| Since the reform and opening up, Chinese economic has been keeping a high growth rate for over30years, leading remarkable achievements. As documented by Wu (2008):"From1978to2008, the reform and opening up taken place in China has brought pronounced economic outcomes. Compared with1978, by the end of2006, the total amount of GDP has increased14times with an average annual growth rate nearly10%. In addition, the disposable income of urban residents and the net income of rural residents both increased6.7times. And furthermore, the poverty population has reduced from250million to21.48million." Except China, there is no other country in the world, even Japan, has ability to maintained an annually economic growth rate of nearly10%for over30years (Zhou,2007).Thus, the economic growth in China could be seemed as a miracle.Prior studies have concurred that since1978, the reforms taken in Chinese political system and especially the economic system, have played a crucial role in promoting Chinese economic development. The decentralization reform taken in Chinese economic system, which gives local governments more economic management power, contributes lot to the development of local economy (Weingast,1995; McKinnon,1997; Qian and Roland,1998; Jin et al.,2005; Lin,2007; Wang et al.,2007). The decentralization reform in China could be mainly manifested in two aspects:First, the marketization leads government gradually withdraw from competitive fields and make the resources allocation mainly determined by price and competitive mechanism. Second, as to the government system, central government also gradually decentralizes to the local government, though the overall rationing system in early periods and the tax assignment system in later periods, entitling the local government a certain degree of substantial autonomy (Zhou and Zhang,2008). All these reforms effectively arouse the local government's enthusiasm of developing economy and accordingly promote the rapid development of Chinese economy. As a matter of fact, although China takes an incremental reform, the major reforms are taken in the economic system, making great achievement. However, the political system reform is relatively slower. Therefore, the lag of political system reform will affect the sustainable and healthy development of economy when economic development to a certain stage. Hence, in recent years, especially after the third plenary session of the eighteenth, the central government explicitly proposes to "comprehensively deepen reform", promotes the reform of political and economic system, speeds up the "modernization of state governance system and governance ability", as well as improves the governance efficiency of government, in order to realize the long-term healthy economic development.There is a natural connection between state audit and state governance. In fact, state audit is an important part of state governance (Liu,2011). The state audit can effectively promote the realization of "good governance" by ensuring state economic security, supervising power operation, strengthening anti-corruption, promoting democracy and rule of law, maintaining the rights of people's livelihood as well as promoting deepen reform(Liu,2012). In December2013, the21st world audit organization conference, which was held in Beijing, put the "state audit and state governance" as one of its main topics. The meeting issued the "Beijing declaration-the supreme audit institutions promoting good governance", which puts forward as follows:the central goal of state audit is to promote the country to achieve good governance, and the state audit should promote the realization of good governance by maintaining democracy and the rule of law, improving the government efficiency, strengthening anti-corruption, safeguarding state security, promoting the improvement of people's livelihood, improving government transparency and so on.In recent years, the state audit has played a very important role in promoting the government governance efficiency and the sustainable, healthy economic development. Therefore, it won the world's highly praise. As auditor-general Liu said in the national auditing conference (2011):"During the period of'11th five-year plan', the state audit institutions have surveyed more than720000units, increased fiscal income savings of489.3billion Yuan, saved or avoided the loss of78.9billion Yuan, and found out more than13000major disciplinary violations and economic crimes clues." Compared with the local fiscal revenue, which is about7%of GDP, the problem funds investigated by local audit institutions per year is over2billion, which accounts for2%of GDP. As a professional economic supervision organization, State Audit has played a very important role in promoting China's economic development.As a matter of fact, promoting economic development is one of the primary goals of the state audit. The<State Auditing Code> which enforced in2011proposes the major goal of state auditing is to protect the safety of national economy, push forward the democracy and anti-corruption, ensure the healthy development of national economy and society, by supervising the financial revenue and expenditure of audited units and the reality, legitimacy as well as effectively of relative economic activities.However, on the issues related to Chinese economic development, existing research mainly focus on the incentive mechanism, especially the role of economic incentives and political promotion incentives played in economic growth(Fan et al.,1990; Weingast,1995; Qian and Roland,1998; Lin and Liu,2000; Jin et al.,2005; Li and Zhou,2005; Wang et al.2007; Zhang,2007; Zhou,2007; Pi,2012). Few literatures explore the role of supervision mechanism in economic development. This dissertation inherits the relevant researches of Chinese Style Decentralization, and further discusses the role of state audit role played in China's economic development and the path through which state audit affects the economic development.Based on the theory of public accountability, this dissertation explores the state audit's role in promoting local government to perform accountability from the perspective of Chinese style decentralization, and then test the state audit's effect on promoting the government governance efficiency and the long-term healthy development of the local economy. This dissertation will not only help people to learn more about Chinese style supervision mechanism's role in economic development, but also help deepen the people's understanding of the state audit's governance function. In addition, this dissertation has certain significant enlightenment in promoting" the modernization of state governance system and governance ability", boosting the reform of economic system and changing the way of economic development.This desertion mainly includes six parts. The specific contents of the chapters are as follows.Chapter1:Introduction. This chapter mainly introduces the research background of the topic and its importance, the research ideas and methods, the expected innovations, the research contents and structures. Chapter2:Literature review. This chapter first defines the meaning of Chinese style decentralization based on the existing research literature and then analyzes the role of Chinese style decentralization in economic growth and the bias behavior of Chinese local government caused by the decentralization. I next discuss the state audit's role in service state governance and promoting economic development. Finally, I summarize the existing research literature and show the research opportunities.Chapter3:Building the whole analysis framework of state audit, government governance and economic development. First, this chapter discusses the main content of public accountability and principal-agent problems of government according to the theory of public accountability. Next, this chapter analyzes the role of Chinese style decentralization played in dealing with the government principal-agent problems and its impact on promoting local government to perform accountability. Then according to the characteristics of the state audit system, this chapter further explores the mechanism of state audit in promoting local government