A Study Of Incentive Mechanisms Of Local Governments In China's Economy Developmet

Since the reform and opening-up,China's economy development has made great achievements.By the end of 2015,China's gross domestic product(GDP)has reached more than 67 billion yuan with a nearly 10% of average annual growth rate,which is called ‘Chinese miracle'.On the other hand,there are also many thory issues in the development of China's economy,such as istitiution frequently being changed,the lack of the public goods,and the regional development coordination peoblems,which all hinder China's economic sustainable development.To explore the economic miracle and economic problems,it is necessary to find the main body of their behaviors.We know that the local governments play an important role in the process of economic development and in the allocation of social resources in our country.They are not only the direct participants of the economy behavior of the main body,but also the governors.At the same time,we have an analysis of the local governments' power source of developping the economy.development,.In this paper,through in-depth study of the incentive mechanism of the time,I try to uncover the root causes of many problems in ecoomy development.This paper has an analysis of China's local government incentives that consist of the two major institutional design,fiscal decentralization system and the political promotion tournament system,to explore the intrinsic mechanism and their advantages and disadvantages.The study found that the fiscal decentralization system is an important foundation for the economic growth of China's reform and opening up.When the fiscal decentralization system is added to the economic growth accounting equation,its contribution rate to economy growth is far more than the traditional factors such as capital,labor and so on.By reviewing the history of the change of the financial system,we can find that China's fiscal decentralization has a certain path dependence,and the central government's commitment to is very important to the local government.On the other hand,the political promotion incentive is based on fiscal decentralization.And the GDP and other economic indicators can be accurately measured as the evaluation criteria,which further strengthens the local government's incentives to develop economy.It is also due to the strong incentive characteristics of the political promotion tournament that results in a distortion of incentives of the local government,as an agent in the face of multiple tasks.And in the area of cooperative game,local government officials,in order to maximize their own political interests,lack motivation of cooperation,and even make selfish things,which is the most important reason for local protectionism.