Chinese-style Fiscal Decentralization, Local Competition And Economic Growth

This paper mainly studies the relationship between the provincial fiscal decentralization and economic growth since the tax reform. In this paper, it firstly reviews the different fiscal decentralization theories, and then reviews the history Chinese fiscal decentralization since China’s reform and opening up, at the same time, it makes a detailed literature review the relationship between Chinese-style fiscal decentralization and economic growth. This paper uses30provinces (city) per capital real GDP growth rate from1994to2008as the dependent variable, uses three different control variables of fiscal decentralization, considering the degree of government intervention in the economy, the degree of market-oriented, human capital and so on, this paper takes the fixed effect model to investigate the fiscal decentralization and economic growth. Due to fiscal decentralization has a regional characteristic, so this paper divides the samples into three regions of East, middle, west of Fiscal Decentralization for different stages of development of the region.The empirical results show that:there is a significant and robust positive correlation between fiscal decentralization and economic growth;(2) there is a significant negative correlation between the government on the economy and economic growth;(3) opening-up policy promotes local economic growth, of which, the total import and export plays the role in promoting economic growth significantly;(4) market-oriented is very important for the Midwest economy.