On The Competition Of The Fiscal Decentralization System Of Local Government Spending

Focusing on the expenditure competition of the Chinese local government, this paper studies the conception of the expenditure competition and its mechanism and effectiveness. The purpose of this study is to describe the current situation and influence of the expenditure competition in China and give some insight in the construction of orderly expenditure competition structure.There are four parts in this paper. The first part introduce the significance of this study and review the literature and conception. The second part is a theoretical review of the mechanism of the expenditure competition and its effects. Firstly, we analyze the condition that result in the expenditure competition and study the mechanism from the point view of game theory. Secondly, we analyze the effective of expenditure competition on the economic circumstances, capital and labor flow and the economic growth and economic equality. The third part is an empirical analyze of the expenditure competition of the Chinese local government. Firstly, we analyze the two stages of the development of the expenditure competition and their characteristics. Secondly, we study the current circumstances and the reasons. Finally, we use the cases of Jiangsu and Shandong province to get the conclusions. The fourth part is about the policy reconstruction.The innovation of this paper is:1. The definition of conceptionsThe expenditure competition is the competition of the economic resource and activities to maximize the public expenditure. In details, the local government increases the overall expenditure and optimizes the structures to improve the supply of the local public goods.2.The mechanism of the formation of the expenditure competition.We use game theory to analyze the behavior of the local governments to attract investment.3.The social and economic influence of the expenditure competition.The influence is the flow of production factors and the distribution of thesefactors and the effect on the economic growth.4.The empirical study of the expenditure competition of the local governments We use new data and index to get the conclusion that the ability of expenditurecompetition is of great varieties and there are equal existence of expenditurecompetition and tax competition.