Reform describes 13:
China's economic contribution to the separation of powers, what?
Zhang
previous article I talked about, as a big country, separation of powers in modern economic development in China, occupies an important position It is not easy to question. If the relative proportion of local government expenditure to measure, China is even considered as the world's most decentralized countries. For example, the 1997 World Development Report In developed countries, provincial (state) level, total government spending at all levels of the average proportion of total government spending only about 30%, the separation of powers in Canada and Japan, only 60%. In the 1990s, the average share of developing countries is 14%, 26% transition economies, the United States not to 50%. and provincial level in China has been spending more than a decade the country's total financial expenditure to maintain a nearly 70%. Therefore, in China, the economic system which, decentralized structure is naturally captured by Chinese economists, as observed after the reform of China's economic growth, an important empirical phenomena, and may have a potential economic contribution to the literature.
ten years have passed. Recently I finally with the Peking University, Professor Zhou Lian jointly edited a collected works, and take the Edit this corpus is intended to be able to sum up all these years of experience in China-based China economist for the completion of fiscal decentralization and economic growth research. I think this is an important contribution to transition economics literature.
in the economy science literature, Charles Tiebout 1956 years of classical theory and Wallace Oates 1972 in the In particular, the residents / voters) of the complete freedom of movement and the Government of voters are the two most important assumptions. and these two assumptions on the developed economies appears to be too harsh, not easy to be met. Not only that, growth and sub- inevitable between the right to influence each other. Technically, the factors affecting economic growth vastly complex, and accurate way to measure the degree of decentralization is not easy to obtain, are often not reliable. Wallace Oates in a 1993 paper, and economic development Zou Hengfu in the Journal of Public Economics (Journal of Public Economics) published a relationship between fiscal decentralization and growth in the paper. They used 1978-1992 data on the provincial fiscal decentralization and examined the relationship between economic growth and found that fiscal decentralization is conducive to economic growth theory has not been confirmed by the Chinese experience. in 2000 , Lin Yifu, and Zhiqiang paper, Panel Data.
everyone knows, have experience of different factors that research findings are very complicated. data sources, variables, methods and measurement metrics are important policy reasons. Of course, these two earlier studies did not cover the 1994 on the implementation of the tax system after the empirical data. until 2006, Zhang Yan and Gong six published including the 28 provinces in the 1986-2002 years of data), re-growth of China's fiscal decentralization and the relationship of the test. They use the above method of estimation is no different, but they consider the measure of the degree of decentralization the transfer payments and extra-budgetary funds to construct a definition of four types of decentralization. Their estimates show that fiscal decentralization and growth in China there are obvious differences across time, in the years 1994-2002 was significantly positive, while the 1986-1993 was negative. Therefore, they believe the tax system to improve the fiscal decentralization and economic growth. They also found that 14 individuals GDP of 6,000 yuan higher than the developed regions, fiscal decentralization on economic growth is significantly positive, while 14 other developed regions, this effect is not significantly different from 0. Thus, in their view, the impact of fiscal decentralization on growth effects also exist across regions.
course, one can say that not find a better instrumental variables (IV) solution before the endogenous result of these studies have reason to be treated with caution. But in any case, fiscal decentralization of local government spending behavior can not be underestimated. The only question is, this effect in different areas may be affected in different ways, the growth of the economy.
to show after the local government in fiscal decentralization strengthen the financial incentives are not hard to get. Logically, if the result of decentralization of local government spending more and more subject to local revenue, then, in general, have a greater incentive to local government is committed to local investment and economic growth, expand the tax base. Therefore, a simple processing technique is to take place financial the regression on the revenue expenditure, to see how the correlation coefficient. Many people use such a simple way to do that, after the decentralization of local government financial incentives improved, and local financial incentives to promote the growth
, however, Anti-Chen et al paper is that the tax system in 1994 the central budget revenue increased centralization, thus changing the behavior of local governments, from the The theory is that when the centralization of power, the best strategy is to select local non-budgetary revenue to increase their own interests. the expansion of non-budgetary revenue of local government representatives from the changes. their papers after the tax system is not to prove whether the extra-budgetary revenue growth contributed to growth, but they believe this change will increase corruption, less investment, which is not conducive to economic growth.
this reasoning remains to be more experience of the test. but empirical observation seems to be that the local government, the increase in extra-budgetary revenue is likely to make local government more committed to economic growth. For example, since 1994, the local infrastructure, but in fact speed up the investment activities , and the investment environment improved significantly more foreign direct investment (FDI) is also accelerated in 1994, settled in China after the pace. So, whether these observations help to demonstrate the tax system after the fiscal behavior of local governments to promote economic growth changes ? The answer seems to still depends on the first test conditions for the region.
I coach Fu Yong, a doctoral student in the doctoral thesis examined the tax system after the fiscal decentralization of local fiscal expenditure structure. he used in China 1994-2004 panel data of 29 provinces, respectively, in the estimated capital expenditure spending and how spending on science, education by the impact of decentralization and local competition. He provincial expenditure per capita central government spending per capita measure of decentralization, enterprises with foreign investment over the actual tax burden on average as the removal of a measure of the degree of competition. in controlling other factors, he found that in 1994-2004, fiscal decentralization on the east and west of the proportion of capital expenditure significantly positive, while the proportion of expenditure on science, education is significantly negative impact. For no significant effect on the middle. And the data do return extended to 1986-2004, found that the tax system in 1994, before capital expenditures for fiscal decentralization no significant effect on the proportion, while the proportion of science, education spending is significantly negative impact.
help explain this finding, the tax system, the local government's fiscal discipline is more obvious, seems to induce a growth-oriented fiscal expenditure structure. In addition, Zhang Xiaobo counties with a 1860 estimated that the financial data, county-level government expenditure share of productive expenditure in the found that the proportion of local agricultural and economic growth slow. The logic behind this may be a place if the weak industrial base, they are more easily collected tax revenue, local governments have financial resources committed to improving the investment climate and promote economic growth, and a large proportion of the local agriculture, local businesses must assume a greater tax burden. This would worsen the investment environment is not conducive to growth. places will be intensified uneven development.
on these issues, we already have The empirical research on the expansion of China's economy is difficult to imagine a single economy. Therefore, the distinction between empirical research on practice is more meaningful. of a place to track cases and experimental research will clarify the complex experience of the phenomenon is sometimes helpful.
Eric Thun A good example is the rise of China's automobile industry Mode. in fiscal decentralization and opening up, the Shanghai, Beijing, Guangzhou, Wuhan and Changchun's automobile industry showed a very different growth model. The authors found that in the system, the Shanghai model is characterized by a centralized bureaucratic system with hierarchical enterprises, like Japan; while Beijing and Guangzhou, the bureaucratic model is coupled with decentralized market-oriented business relationships; Changchun and Wuhan, the pattern is just a bureaucratic system with distributed hierarchical corporate relationships. These institutional differences and the growth of the automotive industry and competitiveness of the need for more in-depth case studies to see more clearly. Eric It took seven years to five places in this investigation and tracking, have written a book, acclaimed.
In addition, in some cases, various regions of China endowments, social, policy and institutional conditions for a lasting difference economic research for our natural experiment to provide a good venue. For example, do the returns to education, poverty, income distribution and evaluation of public policies, such natural experiment is not obtained. Thus, careful observation often leads to extra joy.
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