Regional Competition、Fiscal Decentralization And Environmental Pollution

In recent years, the environmental pollution is increasingly serious in our country, which brings the threat to the country’s economic and social development. To find out its cause, the environmental problem of our country is attributed to Chinese local governments’behavior under Chinese-style fiscal decentralization. Chinese-style fiscal decentralization is based on appointment System in charge of government and under Political centralization. In the relative performance evaluation mechanism of which GDP is the main Index, local government has launched the GDP competition for the promotion, in order to compete with other provinces; local governments tend to adopt strategic environment policy. On one hand, the government reduces the sewage charge in order to keep economic growth at the expense of the environment. On the other hand, the local governments reduce the Spending on environmental protection. In general, fiscal decentralization increases environmental pollution through the strategic environment policy made by local government. So far, foreign researches on the impact of the competition of local government and fiscal decentralization on environmental pollution are quite abundant, But foreign literatures which study local government behavior and the impact of fiscal decentralization on environment is under the background of federal system which suggests local the local government has power to decide the tax. However, the local governments in our country don’t have the power. Otherwise, the system of decentralization in our country is the coexistence of economic decentralization and political centralization. These differences mean it is difficult to draw much meaningful lessons from foreign research, when we study the environment problem in our country. In fact, the researches on local fiscal policies competition are abundant, but researches on local environmental policies are inadequate. Therefore, Drawing lessons from foreign researches and based on domestic researches on local provincial fiscal policy competition, I divided the environmental policy into two categories:sewage charge competition and environmental expenditure competition. Then I employed the Economic Quantitative Methods to analyze the game on the environmental policy among the local governments. Finally, I analyzed the impact of fiscal decentralization on the environment directly.The paper consists of five chapters. The first chapter is the introductions, introducing the background, present situation and the implications of the research. In the second chapter, I first introduced the basic theory of the fiscal decentralization, which consists of the definition and characteristic of Chinese-style fiscal decentralization, based on this, I also introduce the provincial environmental polices competition under the Chinese-style fiscal decentralization, which includes the characteristic and the methods of strategic environmental policy of local government. In the third research, using the provincial panel data, I employed regression method to study strategic behavior of local government on making environmental polices.by analyzing the impact of fiscal decentralization on the environment concluded the impact of fiscal decentralization on the different Pollutant is different. Fiscal decentralization contributes to the pollution of the environment. In the fourth research, I use the provincial panel data and employed system GMM regression method to prove the impact of fiscal decentralization on environment. The fifth research is suggestions.I made the conclusion based on previous analysis and put forward to the advice on the policy and behavior of government which is good for environment.