Policy Effect Of Fiscal Transfers

China as one of unitary countries, the two major responsibilities of Centre government—maintaining macro-economy stability and achieving income distribution equality—need to be implemented by local governments at all levels. Fiscal transfers are one of the most important fiscal tools for reflecting the centre governmental financial targets. Since the reform of tax-sharing system in 1994, the fund size of fiscal transfers from center has been enlarged gradually. Then comes the question:how can the centre governmental fiscal policy target be realized at the grass—roots governments,i.e. county governments? Whether will the counties execute them? Whether are there really "the centre having its policies, but the local having their counter-strategies, (shang you Zhengce,xia you duice)",when the lower governments carry out the superior 's policies? The dissertation employs the nested analysis as a mixed—method strategy to study them through the distribution process and the expenditure orientation of fiscal transfers in Jiangxi Province.What the main analysis framework is : bureaucratic interest maximization based on the official standard(guan benwei). Which founded on a basic of three kinds of main theories: Public Choice, Agency—Centered New Institutionalism, Principal—Agent theory. The framework main contents: official as an economic man will chase their self interest maximization. As an official in China governments, their maximum self interest is chasing promotion or another term of office, because of the traditional impact of official standard, the vast incumbent public money expenditures and the immense official discretions. In order to make sure of the policies will be carried out, the upper—level governments will assess the inferior officials' performances. So the latter have to work out policy performances(zhengji) and fulfill the assessment goals to enjoy their leaders, besides chasing the budgetary maximization.Based on the theory framework, according to the changing of center fiscal policies, we can bring forward the article's hypothesis: for position promotion or chasing next official term, the county government main officials will implement the fiscal policies from upper—level governments.To be more concrete, that means: before 2001, under the center requirement of "firstly assure having meals, secondly assure development"(yi yao chifan, er yao jianshe)",the centre government emphasized the assessment of "economic performance", So the county governments overvalued the expenditures on economical construction, administrative management, and public security. As to other public expenditures, which can not reflect short-term policy performances, such as public medicine service, compulsory education, social security, will only be met basic demands.But started form 2002, the center have changed to emphasize public services, required the fiscal expenditures must "to make sure of salary, government operation, social stability, social welfare, key expenditures", then the county governments would emphasize the expenditures on administrative management, public security, medicine service, and compulsory education. Economic construction, as the important symbol of "policy performance", still was the expenditure priority.The cross section data in 2001, 2005, and the panel data over the 1996—2005 period, those come from 80 counties in Jiangxi Province, were employed to test the hypothesis respectively. These models' estimate findings indicate that, before 2001, the center finance policies had emphasized that local fiscal must achieve "firstly assure having meals, secondly assure development"(yi yao chifan, er yao jianshe)",after then, its emphases turned to "make sure of salary, government operation, social stability, social welfare, key expenditures", which all had been fulfilled from the distribution anger of the block transfers and earmarked transfers(special transfers),and the counties' finance had always emphasized the expenditures on economic construction, reflecting the county governmental policy performances (zhengji)view of " economic construction is the central point, and development is the first task".The field surveys from "D "County and its"C" township in Jiangxi Province also support these arguements. When the fiscal fund was distributed by the county governments, the special transfers basically were used to the appointed field. And the county governments also set aside corresponding matching fund under the circumstance of self finance is enough. As to other fiscal fund, they will be firstly used to make sure of salaries and governmental operation. That is, assuring the government employees' salaries and public fund is the preference purpose. Then, the remainders may be fund some programs which easier be appreciated by the superior leaders, such as urban infrastructures.At the township level, especially the poverty ones, their expenditures depended heavily on the upper—level subsidies, which make them be an executive organizations of county governments, and the fiscal system of "township finance is managed by county but used by township(xiangcai xianguang xiangyong)", further strengthens the county's control to the township governments. So, the township governments have to try their best to apply for extra fiscal transfers from every upper-level governments. They make efforts to apply for all kinds of fiscal fund, then use them to meet the demands of "make sure of salary and governmental operation". In addition, they also use some of the "begged funds" to the "highlight dot (liangdian)" program, which can be appraised by their leaders, but these programs sometimes indirectly influence the local economic development and the peasant's income growth.The dissertation concludes: in the current government system, the upper-level government policy targets, including the center fiscal policies' will gain good implementation at every level local governments, also including the grassroots levels, county governments. Certainly, during the process of implementing, there are some possibilities of alterative or elective enforcements, but they can not change the basic facts that the center policies have been enforced at the grassroots levels. Under the current system framework, in order to better realize the center government policy targets, especially make good use of the fiscal transfers, some suggestions are given: one, we should make the intergovernmental fiscal system better, solve the problem of "Isomorphic Responsibility"; two, enlarge the citizen involvements, and improve the budgetary management system.The main innovation points in this dissertation:first of all, the research methodology innovation, the nested analysis methodology is employed to combine the qualitative research with the quantitative research, then to explore the effect of fiscal transfers. Second, the research content innovation, take the transfers' policy effect as a research angle, the paper studies the implementation status of the center fiscal policy targets at the local governments' levels, in order to do so, the fiscal transfers are divided into two halves to interpret their impacts on every kind of county governments' public expenditures respectively. In addition, in the way of field surveys, we explore the township governmental process of fiscal transfers, i.e. how the township gains its grants and uses them, and learn thoroughly the township government expenditure responsibilities and its current fiscal situation. Third, theoretic innovation, take the policy effect of fiscal transfers as a researching angle, a analysis framework—bureaucratic interest maximization based on the official standard(guan benwei) is constructed to explore and explain the facts that the center fiscal policies have been exerted at the county level, which helps us better understand, although the degree of fiscal decentralization is very high in China, as a unitary country, why the center government policies can be implemented at the grassroots levels, the center still holds the authority over the local governments.