Research On The Impact Of Chinese-style Fiscal Decentralization On The Governance Capability Of Local Governments

Over the past 40 years of reform and opening up,China’s economic aggregate has achieved rapid growth,and the living standards of residents have been greatly improved.As an important foundation of government departments and a core pillar of national governance,local governments play a key role in promoting economic growth,safeguarding the well-being of residents,and providing public goods.Fiscal decentralization is an institutional arrangement of the fiscal relationship between the central and local governments,which affects local fiscal expenditures and government behaviors to a certain extent.Traditional fiscal decentralization theory believes that decentralization is beneficial to government governance,but under the Chinese-style fiscal decentralization system,in the face of the current situation of mismatch between powers and financial powers after the reform of the tax-sharing system,local governments have long chosen extensive economic development methods,causing problems such as lack of sustainable financial resources,insufficient supply of public services,and aggravated environmental pollution,which seriously hindered the improvement of government governance capabilities and economic and social stability development.How to solve the above problems has become a bottleneck that governments at all levels need to break through.In this regard,in the new development stage of the "14th Five-Year Plan" period,an in-depth exploration of the impact of Chinese-style fiscal decentralization on the governance capacity of local governments from the perspective of the fiscal system is of great significance to the promotion of the modernization of the national governance system and governance capabilities.Based on this,this article uses the panel data of 30 provinces and cities in our country from2004 to 2019,uses the data envelopment analysis DEA method to conduct static and dynamic efficiency measurement,analysis on the governance capacity of our country’s local governments,and uses the efficiency value as the explained variable,ordinary Panel,system GMM and threshold regression model are used for empirical analysis to explore the impact of different degrees of Chinese-style fiscal decentralization on local government governance capabilities.The results of this paper are as follows.From the perspective of static efficiency,although the overall government governance capacity of our country has been on the rise in recent years,there are still certain efficiency losses and regional differences,the governance efficiency of the western region is much lower than that of the eastern and central regions.From the perspective of dynamic efficiency,the total factor productivity of our country’s provincial government governance is generally low,mainly due to the relatively backward level of local technological progress.At this stage,fiscal decentralization has a significant negative impact on the governance capacity of local governments.This result is still valid in the robustness tests such as replacing variables,changing samples,and replacing empirical methods.Further threshold regression found that fiscal decentralization has a threshold effect on the governance capacity of local governments,the negative impact of fiscal decentralization on government governance capabilities continues to increase with the increase in expenditure decentralization,and it continues to weaken with the increase in income decentralization.Based on the analysis of the current situation and the empirical results,this article proposes countermeasures and suggestions for improving the governance capabilities of local governments in terms of deepening the reform of the fiscal system,changing the performance evaluation mechanism,and strengthening public supervision and management.