Local Public Finance And Governance Capacity At The County Level

The thirty-years of reform and revolution in china are featured with the system innovation. It has been evident that the system innovation was first introduced to the economic domain, with breakthroughs in local financial systems. Reforms and changes in the financial system will surely entail changes in the inter-government allocation of financial resources, as well as changes in financial structures of governments at all levels, which can further lead to changes in government's financial ability. This is especially pertinent to local governments. The governing abilities of local governments are closely related to their financial abilities, as the governing ability is represented by the public serving ability, which is based on the financial ability and determined by the financial structure.This dissertation examines how revenue and expenditures structure of public finance at the county level impact the governing ability empirically, since governments at the county level are the most important and stable level of governments in China.A county level government in the Mid China, the Yi'ning District of Hubei province was selected to examine its financial ability. Reforms in its financial system and changes in its financial resources were also discussed.Possible contributions of this study are as follows:Firstly, the studying material is novel. Due to the sensitivity and confidentiality of financial issues and many other factors, it is extremely difficult to obtain relevant materials in this field. To overcome this obstacle, the author has spent more than seven years in fostering a mutual confidence with the local government officials during this study and several other long-term research programs. Good relationship has been established and many official documents confident to others have been given access to the author. Furthermore, two rounds of questionnaire survey and 112 interviews have been conducted to the peasants and local public servants. These produce an original, comprehensive and detail collection of financial documents for a county government.Secondly, it observes the topic of maintaining people's lives from the perspective of county level financial expenditure, which is a new perspective. Extant financial studies mainly focus on the village level, and more recently, studies on township financial dilemma have been increasing. Generally, extant studies give deficient attention to county level finance. This study examines the financial expenditures of a mid China county in detail and provides a better understanding to the relationship between local finance and governing ability.Thirdly, this study has established a framework of governing ability analysis to county level governments. The framework consists of three elements: financial capability (extraction capability), service providing capability, and anti-risk capability. From these three aspects, the governing ability of a county level government can be better observed and assessed.Fourthly, an interdependence model of local governance has been advanced. With the social transformation, the local governments have been changing their political concept, and people's livelihood has become a focal point of current and future policy selection. This means that, in addition to their autonomy, local government should also pay close attention to the embeddedness of the governments, and cooperate with the folk society. Interdependence of the folk society and the government can cultivate the sense of community, and lead to the synergistic effect, therefore improving the local government's governing capability and performance.