| From the beginning of 1980s, China started to carry on a fiscal decentralization reform and profound transformation has taken places with more than 30 years passing by. The fiscal system, in which all arrangements of government revenue and expenditure were under central government's control, has showed a relative decentralization tendency, in which case local governments have been given a limited authority. As significant inter-regional differences of resource endowments and economic base exist, economic development of different regions may be affected in different ways or depths even under the same institutional arrangements. And China's gradual fiscal decentralization means the institutional arrangements are also different between regions. Therefore, whether the fiscal decentralization in China, especially the reform of tax system in 1994, is an explanation of regional economic development as well as a promotion of disparity, how it functions and other related issues become key points discussed in this article.In an empirical way, this paper uses methods of comparison and statistical analysis based on inter-regional indicators of fiscal decentralization and other relevant data. The conclusion explicit regional economic developments have been accelerated by the decentralization about government expenditure while dragged down by the one about government revenue. At the same time, the effects of fiscal decentralization are distinguishable in separated regionsThe paper includes five chapters organized as follows:The first chapter is the introduction. The second chapter is a literature review, from theoretical and empirical aspects, to evaluate the conclusions of different scholars and researchers towards the inherent relationship between the fiscal decentralization and economic development, then gives a brief analysis on the progress and limitations as well as the reasons of differences.The third chapter focus on the capacity and structure of revenue and expenditure in eastern, central and western regions to quantify the fiscal gap, protruding the imbalance of regional economic development caused by the tax-sharing reform and the fiscal behavior of local governments.Chapter IV is to sum up the calculation of indicators used by other empirical research firstly, combines features of our fiscal decentralization system, and then proposes indicators in this article. This article uses panel data 1994-2008 and fixed effect model analysis to reflect the impacts of the national policies on regional economic equilibrium, arguing that the roles of revenue decentralization and expenditure decentralization playing in economic development are not the same and there is significant cross-region effect supported by empirical analysis. So it is believed that the regional disparities of fiscal decentralization effect results from bias due to local fiscal expenditure structure.The fifth chapter is a summary of the full text and proposes related policy recommendations. Based on data and empirical analysis of the degree of fiscal decentralization and local government behavior differences in the eastern, central and western regions, it proposes to set up a transfer payment system aiming to improve the equalization of basic public services, a reform performance evaluation system, to strengthen the legislative protection of fiscal decentralization, and many other policy recommendations.This study shows that:in addition to differences in macro factors such as capital investment, industrial structure and tax burden, fiscal decentralization is also a factor affecting the imbalance of regional economic development. The analysis can contribute suggestions to China's decentralization reform. The research also has significance towards the tax system reform, the transfer payment system, the equalization of basic public services and reduction of regional disparities... |
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