Green economic development under the fiscal decentralization system: Evidence from china

Abstract

The literature is still divided on the study of the ecological and economic effects of fiscal decentralization. To clarify the relationship between fiscal decentralization between central and local governments and green economic development in developing countries, we take China as an example to test the impact of fiscal decentralization on green total factor productivity and its mechanism. It is found that fiscal decentralization helps local governments play a greater role in the regional economic system and promotes green economic development. From the perspective of policy synergy, environmental regulation is an enhanced mechanism for fiscal decentralization to promote green economic development. We also find that technological innovation is an important mechanism for fiscal decentralization to promote green economic development. Our study develops the theory of fiscal federalism and affirms the necessity of decentralization system reform in the context of the green economy, which has important theoretical and practical implications.

Fiscal Decentralization, Enterprise Digital Transformation and Enterprise Green Innovation—The Case of 11 Years A-Share Listed Companies in China

“…The research on fiscal decentralization is mainly empirical, primarily focusing on two dimensions of economic and environmental governance. In terms of the impact of fiscal decentralization on the economy, Wang et al [5] found that fiscal decentralization will promote the development of green economy and promote the role of local governments in regional economic development. Yi [6] found that fiscal decentralization has a positive spatial spillover effect on green technology innovation and also promotes the surrounding areas.…”

Fiscal self‐sufficiency, debt policy, and long‐term sustainability in China's emerging local bond market

“…The empirical model includes provincial level fixed effects to control for the time-invariant provincial characteristics or cross-province heterogeneity, and year fixed effects to control for national shocks and policy changes that are common to all provinces in a given year. Conversely, a lower fiscal sufficiency rate denotes the greater reliance of the region on intergovernmental fiscal transfer payments (Yang, 2014). However, our study provides empirical evidence that local governments' fiscal self-sufficiency is not a key factor to help local governments maintain long-term debt sustainability.…”

Analyzing Green Growth Efficiency in China and Investigating the Spatial Effects of Fiscal Decentralization: Case Study of Prefecture-Level Cities

“…Song et al [29], Feng et al [30], and Yu et al [31] suggest that optimizing resource allocation, improving local public infrastructure, stimulating enterprise innovation, and promoting the green development of the economy can be achieved through fiscal decentralization. Wang et al [32] found that fiscal decentralization promotes competitiveness among local governments in technological innovation and other sectors, leading to an enhancement in green total factor productivity. They accomplished this by utilizing provincial data to construct a panel model for empirical analysis.…”