Transfer Payment In Ethnic Areas And Economic Growth Of Counties

Since the reform of the tax system in 1994,in order to narrow the interregional gaps and promoting the coordinated development of all regions,the central government has gradually increased the financial transfer payment to backward areas.Fiscal transfers for ethnic regions are one of the largest transfer payment policies in the past decade,which is the outstanding performance of ambition of promoting the coordinated development of all regions.Past studies show that those equalization transfer payment policies can effectively reduce the gap of interregional fiscal expenditures.But the heterogeneity effects of the specific policy to economic growth and its path still need further discussion.The paper evaluates the impacts of fiscal transfers for ethnic regions on local economic growth and industrial development by using the panel data of 1998-2010 in China.The empirical results are as follows.(1)Fiscal transfers for ethnic regions have significantly increased incomes per capita by 3 percent per year during the period.(2)The effect is prominent in the early stage of the implementation of the policy,and it has been remained strong in subsequent years.(3)Fiscal transfers for ethnic regions significantly promoted the growth of industry firms especially those in heavy industry.(4)The growth rate of industrial value added and employment growth have been significantly improved.