Study On Fiscal Decentralization,local Government Competition And Enterprise Entry

In recent years,the impact of the financial crisis on the economy is still lingering,and the development of enterprises has become the focus of economic and social attention after the COVID-19 pandemic.The registration of new enterprises can provide new jobs,stimulate the market,and lay a foundation for economic development.Since the beginning of the 21 st century,the number of newly registered enterprises in our country has maintained a relatively large growth rate.From the perspective of enterprises of different scales,the increase of small and medium-sized enterprises accounted for more than 70% of all enterprises;From the perspective of different types,private enterprises account for about 45% of the total;However,under the background that the total number of registered enterprises continues to rise,the number of registered enterprises with foreign direct investment has declined year by year.In order to encourage the registration and development of enterprises,the state has issued and implemented a series of policies,including changing the paid-in registered capital system to subscription system,simplifying the registration and approval procedures,optimizing the business environment,increasing targeted support for small and medium-sized enterprises,and guiding private enterprises to enter the fields of basic telecommunications operation and infrastructure.After the reform of tax distribution system,local government has become the key role in providing public goods and services.Compared with local governments,the central government has problems such as information asymmetry,so local governments play a leading role in regional economic development.On the basis of fiscal decentralization,local governments have a part of the income autonomy,but also shoulder certain expenditure responsibilities,and local government competition caused by the revenue and expenditure behavior of local governments plays an important role in enterprise entry(registration)behavior.Therefore,it is of certain theoretical and practical significance to study the influence of government behavior on enterprise entry(enterprise registration).This paper analyzes the influence of fiscal decentralization and local government competition on enterprise registration from theory to demonstration.On the basis of a brief review of the relevant literature,theoretical analysis is carried out.Then,based on the current situation of fiscal decentralization and enterprise entry,this paper empirically analyzes the impact of different measures of fiscal decentralization,two types of local government competition on different enterprise scales(large,medium,small and micro enterprises),different enterprise types(foreign-invested enterprises and private enterprises).The detailed contents are described as follows.The first chapter analyzes the research background and significance of this paper,and summarizes and briefly reviews the existing research on fiscal decentralization,local government competition and enterprise entry.On this basis,it expounds the main content,research methods and technical routes of this paper,as well as the possible innovation and shortcomings.Chapter two carries on the theoretical analysis.On the basis of summarizing the concepts and definitions of decentralization at home and abroad,this paper analyzes the mechanism of fiscal decentralization affecting firms’ entry behavior.This paper analyzes the influence of fiscal decentralization on expenditure competition and tax competition among local governments.A theoretical model of two regions and two sectors is established to analyze the influence of expenditure competition on the entry behavior of enterprises under fiscal decentralization,and a game model is established to analyze the spillover effect of expenditure competition.Finally,a two-region and two-sector model is established to analyze how tax competition affects the entry behavior of enterprises,and its influence mechanism is further explained.The conclusion is that different types of decentralization measures have different impacts on the entry of enterprises,and also have different impacts on different types and sizes of enterprises.The increase of income autonomy will make the government more willing to use low tax burden strategy to gain advantages,while the increase of expenditure autonomy will make the local government more willing to use high expenditure strategy.Through the establishment of the two-region and two-sector model,it can be confirmed that the increase of local government expenditure leads to the reduction of transaction costs between the two places and the reduction of costs caused by the reduction of tax burden,which can attract the registration of enterprises.Under the incentive of fiscal decentralization,whether local governments can provide expenditure support and tax reduction to meet the needs of enterprises determines whether enterprises will choose local investment,and also affects whether existing local enterprises will choose to relocate to other areas.The third chapter studies fiscal decentralization and the development process and current situation of enterprises.Starting from the reform of fiscal tax system after reform and opening,the different types of fiscal decentralization indicators are measured and compared.Then,the development status of Chinese enterprises is analyzed.On the basis of the existing enterprise scale classification standards,the relevant data