The Research On Fiscal Decentralization,Spatial Spillover And The Provision Of Public Goods In China

Fiscal Decentralization has been received widespread attention in economically developed countries, and has became the main part of the reform of financial system for developing countries and those in transition, which show that fiscal decentralization has become a world phenomenon. Since China’s reform and opening up, China has made great achievements in economy, and the GDP is growing at a rate of about10%per year. The reform of fiscal system, which began in the early1980s, has played an important role in the process of China’s economic development, and the fiscal decentralization is a significant breakthrough in the process of economic transition, as well as a driving force of policy in the process of economic development. The central government makes the local governments have more financial autonomy through decentralization of power and transfer of profits, which greatly inspires local governments’ enthusiasm of developing the local economy.However, in recent years, the local governments have competed with each other for economic growth at the price of shortage of public goods and low efficiency at the time of rapid growth in economy. Public goods and public service are relatively insufficient no matter in quantity or in quality. The supply gaps of those public goods and public service, such as basic education, science and technology, health care, social security and environmental protection, are not narrowed with economic growth, while the degree of inequality and unfairness of public goods and services the residents in different areas share is deepening. Meanwhile, the investment in those public goods is increasing, such as in high speed railway, subway, energy, communications and so on. Due to a lack of mechanism showing Residents’ preference for public goods and services, as well as the vagueness of the division of local governance in China’s Fiscal Decentralization system, the local governments are short of incentive to supply public goods and public services. Accordingly, the low efficiency of the supply of public goods in the Fiscal Decentralization system has been paid increasing attention. The report of the17th Congress of the CPC explicitly put forward the strategic target of equalization of basic public services so as to realize the coordinated development of regional economies.Based on the understanding above, this thesis will treat fiscal decentralization and public goods as the research objects, and the Effective Supply Theory of public goods as the starting point, base on theory of Fiscal Decentralization, and abide by the technical path of raising questions, building a hypothesis, forming a framework and empirical test and solving the problem. On the one hand, discuss the efficiency of the supply of public goods and service through theoretical mode, with the basic theory of Neoclassical Economics as the research perspective and analysis paradigm, and make a study of the influences of fiscal incentives, system design, government preference and competition and some other aspects on the local public goods and public service supply under the background of China’s Fiscal Decentralization System. On the other hand, find out the change of fiscal incentives before and after the tax reform in our country through empirical test under the background of Fiscal Decentralization system by establishing econometric model. At the same time in order to further test the relationship between decentralization and public goods supply, this paper will empirically test the influences of Fiscal Decentralization at the provincial level and open economy on the public goods supply, and clarify that regional spillover effect and the interaction between external factors have an effect on the public goods supply, through the comparison of spatial lag model and spatial error model. Finally, this thesis tries to probe into the corresponding policy and suggestions for effective supply of public goods, starting from the background of China’s fiscal decentralization, and combined with the results of theoretical analysis and empirical analysis.