Financial System Of Flattening Government To Study Of The Economic Performance Of County

After the establishment of the People Repulic of China(1949),China has experienced three changes in administrative system.Initially,the provincial government managed the county affairs through special districts.Since 1980 s,in order to facilitate the supply of grain,oil and vegetables to neighboring cities,China has begun to explore the system of city-managing-county.In the tax system reformation,city-managing-county is mainly reflected in clearly defining income distribution and the responsibility expenditure between the central government and the provincial governments.In short,the provincial government directly determines the financial allocation of municipal government,the municipal government determines the financial allocation of the county government.On the one hand,with the continuous deepening of marketization,the development of the county economy may surpass municipal economic development and there is a phenomenon of “small horse-drawn carts”.On the other hand,Municipal governments are more inclined to themselves.Since the reform and opening up,the economic development gap has become larger and larger in difference region The city-managing-county has no longer absolutely adapted to the economic development of all counties.More and more drawbacks have been exposed,and province-managing-county has born.The reform of Province-managing-county is to solve the existed problems,and it has been tested by more and more provinces,and it has aroused wide discussion in the whole country.As we all know,the economic basis and the speed of economic development are not exactly the same in China.Even the same policy reform effect would have huge differences due to the intensity of the implementation of reforms and the pre-reform economic conditions.Most of the current research on the reform of province-managing-county are concentrated in the developed areas.As a central city in China,Hunan is more weak in the developed areas.The reform effect of the province-managing-county is still to be investigated.This paper selects Hunan Province as the sample,and studies the impact of the financial system reform of province-managing-county on the economic growth.First of all,according to the existing literature,we comb the representative viewpoints of "direct administrating counties,fiscal decentralization and county economy" at home and abroad.Secondly,we collated the theoretical basis for economic growth of province-managing-county.At the same time,this paper deduces how fiscal decentralization plays the role of transmission mechanism.Thirdly,the reform of province-managing-county provides us with a good quasi natural experiment.Therefore,we use DID to carry out empirical research on 123 counties and test the impact of province-managing-county on economic growth during the period from 2005 to 2014.At the same time,nearly half of the counties in Hunan belong to poor counties.In this paper,we divided samples into two groups from poor counties and non-poor counties,in order to study the effect of different areas policy reform.Finally,according to the theoretical and empirical results,this paper puts forward several suggestions for implementing the provincial financial system in Hunan province.The results of this study show that the reform of the province-managing-county in Hunan has played a significant role in promoting the development of the county economy,and the effect of the reform on economic growth is mainly achieved through the path of fiscal decentralization.We find that the reform of the province-managing-county has a positive effect on the development of the county economy in poor counties,but it is not statistically significant in the statistical sense.Province-managing-county has significantly improved the level of economic development in non-poverty-stricken areas Therefore,the reform of province-managing-county in Hunan is more suitable for the development of non poverty-stricken areas.