Revisiting the nexus between fiscal decentralization and government size - The role of ethnic fragmentation

Choudhury, Atrayee; Sahu, Sohini

doi:10.1016/j.ejpoleco.2022.102193

Cited by 11 publications

(5 citation statements)

References 72 publications

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“…Due to the remote location, the investment climate in the western region is relatively poor. Particularly the increased pressure from local “interest groups,” and local governments are under “pressure to lower taxes” in the context of the reform of government functions, which results in a decline in government fiscal revenue and is unfavorable to the development of infrastructure and public services (Adam et al, 2014; Choudhury & Sahu, 2022; Rodríguez‐Pose & Ezcurra, 2011). Thus, it may harm the business environment.…”

Section: Discussionmentioning

confidence: 99%

Evaluation and optimization of business environment based on sustainable development perspective: Exploring the role of the reform of government functions

Yin

Yuan

Zhou

2023

Sustainable Development

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The existing research on the business environment index system has a single viewpoint, which can hardly reflect the requirements of SDGs on the business environment. Few studies have focused on the “front end” factors determining the business environment. Based on panel data from 2011 to 2020, this study measures the business environment in 275 Chinese cities and uses the ArcGIS software and Natural Breaks (Jenks) to examine its spatiotemporal characteristics. The PSM‐DID model is utilized to examine the policy implications of the reform of government functions on the business environment. The findings demonstrate that China's urban business environment's total score has risen, and its geographic characteristics are “strong in the east and weak in the west.” Among the various sub‐dimensions of the business environment, the largest contribution is the infrastructure environment, followed by the rule of law environment. The reform of government functions can improve the business environment from the second year onward. Regional and city‐level heterogeneities exist in the effects of the reform of government functions on the business environment. In addition, informatization level, population density, and consumption level can optimize the business environment. This study provides a guide for accelerating the creation of a marketized, legalized, international, and sustainable business environment.

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Section: Discussionmentioning

confidence: 99%

Evaluation and optimization of business environment based on sustainable development perspective: Exploring the role of the reform of government functions

Yin

Yuan

Zhou

2023

Sustainable Development

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“…Finally, the impact of ICP policy on BE varies according to the administrative level of cities. Cities with high administrative levels, such as provincial capitals and special economic zones, have more financial strength, better infrastructure, and public services and are more flexible in responding to market demand [ 87 , 88 ]. These cities can build better innovation ecosystems and gather richer innovation resources; therefore, BE reforms should focus on regional differences and explore the decentralization of economic management authority on a “first pilot” basis.…”

Section: Discussionmentioning

confidence: 99%

Can innovative urban design optimize the business environment? Quasi-natural experimental evidence from China

Yang,

Ying,

Zhang

2023

Heliyon

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“…Amplified public spending on domains such as transportation infrastructure, social programs, amenities, and remuneration within the public sector signifies more favorable local conditions that can enhance a jurisdiction’s competitiveness [ 51 ]. However, uncoordinated expenditure competition among local governments, without adequate policy coordination, can lead to excessive public spending, deficits, and inefficient allocation of resources at the subnational level as jurisdictions vie to outdo one another in terms of expenditure [ 52 ].…”

Section: Conceptual Frameworkmentioning

confidence: 99%

Balancing fiscal expenditure competition and long-term innovation investment: Exploring trade-offs and policy implications for local governments

Wenjuan,

Zhao

2023

PLoS ONE

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The mobility of economic factors across jurisdictions has led to increased fiscal competition among decentralized subnational governments. This study examines the relationship between fiscal competition and long-term investment in innovation at the local government level. Panel data analysis, encompassing expenditures, taxes, and innovation inputs from 18 municipalities over a 10-year period, is employed using fixed effects regression. The results reveal a negative correlation between fiscal competition and expenditure on innovation, indicating that intensified competition for mobile capital diverts resources away from essential long-term investments crucial for knowledge-driven growth. Even after controlling for economic and institutional factors, a one standard deviation increase in competition corresponds to an average decline of 25% in per capita innovation investment. These findings highlight the unintended trade-off resulting from heightened competition and underscore the need for policy frameworks that promote localized flexibility while curbing uncoordinated competition that undermines innovation capacity. While fiscal decentralization aims to foster competitive governance, this study provides empirical evidence that short-term expenditure incentives often displace long-term innovation objectives without sufficient coordination. The insights contribute significant empirical evidence on the concealed costs of fiscal competition for regional development. Consequently, a re-evaluation of conventional perspectives on decentralization and competition is warranted, emphasizing the importance of developing cooperative policy solutions that strike a delicate balance between decentralized decision autonomy and strategic coordination. Adopting such an approach is essential to fully leverage the advantages of competitive governance while simultaneously nurturing innovation ecosystems.

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Revisiting the nexus between fiscal decentralization and government size - The role of ethnic fragmentation

Cited by 11 publications

References 72 publications

Evaluation and optimization of business environment based on sustainable development perspective: Exploring the role of the reform of government functions

Evaluation and optimization of business environment based on sustainable development perspective: Exploring the role of the reform of government functions

Can innovative urban design optimize the business environment? Quasi-natural experimental evidence from China

Balancing fiscal expenditure competition and long-term innovation investment: Exploring trade-offs and policy implications for local governments

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