governance. Finally, I discuss the mechanism of the state audit in promoting local economic development.Chapter4:The empirical test of the state audit to promote local government governance efficiency. Using the data of local government at the provincial level, this chapter tests the state audit's effect on the efficiency of government governance, the expansion of the government scale and the struggling against corruption, based on the perspective of Chinese style decentralization. This chapter provides the empirical evidence for the important thesis that the state audit has governance function.Chapter5:The empirical test of the state audit to promote local economic development. Using the data of local government at the provincial level, this chapter tests the state audit governance function role in promoting local economic development, based on the relevant research of Chinese style decentralization. This chapter focuses on the effects and acting path of state audit to promote the development of economy, and analyzes the influence of Chinese style decentralization on the function of state audit since the'audit storm'Chapter6:Conclusion. On the basis of above research, this chapter summarizes the main findings, and puts forward the corresponding policy recommendations and the future research prospects with the discussion of the innovations and limitations of this dissertation. The main findings in this dissertation are as follows.(1) Chinese style decentralization leads to the alienation of local governments'behaviors in performing public accountability. Under the system, which puts GDP as the core of criteria of assessments, Chinese style decentralization leads to the local governments'selective tendency in fulfilling public accountability. It prompts the local government to put the performance of economic development in the first place, making them allocate the most economic resources in the economic development. When certain resources are in short, in order to local governments even tend to adopt some inappropriate methods, such borrowing, to keep the economy grow rapidly. Therefore, local governments can hardly perform other responsibilities effectively, since most resources are spend in economic development. As a result, a series of social problems, such as the public goods supply imbalance, unreasonable distribution of social interests, gradually expanding gap between rich and poor, serious environmental pollution, and prominent corruption comet to the surface.(2) There is a certain degree of opportunistic behaviors in the process of local governments pursuing the economic development. Under the system, which puts GDP as the core of performance criteria of assessments, the arrangement of Chinese style decentralization would motivate local government to pursuit for short-term economic growth, even may incent them to misappropriate or illegal use of the budget, which was supposed to be used in education, health care and social security, to projects, such as infrastructure construction, which is helpful to the short-term economic growth, leading to the'soft budget constraint'problem. This dissertation finds that the more the illegal and wasted fund investigated by state audit the more adverse to the current economic growth. However, the investigations on the illegal and wasted fund conducted by state audit can significantly promote the future economic growth. This study shows that there are certain opportunistic behaviors, such as misappropriate or illegal use of the budget, in the process of local governments pursuing for economic development, and the state audit can effectively promote the long-term healthy development of the local economy, by inhibiting the opportunism behavior of local government.(3) The state audit has important governance function. The empirical research of chapter4finds that, the state audit can effectively improve the administration efficiency of local government, inhibit the expansion of the government scale and improve the efficiency of local government's anti-corruption. The results indicate that, the state audit can enhance the efficiency of government governance, testifying that the state audit has important governance function.(4) The state audit can promote the long-term healthy development of the local economy by supervision the local government effectively to perform public accountability. The empirical research of chapter5finds that, the role of state audit is not conducive to achieve short-term economic growth, but to promote the long-term development of the local economy. Since the'auditing storm', the state audit has played a more important role in promoting the long-term development of the local economy. In the region with higher degree of decentralization, state audit has greater effect on promoting long-term development of the regional economy. State audit promotes the development of local economy mainly in three ways: improving the administration efficiency of local government, reducing the unreasonable expenditure of local government, and facilitating local governments actively conducting anti-corruption.The innovations of this desertion are mainly embodied in the following three aspects:(1) Based on the theory of public accountability, this dissertation builds a whole framework for analysis of the state audit, government governance and economic development. This dissertation argues that the governments'public accountability should include at least seven aspects, which are economic development responsibility, public goods supply responsibility, promote fair competition responsibility, coordination of interest distribution responsibility, guarantee the economic entity's legitimate rights responsibility, prevention and control of corruption responsibility, information disclosure responsibility. Chinese style decentralization would lead to the local governments'selective tendency to fulfill public accountability. Local governments are keen to fulfill economic development but ignore other aspects. As a special economic control mechanism, state audit can promote the long-term healthy development of the local economy by supervising the local government effectively to perform public accountability. The theoretical framework this dissertation built can help people to study state audit's function under the institutional backgrounds of China, and can better promote explanatory power of auditing theory to practice, also can deepen people's understanding of the state audit's role in transition economies.(2) This dissertation provides empirical evidence on the aguments that state audit has significant governance function. Using province-level data, this dissertation tests the state audit's effect on the efficiency of government governance based on the perspective of Chinese style decentralization, and finds that state audit can effectively improve the efficiency of local government governance. This dissertation also finds the effect of state audit would be greater in regions with higher degree of decentralization. My results indicate that state audit has important governance function. Thus, this dissertation has certain significant enlightenment in promoting "the modernization of state governance system and governance ability".(3) This dissertation inherits the relevant research of Chinese style decentralization, and further discusses the role of state audit (the special Chinese style supervision mechanism) played in Chinese economic development. On the issues related to Chinese economic development, existing researches mainly discuss the incentive mechanism, especially the role of economic incentives and political promotion incentives played in economic growth. This dissertation further discusses the special Chinese style supervision mechanism's role in economic development. Combined with the existing researches of Chinese style decentralization, my dissertation helps to form a relatively complete theoretical analysis framework. Also, this dissertation has some implications for helping people to better understand the mysteries of Chinese economic growth, and boosting the reform of economic system and changing the way of economic development. |
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