Dissertation > Economic > Fiscal, monetary > Finance, the state's financial > China's financial > Local financial

Study on the influence on the regional supply of public services of the local financial competition

Author YuanZuo
Tutor WenChuanHao
School Chongqing Technology and Business University
Course Regional Economics
Keywords Fiscal Competition Public Service Local Governments
CLC F812.7
Type Master's thesis
Year 2013
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According to the development experience of many countries, when a country is passthrough the period of the per-capita GDP rising from US$1000to US$3000, the demandfor pubic services is going throng a period of rapid expansion. Now, China is in such atransition stage, in which public needs are in rapid growth and fast change. So theoutstanding problem exists in public needs and public service.In1994, the government of China began to reform the "revenue-sharing"financialmanagement system. The central government has taken the decentranlized governance,giving local governments the right of autonomy. Local governments at all levels havetheir own independent intererts, being the independent stakeholder. And then thecompetition between governments came into being. According to the traditional view offiscal federalism, the non-cooperative competition can help to improve the efficiency ofsupply of public services, thereby increases the welfare of the residents. However, theacademics put forward “the race to bottom” they suggested that competitiong wouldbring excess losses for the welfare effects. For China’s distinctive fiscal decentralizationsystem, what kind of impact would the fiscal competition between local governmentsbring for the supply of public services, need further empirical tests.Based on fiscal competition theory, this paper explores the relationship between thecompetition among local governments and the supply of public services by theoreticaland empirical analyzes method.The principal tasks include:(1) Carding and summarize predecessors’ fiscal competition and the supply of publicservices.(2) Review and analyze the changes of fiscal system and the supply of public servicesin past several decades. Analyze the main public services status quantitatively based ona large number of informative data on the internantional comparison background; do anin-depth analysis the political and economic logic of China’s current inadequate supplyof local public service behind with a special focus on the country’s political system;(3) combined with the characteristics of China’s local government behavior, usinggame theory do an in-depth analysis on the lack of the supply of public services and theimbalances in the eastern, central and western regions;(4)Choosing the fiscal expenditure and other related data during1997and2011as astudy sample, this paper make an empirical virtification on the relationship between thesupply of public service and fiscal competition among local governments. (5)The corresponding policy recommendations are presented according to the researchfindings in this paper.

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