Research On Action Mechanism Of Fiscal Decentralization On Antipoverty In Developing Countries

Since 1980s, fiscal decentralization has been becoming more and more popular in developing countries. It is used for improving the efficiency of public services and promoting economic growth. The transition of developing countries makes the people began to focus on fiscal decentralization. They have studied the effect of fiscal decentralization on economic growth, government governance, and environmental protection etc. But the effect of fiscal decentralization on antipoverty has not been studied. Antipoverty is an important task of developing countries. Fiscal decentralization promotes economic growth, whether it is conducive to antipoverty? Whether it has other effect on antipoverty? The dissertation studies action mechanism of fiscal decentralization on antipoverty in developing countries on the basis, and does an empirical study by fiscal decentralization practice and poverty status in China and India.First, the dissertation studies indirect action mechanism of fiscal decentralization on antipoverty through economic growth. It argues that fiscal decentralization promotes economic growth but exacerbates the imbalance in regional economic development meanwhile. On the other hand, the increase of economic growth rate is conducive to antipoverty, but the character of imbalanced income distribution will have negative impact on antipoverty. Thus, fiscal decentralization will have two opposite effects on antipoverty, so it needs tradeoff in practice. When the level of poverty is higher and the gap between rich and poor is smaller, fiscal decentralization is conducive to antipoverty through promoting economic growth, and vice versa.Second, the dissertation studies direct action mechanism of fiscal decentralization on antipoverty through institutional arrangement from fiscal revenue and expenditure. Theoretical study shows that partial fiscal decentralization (fiscal revenue centralization and fiscal expenditure decentralization) in developing countries is conducive to implementation of governments' antipoverty policies. Because on the one hand, fiscal revenue centralization of central government ensures adequate antipoverty funds for poor areas, and on the other hand, fiscal expenditure decentralization of local governments ensures efficiency of antipoverty funds. After reforming and opening, the practice of China's fiscal decentralization can be divided into full fiscal decentralization and partial fiscal decentralization two periods by tax reform in 1994. By empirical study comparing antipoverty performance of two periods, partial fiscal decentralization is better.Third, on the base of partial fiscal decentralization, the dissertation studies behavior of local governments in antipoverty program delivery and targeting of antipoverty program in appointment system and election system. Due to different systems, the supervision and incentive of local governments are different. Local governments in appointment system are prone to take place "Agency problem" and transferring antipoverty funds behavior. While local governments in election system are prone to been captured by the rich and makes the antipoverty program delivery incline to the rich. Both the two situations can distort the targeting of antipoverty program. The study shows that the targeting of large-scale antipoverty program in appointment system is better and small-scale antipoverty program for election system.Finally, the dissertation studies the effect of fiscal decentralization on antipoverty in China and India by empirical study on the base of above-mentioned analysis. The partial fiscal decentralization in China and India both have positive impact on antipoverty through economic growth. But the efficiency of local governments' antipoverty program delivery is different. Local governments in appointment system in China promote antipoverty, while local governments in election system in India have not significant effect. It illuminates the supervision of central government to local governments is effective in China, but the capture to local governments by rich is serious in India. Hereby, the conclusion not only explains the effect of fiscal decentralization on antipoverty in China and India, but also provides experience for other developing countries.