Abstract: The third industrial structure upgrading is one of the manifestations of the upgrading of the industrial structures, but its essence is the upgrading of the factor endowment structure. The industrial structure upgrading effect of the fiscal expenditure is mainly realized through the transmission path that acts on the factor endowment structure. By making use of the panel data of 31 provinces in China during the period of 2011-2015, this paper conducts an empirical test of the effect of the factor endowment structure upgrading of the financial expenditure of local governments. The results show that the role of educational expenditure in upgrading the factor endowment structure has not been fully realized, and the expenditure effect is lagging behind. Due to the poor originality of local scientific and technological innovation, the promotion effect of science and technology expenditure is thus limited. The purely exhaustive expenditure attribute of the general public service expenditure has determined its negative effect. The government investment expenditure has significant inhibitory effect, which may be due to the excessive government intervention. In this regard, it is necessary to speed up the transformation of regulatory ideas. Specifically, it is necessary to achieve a shift from total expenditure control to expenditure structural optimization, increase the coupling degree between expenditure structure and industrial structure, and further expand the industrial R&D effect.

Key words: local government fiscal expenditure; fiscal expenditure structure; industrial structure upgrade; factor endowment structure upgrade