A Study On Governance And Public Goods Provision

The theoretical and empirical research in Development economics has indicated that increasing the supply of public goods can develop the rural economic and improve the standard of living for rural households. However, how to supply the public goods is not just related to investment or technology. Many studies demonstrated that public goods provision is also closely related to the political systems and the governance.Unfortunately, current researches on public goods provision in rural China tend to discuss the sources of the funds and pay little attention on the impact of political factors.Based on Hirschman’s Exit-Voice theory and The Median Voter theory, combined by the analysis of the process of public goods provision and village election and governance, this paper tries to provide theoretical and empirical answers to the following key questions using the survey data from China’s villages:(1) How does the situation of public goods provision change the rural resident’s behaviors in village elections?(2) How does the informal authority affect the public goods provision in rural China? (3)How does China’s village election reduce the deviation of supply and demand for public goods?The answers to the above thress questions can be summarized as the following conclusions in our studies:(1)The satisfaction of public goods provision in rural China could effectively change voting behavior and participation of rural households. Considering the demand and preferences for public goods, villagers will take beneficial activity. Besides, the sources of household income and education level also have significant impact on the participation in the village elections.(2)Authority coupling is defined as the situation when the informal authority from large surname group coincides with the formal authority generated by the rural election. Our econometric exercises shows that the more decentralized structure of surname group in the village, the more investment from the government sector. While the higher proportion of large surname group in total population, the fewer funds from the transformer payment. Moreover, more projects such as irrigation, roads and bridges and other tangible assets will be invested in this kind village. The reason for this trend is that according to the principle of majority voting, the higher proportion of large surname group, the possibility of winning the village chairperson increased. The lack of competitive election will further impact on the accountability of the provision of public goods. Further econometric exercises shows that informal authority can contribute to increase village self-funded public investments. The informal authority can use its specific organizational resources and therefore can help to reduce the cost of the cooperation and increasing the likelihood of collective action.(3)We respectively analysis the village and household demand for the public goods by using village’s marco data and households’mirco data with public spending demand functions which was based on the median voter model. We found that income has stimulation effect on the demand for public and the demand for public goods also has price effects. Besides, the distance from the village to the township government as well as the size of the village will have an impact on the supply and demand of public goods.We testify our hypothesis that democratic governance improves the situation of the supply and demand of public goods in rural China. In the test we found that the democratic in the village plays different roles in reversing the imbalances of the supply and demand for the public goods. Among them, the village democratization has no significant effect on social security and medical spending, but has a positive correlation with the educational facilities and services. The higher democratic level, the fewer possibility of educational facilities and services below the level of the villagers preferred. The same as that, the democratic level has a negative correlation with the oversupply of irrigation and facilities which mean the higher level of democratic governance in rural areas, the fewer cases will be happened in the oversupply of the irrigations. And we also found that the democracy can decrease the Administrative spending.In the summary, from the democratic governance perspective, this paper combined theoretical and empirical analysis to the supply and demand of public goods.we may have a certain contribution to the following aspects of the supply theory of public goods in rural China:First, Though Hirschman "Exit-voice" theory, provides a theoretical foundation for analyzing the voting behavior. Meanwhile,combined the satisfaction of the public goods provision with the voting behavior, we further elaborate that "voting" mechanism is important for the rural development. Secondly, the new understanding of the role of informal authority played in the public goods provisions, makes up for the imperfection in researches in factors influencing the supply of public goods such as economic factors. Thirdly, based on the A.Downs median voter theorem and the public choice theory, this paper constructed rural public goods demand function and discuss how the democratic election correct deviations of the supply and demand of public goods in rural China. This first attempt to connect the village governance to rural public goods provision expands the research perspectives and also provides a new framework for economic analysis。...