Fiscal Decentralization On The Growth Of Regional Economic Imbalance

The brilliant achievements of the Chinese economy can not hide the fact th at regional disparities continue to expand, especially among eastern, central and west region. Of course, researching scholars and literature in this area are too numerous to mention. However, if the study extended to a broader perspective in the field, dating back from the imbalance in institutional level, fiscal decentralization, as the financial system can not avoid the issue will have to pay attention to.As the forefront of national attention to the problem theorists, a pure theory of local public expenditure of Tiebout theory of fiscal decentralization created a precedent in 1956, TOM model, preference theory of false consciousness, menu theory and the theory of separation of powers club first-generation theory of fiscal decentralization, etc. The main point of competition and information superiority regarded as the theoretical basis.Until the late nineties in the second generation theory of fiscal decentralization had thrown doubt on the official dedication assumptions, changing area resident's welfare maximizing assumption, and incentive compatibility and mechanism design theory into the financial theory, more concerned about how to design a mechanism to achieve public policy incentive. More focus on domestic research to explore the field of practice, fiscal decentralization and the market order and the role of regional market segmentation and constraints and institutional environment, local government capacity to provide public goods, local differences in behavior, and economic growth relations and the optimal degree of fiscal decentralization in recent years, scholars have become increasingly hot research topics.China's financial system has undergone three major reforms, from the unified revenue and expenditure to the phased implementation of the tax system after 1994 and then to reform, every reform, fiscal decentralization can be regarded as a specific attempt, in this period, the gap among eastern, mid and western region also experienced a gradual widening of the process. If fiscal decentralization as an important factor for economic growth to consider, in terms of capital investment, on the one hand, has always been central to the progressive reforms to ensure stability dependence on the system designed in the tax return of the irrational, the other On the one hand, mainly transfers, special input turn to be much more in eastern region than others, so the Mid and western region in the financial capital formation clearly does not have the eastern edge. The cumulative effect from the eastern encourage them to pay more attention to human capital investment and to attract, In initial capital and labor are not the dominant premise of fiscal decentralization in the remodeling market micro-economic entities and market integration show different regional differences.Further speaking, fiscal decentralization as an institution operating results, whether for political or economic goals need to fiscal decentralization based financial system reform, local governments had a strong incentive effects. Theory of inference that the three-stage game model can promote consistency between local cooperation, which appears homogeneous government. However, officials of political centralization and simplification of performance indicators, benchmark competition caused by the local government, resulting in local officials 'selfish choice', the budget and extra-budgetary revenue growth occurred in different proportions. In total expenditure, the central and western regions due to limited financial resources can not be compared with the east, and the expenditure structure to stimulate economic growth also has regional differences. These are precisely the economic gap between the direct cause.By constructing the fiscal decentralization and regional economic growth indicators, using nearly 20 years at the provincial level panel data found that China's fiscal decentralization process and in promoting market-oriented local government'for the growth of competition' in the same time, total expenditure on shows more than the eastern, central and western fewer features, the structure of expenditure is 'heavy input in infrastructure construction, light of human capital and public services.'Total expenditure and the structure of competition on the ultimate impact depends on the degree of decentralization. The future challenges of China's financial system reform is how to choose more appropriate level of fiscal decentralization in promoting economic growth, reduce regional imbalances in economic growth.This last, from the transfer payment, the tax system, expenditure structure, rights of finance division, and local officials evaluation system, and relevant policy recommendations are given.