Research On The Local Government Competition Failure Avoid

The Local government competition is that the cross‐region competition of internal differentadministrative regions’ local governments which provide public goods, attractting capital technology andother production factors in investment environment, legal system, the government efficiency and others.According the unitary government structure system setting of our country, the local governmentcompetition is that the horizontal competition between non-administrative subordinate relationship ofprovincial and municipal (county) governments, namely, it don’t include the longitudinal local governmentcompetition with administrative subordinate relationship, because the competition in a great extent must bedistorted by the intervention of administrative power, it do not have the characteristics of fair competition,such as fairness, standard game, etc.; Meanwhile, this paper also don’t consider the participating possible oftownship government in the competition, because the power and responsibility limitation of townshipgovernment.The earliest discussion of local government competition can date back to the Adam Smith. In <thewealth of nations>, He reminded the government shouldn’t collect heavily tax of the capital according thecapital flow essential, it established the logic starting point for local government competition theory. AfterAdam Smith, many scholars discussed the local government competition from different angles andapproaches, until the US economist Charles Tiebout, they specially started to research the local governmentcompetition. In <A Pure Theory of Local Expenditures>, he designed the local public supply model andvoting with feet theory, which proposed a theoretical fulcrum for the following study about the localgovernment competition. However, the German scholar Albert formally proposed the concept of localgovernment competition. The reason of local government competition, they believe that it must preventsthe local government competition accompany with the fiscal decentralization. Meanwhile, the localgovernment public goods supply system and officials political promotion game are also the main reason forcasusing the local government competition.The30years of reform and opening-up, China’s achievements are remarkable, and known as "Chinese miracle". The reasons of the "Chinese miracle", whether domestic scholars or foreign scholars,they all believed that it must be attributed to the unusually fierce competition of local governments. Since 1982, we gradually began to carry out the top-down reform, the reform of economic system driven politicalsystem reform, and the central government gradually move part of the power to local government, then thelocal government competition took shape. But the local government competition are not the true localgovernment competition at that time, because the local government didn’t have the power to plan the localeconomic and social development, only limited to apply to the central government financial, materialproduction factors such as the competition.The repetitive construction, local protectionism and malignant competition are the main failure oflocal government competition, and the institutional and non-institutional are the two factors, leading tolocal government competition out of work. The institutional factor includes the negative effect ofinstitutional transformation, the defect of incentive system and the loss of constraint competitive system.The non-institutional factor includes, the political promotion game and the insufficiency of civil societydevelopment.