Science, vol. 8(10), pages 1-7, October.
    • Handle: RePEc:plo:pone00:0076656
    DOI: 10.1371/journal.pone.0076656
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    References listed on IDEAS

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    Cited by:

    1. Zhang, Zhimin & Elshkaki, Ayman, 2022. "An analysis of the supply-side factors of geological exploration in China based on provincial panel data between 1999 and 2017," Resources Policy, Elsevier, vol. 76(C).

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