An Empirical Research On Characteristics Of Local Officials And Cycles Of Fiscal Revenue

In recent 30 years, China’s economy sustains a high-speed growth. While the traditional economic theory could not fully explain the economic miracle, more researches have turned to give explanations from the perspective of political theory. One of the most famous theory, called "promotion tournament", says that the coexistence of highly centralized political power and highly decentralized economic power is China’s unique institutional arrangement since the reform and opening up. As an important governance mode to government officials in our country, "promotion tournament" encourages local officials to compete with each other for promoting China’s rapid economic growth and development around a series of achievements appraisal indicators, especially on economic development. Just because local officials play an important role in China’s economy, investigating phenomena and laws of economic growth from the perspective of the local officials has become a hot research topic in the theoretical circle.Through the review and summary of domestic and foreign researches, we find that lots of current researches have focused on the relationship between GDP index and local officials, but as one of the important indicators of economic development, the change of local fiscal revenue is also worth attention, but almost no research has been found on the relationship between local fiscal revenue and local officials. The change of local fiscal revenue may be normal, but also may include abnormal human factors. In this paper, research is focused on the non-economic factors on the changes of local fiscal revenue, attempting to investigate the impacts from local leaders.In this paper, we mainly use quantitative analysis method for empirical research, but also with literature analysis method, construct a panel data with political and economic variables on 128 successive municipal party secretaries from 24 prefecture-level cities of Jiangsu and Zhejiang provinces between 1995 and 2013. We use statistical softwares for regression analysis and robustness tests, to systematically investigate quantitative impacts on fiscal revenue from the influence of municipal party secretaries’individual-level factors, such as turnover、tenure、age、education、 source and so on.Firstly, this paper reviews the relationship between local officials and local fiscal revenue in China. Nowadays, because of the official achievements appraisal mechanism which is mainly based on economic indicators, the completion of the task of local fiscal revenue largely determines the future of local officials. So in reality, local officials often take a variety of ways or means to adjust or change the financial income growth rate by means of fiscal and tax revenue control, statistical data fraud and so on, to meet the practical needs of higher or lower indicators’ performance at a specific stage. In order to analyze the degree and laws of the influence, this paper subsequently describes the historical changes of prefecture-level cities of Jiangsu and Zhejiang provinces, annual GDP growth, fiscal revenue growth and the situations of municipal party secretaries through intuitive text outlines and charts. Based on the preliminary description, this paper then put forward four research assumptions and carry out empirical tests one by one. The four research hypotheses and verification results are respectively:The first study hypothesis was validated, the fiscal revenue growth will be significantly slowed down in the year of changing municipal party secretary. The second study hypothesis was validated as well, the fiscal revenue growth will appear to rise first and fall later during the party secretary’s tenure, presenting inverted U type characteristics. The third study hypothesis was partly validated, the fiscal revenue growth will present weakly U type characteristics, the older the secretary is, the lower the growth will be, but the growth will increase again when the secretary is most likely to retire. We regrettably found no significant relationship between education background and fiscal revenue growth. The fourth study hypothesis was validated, secretaries from the central、other provinces or provincial organs will get a significantly lower fiscal revenue growth compared with those promoted from local. The conclusions of the study also passed some robustness tests, such as the pre or post of turnover, the division of tenure, the driving of the economic cycle, showing a strong reliability.Some advice are given on current problems of fiscal income index and local officials governance at the end of this paper. On the one hand, the chaotic phenomena of abnormal tax warehousing and statistical data fraud should be governed. On the other hand, further changes should be taken to the official achievements appraisal mechanism which nowadays mainly based on economic indicators, enriching evaluation elements and contents, releasing local officials from the promotion tournament focused on fiscal revenue growth index, returning to inherent canon of the market economy and natural law of the fiscal revenue growth.