Study On Direct Provincial Supervision County Reform To County Economy

In recent years, perfecting the financial level and making the duties and rights ofdifferent governments reasonable have been the most important part of financial systemreform in China. The reform of the tax distribution in1994has made the centralgovernment have more power to gather tax, while take less obligations. However, thelocal governments have less power to gather tax but take more obligations. That situationresults in financial difficulties of local governments. In face of such difficulties, thesuccess of direct provincial supervision county reform in Zhejiang province gave hope tosolve the financial difficulties. With the purpose of solving financial difficulties,Shandong province took the direct provincial supervision county reform and issued a lot ofmeasures in2009. However, there has been little effect in the past3years.The topic of this paper is based on the above background, and the object of this paperis how direct provincial supervision county reform affects county economy. Trying toanalyze how the motivation mechanism of direct provincial supervision county reformaffects county economy from the point of finance and physics perspective theoretically.Taking Shandong province as an example to search for how the direct provincialsupervision county reform affects county economy empirically.The content of this paper are arranged as following: firstly, this paper summarizesrelated documents at home and abroad on the direct provincial supervision county reform,then introduces theoretical basis of the direct provincial supervision county reform andcounty economy, including fiscal decentralization theory, principal-agent theory, flat organization theory, modern economics theory, development economics theory, economicgrowth theory, etc. In addition, this paper also introduces the theoretical basis of howdirect provincial supervision county reform affects county economy: resources allocationfunction and system environment function of fiscal decentralization. Secondly, on thebasis of the above theories, the mechanism of how direct provincial supervision countyreform affecting the county economy is analyzed, the dynamic factors of direct provincialsupervision county reform affecting the development of county economy is found, and thedynamic model is constructed, and how the dynamic factors influence county economy isstated. Thirdly, the dynamic factors are quantified through using the data of Shandongprovince. The paper carries on the analysis in combination with the panel data model ineconometric to explore the relationship between direct provincial supervision countyreform and county economy in Shandong province. At last, this paper analyzes existingproblems in the process of direct provincial supervision county reform in Shandongprovince, then puts forward the corresponding policy recommendations for theimprovement.