Fiscal Decentralization On Economic Growth

With the development of China's economy in the last 30 years, it not only created a China miracle, but also raises China's status. In the past 2009 years, China against the world economic situation and still created amazing growth rate of 8.7%. To the current exchange rate, the gross domestic product (GDP) for the first time exceeded Japan. However, China's economic structure compared with developed countries or regions are still large gaps, as economic growth accelerated, institutional transformation is necessary. China's reform and opening up promote economic growth, but the phenomenon of the economy by driving force is meaningful and interesting. This paper, from the government's fiscal decentralization reform, analysis how fiscal decentralization affects economic growth. The economic roles of government not only include administrative intervention, but also involve implement appropriate control measures, including fiscal policy. However, the implementation of fiscal policy necessarily involves the Government's revenue and expenditure, distinguish between central and local government financial authority and powers will impact on economic growth.From the empirical analysis of data 1978-2007 fiscal decentralization for economic growth, through two indicators to measure fiscal decentralization, the central fiscal revenue in the GDP, and local financial revenue in the local GDP, with the use of individual and time of measurement error component panel data model, draw a cross on fiscal decentralization and inter-variation. Study concluded that China's fiscal decentralization has a positive effect on economic growth from 1993 to-2007 years than the 1978-1993 tax-sharing reform and fiscal decentralization among the significant effect of the eastern region of the fiscal decentralization on economic role in promoting a more obvious effect in central and western. Finally based on empirical analysis, given five points, so that fiscal decentralization in promoting economic growth and reduce regional disparities continue to play an irreplaceable role.