of enterprise registration are divided into enterprise scale(large,medium,small and micro),and the entry situation of different types of enterprises is analyzed,which lays the foundation for the empirical analysis in the following paper.The results show that: from the perspective of each province,there are great differences in fiscal decentralization among provinces,provinces in eastern and western regions have great heterogeneity,and the indicators of income,expenditure and financial self-sufficiency are also inconsistent.From the perspective of each city,there is also the heterogeneity among cities and the results of different indicators.China’s newly registered enterprises after the tax distribution system,there has been a rapid development,but from different provinces and different industries,the total number of registered enterprises and the size distribution of registered enterprises are different.The fourth chapter analyzes the influence of fiscal decentralization on the scale distribution.Focusing on the entry situation of enterprises of different sizes,using the registered data of enterprises in the industrial and commercial enterprise database,and aiming at two different ways of enterprise size division,the dual-fixed effect model is used to analyze the impact of fiscal decentralization on enterprise entry.The results show that: The increasing degree of fiscal revenue decentralization in each city can significantly promote the proportion of small and micro enterprises in the total number of enterprises registered,reduce the proportion of medium-sized enterprises registered,but has no significant impact on the proportion of large enterprises registered."Population primacy" was used to construct instrumental variables for robustness analysis,and the influence mechanism was analyzed by combining the enterprise data in "industrial enterprise database".The results were robust.Chapter five analyzes the influence of fiscal decentralization on local government competition behavior.First of all,it analyzes whether there is financial competition among Chinese cities.The "railway timetable" from 1978 is used to measure the passage time between the city and other cities to construct the weight of inter-city time distance.The dual-fixed effect model is used to analyze the influence of the expenditure behavior and tax burden level of the city outside the traffic.And further analyze the influence of the degree of fiscal decentralization on local expenditure competition and tax competition.The conclusion shows that there is significant fiscal competition among Chinese cities,and this competition behavior presents complementary strategies.The local expenditure level will increase with the increase of the expenditure level of the outside city,and will decrease with the decrease of the external tax burden level.The increase of local fiscal expenditure decentralization will lead to the increase of local expenditure level and the increase of tax burden,while the increase of local fiscal revenue decentralization will lead to the decrease of local expenditure level and the increase of tax burden.The population primacy was used to construct instrumental variables to control endogeneity.The heterogeneity analysis of provincial capitals and eastern and western cities is robust.Chapter six analyzes the influence of local government competition on the entry of different types of enterprises.From the perspective of the interaction between cities,the method of new economic geography is adopted to construct the "financial competition index" between cities by using the data of transportation infrastructure(including railway and road).From the perspective of time effect,the paper measures the influence of the external city on the expenditure behavior and tax burden level of the local city.It is found that the reduction of local tax burden will make more enterprises willing to enter the city,and the competitive pressure imposed by the surrounding cities will also enhance the attraction of the local market to enterprises.The closer the city is,the more obvious the spillover effect is,and the expenditure competition has a restraining effect on the entry of state-owned enterprises.On the basis of the city circle with 20 hours’ travel time,the "time boundary" of the city circle is further reduced to 8 hours.The heterogeneity analysis was carried out by dividing the region,the industry type and whether it is a provincial capital city.On the basis of the above research,this paper obtains the following enlightenment: First,it is necessary to reasonably set the proportion of fiscal revenue and expenditure among local governments.Cities with higher fiscal revenue tend to have higher fiscal expenditure,while cities with higher fiscal decentralization will have slower economic growth.Secondly,the Chinese government should strengthen the management of urban financial funds while giving full play to the fiscal autonomy of local governments,so as to avoid excessive subsidies to large and medium-sized enterprises in cities with relatively large fiscal expenditure funds,which may cause excessive distortion of market competition environment.Finally,governments at all levels should take better care of newly registered enterprises.Through better introduction of government policies,enterprises should get familiar with the new market as soon as possible.Through better business environment and more convenient business procedures,the hidden costs of enterprise operation should be reduced as far as possible.