On The Investment Protection Mechanism Of Public Goods In Western Rural Areas

The Fifth Plenary Session of the 16th proposed the major historical task building a new socialist countryside, whose most challenging part is found in the western region. The insufficiency, volatility and inefficiency of public goods investment in western rural have seriously affected the level of agricultural production, rural economic development as well as the income growth for farmers. Realizing the significance of this problem, many scholars have conducted extensive research on it from several aspects, such as the supply subjects of public goods and supply pattern, system changes, and financing system. This paper focuses on the study of the public goods investment protection mechanism in western rural areas, using public goods supply theory, public finance theory, public choice theory, and game theory from the perspective of appropriate allocation and behavior choice of public goods investment subjects, in hope to achieve three main goals: First, to probe into the system root causes on public goods investment insufficiency, fluctuations and the low efficiency in western rural. Second, to reveal the appropriate allocation and behavior choices of public goods investment subjects in western rural, and to explain the operation mode and existing problems in the investment decision-making mechanism and supervision mechanism. Third, to evaluate the performance of the public goods investment in western rural, to look for a new approach and a new mechanism to improve the investment efficiency of public goods, and to provide a policy basis for promoting public goods supply and new socialist countryside in western region.Main Research Results1. Public goods in rural areas have the complex dynamic and regional characteristicsPublic goods in rural areas are so called only relative to the public goods in the city, it is a kind of classification of public goods. In different historical periods, the same goods in rural areas have different attributes that display dynamic change. With the development of economy, the strengthening of the state's financial ability, scientific and technological progress as well as the changing of governmental development concept, the public goods and private goods in rural areas can be transformed into each other. At the same time, different location and consumer preferences will lead to people's consumption differences in different geographical areas, that is, regional characteristics of consumption. Numerous varieties of public goods, the dynamic changes and geographical characteristics, are the important reasons that make it very difficult to clearly define the investment subjects.2. The diversification of investment subjects of public goods in western rural has yet to take shape.The governments must assume responsibility for the provision of public goods because of the inherent characteristics and a"free rider"problem of public goods. However, since the founding of our country, in the supreme goal-oriented industrialization, the long-term bias in the city's"path dependence", the government's investment to the public goods in western rural has been inadequate. Moreover, with the reform gradually progressing, and higher taxes and fees, the local government became heavily indebted. In the premise of limited financial resources, local government's investment for public goods in western rural is less than sufficient. Meanwhile, farmers'investment is also"insufficient"due to the low level of the farmers'income, low degree of farmers'organizations and the loss of a large number of rural elite. Therefore, the diversified investment of public goods in western rural has yet to take shape.3. Under the framework of government-led public goods investment, the"reverse allocation"of intergovernmental fiscal authority and the implementation responsibility becomes the important institutional causes of inadequate investment to public goods in western rural areas.In the process of financial institutional change, there is an obvious trend that the intergovernmental fiscal authority is"upward"and the implementation responsibility is"downward". And the"reverse allocation"of intergovernmental fiscal authority and the implementation responsibility lead to that the local government undertake a lot of the implementation responsibility. Moreover, the western region also needs to undertake other unique implementation responsibility, such as stability in border areas, national unity, and ecological security, to name a few. The economic situation and the financial strength of the already very weak local governments of the western region has been unable to shoulder many responsibilities in public goods in rural areas, because the economic situation and the financial strength are very weak. Despite the implementation of the western development strategy and"Five Central No. 1 Document"issued in recent years, the government has increased the investment to the western areas, but inadequate input situation of public goods in rural areas still prevails,"Financial Budget for Basic Consumption"has not changed. In a certain sense, the in-equilibrium allocation of responsibilities and obligations among intergovernments, and shrinking financial authority and expanding implementation responsibility of township local governments are the important institutional causes for the lack of public goods investment in western rural areas.4. Centralization decision-making mechanism of"top-down"of public goods in rural areas and the lack of farmers'preference results in important imperfect performance of decision-making mechanism.The current decision-making mechanism of public goods in rural areas is still the continuation of the decision-making mechanism during the people's communes, with the obvious centralized nature. Under the pattern of"Strong Government, weak society"and the"top-down"centralization of investment decision-making mechanism, so that decision-making results were alternated by more"political achievements"and"interests", and vulnerable farmers, because of the lack of