Fiscal Decentralization Mechanisms On The Regional Economy

With an analysis on the contribution of fiscal decentralization initiated in the 1980s to the economic growth in China, this paper argues that fiscal decentralization has not raised the growth of real GDP at the province level at all round .But to some extent ,it has raised the growth of real GDP of the lower income sector such as Ningxia . By comparative study of china demonstrates how the allocation of fiscal resources between the central and local governments has affected economic growth since reforms began in the late 1980s.We also find that a higher degree of fiscal decentralization of is associated with lower provincial economic growth over the past twenty years at all round. But to the lower income sector it is still has a positive effect.To have a positive effect on economic growth in lower sector , fiscal resources and decision-making powers should be decentralized to the lowest feasible legible of the government.for fiscal decentralization is the enhancement of economic efficiency :all the the provision of local outputs that are differentiated according to local tastes and circumstances results in higher level of social welfare than centrally determined and more uniform levels of outputs across all jurisdiction .We focus on the positive analysis of the contribution of fiscal decentralization in china .After we give some dynamic model of the economy ,we come to the conclusion that the fiscal decentralization in china has different effect to different sector across china .