Fiscal Decentralization And China Compulsory Provision

Education is the cornerstone of national rejuvenation,which plays a very crucial role in promoting economic development and social progress.An empirical study on education status of different countries has discovered that compulsory education ranks first in the social rate of return among the three level educational system, followed by secondary and higher education.As public products,compulsory education generally should be provided by the government. We taked a complete centralized approach to manage and provide compulsory education in China before1986. China enacted the law of compulsory education in1986,which stipulated to accomplish nine-year compulsory education and devolve the management responsibility for compulsory education to the local government. This indicated that the basic education had developed to a new-stage. The supply mode of decentralization stimulated the enthusiasm of the local government to a certain extent. But due to the limited financial resources of the county government and inadequate investment in education in poor areas, the level of economic development lead to the imbalance of the development of education among different regions. In view of the situation, our country formulated the county’s management system in1993and clarify the responsibility on the rural compulsory education for the county and above government in2001.Our country made comprehensive revision of the law of compulsory education in2006,which cleared up the overall responsibility of the provincial government.Since the reform and opening policy,we gradually established the fiscal decentralization system of China from financial contracting system to tax federalism in1994.Fiscal decentralization system improved the efficiency of resource allocation, promoted the economic growth rate greatly and optimized self-sufficiencyand expenditure behaviors of local government. But the fly in the ointment, as local governments continue to make great achievements in economic development, the level of our public service has always failed to keep up with the speed of economic development. Though the financial supply system of compulsory education has been developed and improved for27years,the problem of insufficient supply, regional and urban-rural gap still exists.Based on the perspective of fiscal decentralization, we regard compulsory education in the public service as the research object to analyzing the causes of inadequacy and imbalance in the supply of compulsory education in our country so as to put forward the corresponding solutions. Firstly, this paper summarizes and induces the related theory and concept of fiscal decentralization and the supply of compulsory education. Secondly, the paper sort out the historical veining and the current situation of finance supply of compulsory education since fiscal decentralization.Again,through constructing the theoretical analysis framework, this paper analyzes the character of public goods and the influence mechanism of fiscal decentralization for the supply of compulsory education. Considering the special situation in China,there exist institutional constraints to the supply of compulsory education because of fiscal decentralization.Then, through empirical analysis we calculate the data corresponding and measure the impact of fiscal decentralization on the insufficient supply and unbalanced regional and urban-rural supply of compulsory education by regression analysis.Finally, the paper put forward policy recommendations from the perspective of the design of fiscal decentralization system, incentives and legislation.