public goods consumer preference for the demands of channels, the decision-making results deviate from the reality of the situation in the rural areas and farmers'needs. This is the imperfect performance of decision-making mechanism for public goods in rural areas.5. The generalization of"One Issue, One Decision"decision-making mechanism may cause a new round rebound of the burden on farmers.As a form of democratic decision-making and public financing mode for the supply of public goods in rural and voting forms, the decision-making of"One Issue, One Decision"has played a major role in resolving the major village affairs and the supply of public goods in rural areas. However, under the absence of strict and standardized operating procedures, the decision-making system of"One Issue, One Decision"often causes problems of"Discussions Without Decisions, and Decision Without Implementation". At the same time, the generalization of"One Issue, One Decision"decision-making mechanism is easy because of the impact of certain village cadres'understanding, resulting in policies and regulations beyond the scope of procedure and funding standards, and resulting in the hidden danger of a new round rebound of the farmers'burden. Therefore, the decision-making mechanism of"One Issue, One Decision"has not fundamentally solved the difficulties on public goods investment in rural areas.6. The imperfect supervisory mechanism is the important reasons for inefficiency of public goods investment in rural areas.The perfect supervision mechanism is the important factor to improve the investment efficiency under the situation of limited investment of public goods in western rural areas. However, under the existing framework of the supervision mechanism on public goods in rural areas, the existing monitoring mechanism is plagued with many problems because of the inadequate legal supervision of the NPC's, inadequate financial and auditing supervision of financial auditing departments, as well as a lack of social supervision. The phenomenon that the investment funds of public goods in rural areas were misappropriated and abuse, the direction error and low quality of investment, is widespread, resulting in a loss of efficiency of investment, making the limited funds of public goods in rural areas become more scarce.Main Arguments1. Having changed the perspective in the study. Many researches hae studied the supply system of public goods in rural areas, financing system, supply of public goods in rural areas and farmers'burden. There is not a direct study from the perspective of intergovernment's right allocation and behavior choice, nor is there a direct study to the investment protection mechanisms of public goods in western rural areas, although some studies involved in some content on investment of public goods in rural areas. In fact, the intergovernmental right allocation and the behavior choice to public goods in rural areas investment play a decisive impact, especially in the western region.2. Having constructed a theoretic analyzing framework of the public goods investment in rural areas. This paper expanded Ellen Smide's"SSP"analytical framework, suggested the"goods attribution- subjects right allocation– behavior choice - performance analysis"framework, systematically studied the subjects'structure, the right allocation among governments, as well as investment decision-making mechanism and oversight mechanisms on the public goods in western rural areas, and evaluated the investment performance.3. Having revealed the institutional root-causes of inadequate investment on public goods in western rural areas.For a long time, under the arrangement of"urban and rural structure"of the system, our country implemented the public goods supply system with an urban bias. Because of the existence of the"path dependence"of urban bias of public goods supply, and the changes of the financial system, the"reverse allocation"of intergovernmental fiscal authority and the affairs right, that is the fundamental reason on the shortage for public goods in rural areas.4. having approached the preferred order of ivestment decision-making of public goods in western rural. Making clear the preferred order is a improntant problem for improving the investment efficiency of public goods in western rural under the premise of shortage for public goods. This paper approached the preferred order of public goods investment in western rural and put forward the supply order of first and second order on the basis of classification of publid goods in rural area and connect with the investigation of Sichuan rural areas.Suggestions for Policy Makers1. To articulate clearly the practical needs on public goods in western rural areas.Sufficient demand preference for public goods in rural areas is the basis and investment premise for decision-making, and, establish and improve the"targeting mechanism"on public goods in rural,"targeting"the investment projects is the important content to meet actual needs and improve the efficiency of public goods in the western rural region. However, the district of the western rural region is the majority, and the conditions are different, the demand for public goods in rural areas will also be quite different. It is therefore suggested that a full investigation on the reality and potential demand for public goods in rural areas must be designed and implemented, and a rational investment plan must be formulated in light of the different needs of public goods, and to identify the priority order, invest the public goods in western rural areas step-by-step.2. To nurture the main bodies of public goods in western rural areas.Governments are the important main bodies to invest the public goods in rural areas. But, in view of the financial situation of the township government, township government is proposed to withdraw from the main sequence of public goods in rural areas, to change into the implementation main body. Apart from the increase in government investment, there is a need to cultivate more the main bodies of public goods in rural areas. For a large number of