Fiscal decentralization, public spending, and economic growth in China

Abstract

This study of China demonstrates how the allocation of fiscal resources between the central and local governments has affected economic growth since reforms began in the late 1970s. We find that a higher degree of fiscal decentralization of government spending is associated with lower provincial economic growth over the past fifteen years. This consistently significant and robust result in our empirical examinations is surprising in light of the argument that fiscal decentralization usually makes a positive contribution to local economic growth.

In Government We Trust: The Role of Fiscal Decentralization

“…From a political science perspective, trust in government is important for political leadership and governance. More specifically, a 1 Davoodi and Zou (1998) and Zhang and Zou (1998) find evidence of a negative relationship between fiscal decentralization and economic growth, whereas Thiessen (2003) and Iimi (2005) show that fiscal decentralization enhances economic growth. Others do not find a significant relationship (Woller and Phillips, 1998;Thornton, 2007).…”

Gender and Public Goods Provision in Tamil Nadu's Village Governments

“…There are numerous analyses of decentralization and public goods provision in other countries. See, for example, Zhang and Zhou (1998), Faguet (2004), and Zhang et al (2004. 6 Our knowledge test questions focus on GP functioning and panchayat rules and thus differ from the knowledge assessments in Ban and Rao (2008) and Beaman et al (2010).…”

Fundamental causes of inland–coastal income inequality in post-reform China

“…As emphasized by Zhang and Zou (1998) and Zhang (1999), the relative size of local revenue collection is not a good indicator of China's fiscal decentralization 9 . Although marketization may be a composite of a number of indicators, there are no data on these indicators over such a long time span except for ownership transformation.…”