The Public Provision Issues Under Fiscal Federalism

This study gave its attention to the public provision issues under fiscal federalism. Meanwhile, it analyzed China's fiscal system and rural public expenditure. The purpose of the study is to extend the current existing theory in this area so as to integrate the issue of public provision into the framework of fiscal federalism. It is designed to clear the way for further empirical studies and public decision-makings.Besides the preface, this study comprises five chapters. The first two chapters provided the theories of public provision and fiscal federalism. Chapter Three and Chapter Four discussed China's fiscal system reform and rural public expenditure. The last chapter contains some concluding remarks.Chapter One started with the clarification of relationships among private production, public production, private provision and public provision. Based on that, two major reasons for public provision were established and by manipulating education as an example the analysis was extended. Through the rules in public decision-making, the discussion on public provision is transmitted into the framework of fiscal federalism.In the dimension of public economics, Chapter Two presented the significance of decentralized provision and fiscal decentralization. It also followed the track of evolution from traditional fiscal federalism to market-preserving federalism. In addition, the analysis expanded to the dimension of political and social philosophy. It revealed the internal logic of fiscal federalism from the aspects of political conceptions, epistemology and civil society. At the end of the theoretical section, the essence of the public provision issues under fiscal federalism was unearthed.By referring to the reform of the fiscal contracting and tax-sharing system since the year of 1979, Chapter Three revealed the characteristics of China-style fiscal federalism and reflected the process of China's fiscal system reform. Therefore, it concluded that this reform is supposed to aim at formal fiscal federalism instead of re-centralization. This chapter also discussed the related issues such as budget system, transfer payments, local debts and government structure.Chapter Four first of all discussed issues of responsibility identifying, revenue sources and decision-making mechanism in China's rural pubic expenditure management. Furthermore, a framework was provided and used to analyze several China's rural public expenditure items. These items include public expenditure for fundamental education, public health and medical insurance, and infrastructure and agricultural development in China's rural areas. This framework and the following discussion will be served as a way to improve public provision in China.Chapter Five reasserted the essence of the public provision issues under fiscal federalism. Moreover, it briefly remarked on the relationship between fiscal federalism and federalism, the controversy about gradualism and radicalism, and the tendency of constructive rationalism and cultural determinism. These remarks are supposed to further our reflection on the direction and future of China's reform.