quasi-public goods in rural areas, one can nurture and attract more market main bodies into the public goods investment in rural areas through strengthening the construction of infrastructure and formulating preferential policies, and improving the market and policy environment of public goods investment in western rural areas. However, in the process of nurturing and attracting the market main bodies for investment in public goods, the access control system must be strengthened and implemented; the suitable items of rural public goods can be carried out by investment and operations through the market main bodies. Meanwhile, the cooperation professional organizations in the rural areas and the rural elite must be strongly supported and nurtured, as soon as possible and make it become the private or private cooperation main bodies for investing public goods in rural areas."Two labors"system can be reinstated to construct the public goods projects which are needed for a large number of labor input in the rural areas, through mobilizing and organizing.3. To clarify the fiscal authority and the implementation responsibilities of governments through legal form.On the implementation power division between central and local governments, which is a national and overall concept; it should also be under the jurisdiction of the central powers. On the trans-regional projects of public goods in rural areas, they should also be responsible by the central financial authorities, but in view of the central fiscal revenue and expenditure situation, the benefited regions should also take burden. On the financial authority between central and local governments, they should empower local governments in their tax legislative power under the premise of the tax legislative power mainly concentrated in the central government. They should make needed changes in the current tax division, reasonablly divide the taxes between the central and local governments, reduce total (minutes) to enjoy tax, and improve the central tax system and the local one. In order to avoid the intersection of implementation responsibilities between the central government and local governments, as well as the unknown of financial powers among local governments'powers, the division of financial authority and implementation responsibilities at all levels of governments, which should be decided by the nation's highest organ of power in the form of legal norms.4. To reform the decision-making mechanism of public goods in rural areas.Establishing the communication mechanisms of public goods in rural areas and intensifying the democratic system of rural grass-roots, fully implementing the villager autonomy, through the village committee system and township people's congress system, so that farmers can fully express their views to public goods in rural areas through direct or indirect channels, and make the change of decision-making process from the"top-down"to the"bottom-up". At the same time, it is important to strengthen the scientific nature of the financial budget, and establishing a rational and effective operational mechanism for decision-making investment. Firmly implementing the central government's policies, in accordance with the requirements of the scientific development concept and coordinating urban and rural development, adhere to industry-financed agriculture and cities support rural policy, and strengthening the financial support for agriculture and the financial transfer payment of funds, and ensure the steady growth of the investment of public goods in rural areas. They should give full role to the people's congress at all levels, strengthening the ties between the people's congresses and the masses, and the power to approve and supervise the National People's Congress. Meanwhile, they also need to ensure all of the villager's rights in their investment decision-making information on public goods in rural areas, and place the decision-making under the effective supervision of the villagers.5. To further reform and improve"One Issue, One Decision"system.Hey should make greater efforts to publicize and to deepen the understanding of the cadres and the masses about"One Issue, One Decision"system of rural public welfare undertakings. They should truly raise the efficiency of"One Issue, One Decision"through clearly defined scope of"One Issue, One Decision", improve the procedures, and explore various communication channels. They should strengthen the supervision and management of higher level government and the relevant offices on the"One Issue, One Decision,"reasonably determine the status of financing volume according to the income level of farmers and rural public welfare undertakings, make the"One Issue, One Decision"accommodate the will of the majority of the villagers, improve relevant policies and regulations, to"One Issue, One Decision"law, and make it gradually a part of the legal system.6. To improve the oversight mechanisms of public goods investment in rural areas.They should enhance the transparency of the national budget, and strengthen the supervision and management to extra-budgetary funds. The role of public choice of the people's congresses at all levels and the supervisory role of governments at all levels should also be strengthened, along with the balances and mutual restraint mechanisms of the financial decision-making authority. Reforming the existing assessment of cadre's mechanism and dismissal mechanism, establishing the self-restraint mechanisms within local governments, and establishing the long-term mechanism of village affairs and democratic financial management constructing of villager autonomy system will help give full play of the roles of democratic supervision and dominant position to the majority of farmers in the process of financing public goods involved in the interests of the villagers. Also they need to consider establishing and perfecting the system of the external oversight bodies to include the government sector, in particular the system construction advantaged to play the independent oversight functions for professional audit bodies.