Fiscal Decentralization, Promotion Incentives And Scale Of Local Government

This paper takes the cross-regional different impact of China’s FiscalDecentralization on local governments’size as research object. The significance of thisstudy is finding the root causes of the cross-regional different impacts of China’s FiscalDecentralization on local governments’ size and putting forward the accommodationsto prevent irrational expansion of government size. Through the analysis of the systemmechanism which lead to the discrepancy behaviors of local officials, this paperreveals the regional impact of fiscal decentralization on the local government sizeinitially.At first, the paper introduces the research background, significance and the mainresearch literature home and abroad in this field.The following chapter analyzes the theoretical basis of the cross-regional differentimpact of China’s Fiscal Decentralization on local governments’ size and discussesapplicability of the "Leviathan hypothesis" in China. Based on the theoretical modelwhich describes the behavior differences between officials, the paper explains thetheoretical mechanism that causes the cross-regional different impact of China’s FiscalDecentralization on local governments’size.Then, this paper makes the empirical analysis of the cross-regional differentimpacts of China’s Fiscal Decentralization on local governments’ size, the empiricalanalysis’results shows the cross-region differences is exist. The regional different existin the promotion competition’s environment, fiscal expenditure pressure, fiscal transferpayment status, the Marketization degree, foreign investment capital, industrialstructure and other influential factors led to the phenomenon that regional differentimpact of fiscal decentralization on the local governments happen.At last, The paper draws the main conclusion of this study and puts forward thepolicies to curb irrational expansion of the government size. For example, reform theofficial’s performance evaluation system, narrow the economic development gapbetween regions; increase the local fiscal balance degree; improve efficiency of thefiscal transfer payment system; strengthen supervision on local governmentshort-sighted action.