A Research On The Relationship Of Federal Decentralization And Economic Growth On The Provincial Level In China

This dissertation focuses on researching the relationship between financial decentralization and economic growth in China during the period from 1978 to 2002. It starts with a review of foreign and domestic classic theory of financial decentralization, then it gives an outline about the course of federal decentralization in China. The main body of this dissertation is using Panel Data model to research the relationship between federal decentralization and economic growth with nine indices evaluating the degree of federal decentralization. In this model, degree of opening, degree of market economy, human resources, investment ratio etc. are also considered. Because the relationship between federal decentralization and economic growth may vary between different regions and during different periods, there is further research by dividing the 30 regions to eastern areas, central areas and western areas as well as dividing the sample period to two parts, which are from 1978 to 1993 and from 1994 to 2002.On the basis of qualitative analysis and quantitative analysis, this dissertation draws the following conclusions:There is positive and robust relationship between federal decentralization and economic growth.In central area and western area of China, financial expenditure bears a greater stimulation towards economic growth than that towards eastern areas.