Urban And Rural Compulsory Education Investment Gap Between The Perspective Of The Pros And Cons Of Fiscal Decentralization

According to the classical theories of public economics, fiscal decentralization can make a country maximize its social welfare.It has been proved by those successful experiences of many developed countries. However, in China, it seems that fiscal decentralization did not perform as well as people anticipated. Actually, to some extent,it brought about the unbalance of public goods supply among different regions.As one of the unpleasant phenomenon, the disparity in compulsory education investment between urban and rural area is an important problem which deserves our full attention. In this paper, we take the disparity in compulsory education investment between urban and rural area as the angle of view, and make a research on fiscal decentralization system in China, using both the ways of theoretical analysis and empirical study.We find that,because of the failures of"voting by foot" and"voting by hand", the mismatching of local governments' public expenditure and fiscal revenue, and the faultiness of the transfer payment system, fiscal decentralization system could not give local governments,especially rural area's local governments enough incentives to provide sufficient and equal public goods for their residents. Therefore, it could not achieve a balanced development of compulsory education between urban and rural area, too. Through the empirical study, we find that the disparity in compulsory education investment between urban and rural area can be lessened by expanding the fiscal decentralization between local and central governments.Now we arrive at our conclusion. China is a country with distinctive economical and social backgrounds.From the perspective of the disparity in compulsory education investment between urban and rural area, we find that the system of fiscal decentralization in this country has many defects.But it can be improved and perfected. Rationalizing the responsibilities of public expenditure among different levels of local governments, expanding the fiscal revenue power of local governments,perfecting the transfer payment system, and designing an effective monitoring and stimulating mechanism, are the answers of how to improve the fiscal decentralization system in China.