Financial Investment In Rural Compulsory Education Principal - Agent Theory

Rural compulsory education plays a crucial role in China's compulsory education. The insurance and promotion of rural compulsory education enjoys great significance in the course of implementing the Scientific Outlook on Development and build a well-off society in an all-round way. The rural compulsory education investment management system witnessed several transformations since the founding of the People's Republic of China. Due to historical reasons as well as some other reasons, the fiscal investment shortage lasts for years.From the perspective of the principal-agent theory, the fiscal investment shortage in rural compulsory education investment rests in government investment deviation. The agent deviates from the principle of public interests during the government's operation.This paper from the agency perspective, as compulsory education in rural areas through the financial investment (the demand for compulsory education in rural areas - farmers) and the principal agent (the demand for compulsory education in rural areas - at all levels of government and its Group A staff member) between the interests of inconsistency, asymmetric information, not responsibility, public policy does not own its own clients and completeness of the disadvantaged status of the analysis, profound analysis of the Government's compulsory education in rural areas because of insufficient investment。Discordance of interests: Residents in rural areas need rural compulsory education in good quality. The government officials, on the other hand, seek the maximum of political accomplishment. Due to the indirect benefits of education and slow, officials in governments prefer investment in material production other than education in limited term with limited government financial resources. This results in lack of investment stimulus and investment shortage in rural compulsory education accumulation.Non-reciprocity of power and responsibility: Officials in governments enjoy greater power than responsibilities. Therefore they tend to be indolent and opportunistic in rural compulsory education. The rural residents, on the other hand, are weak in rent seeking for allocution of investment funds, which aggravates the investment shortage in rural compulsory education.Asymmetry in information: The government officials clearly know that the rural residents don't know the functioning of government and thus supervision cannot be carried out. The government officials would take such opportunist action like corruption, embezzlement and reduction of rural compulsory education investment. This could also result in the shortage in Rural compulsory education.Contract incompleteness: Policies, rules and regulations are still incomplete at present in rural compulsory education and there's no clear provision of government responsibilities and proportion of funds in rural compulsory education at different levels of governments. Consequently, officials at different levels, out of personal interests and maximum of political accomplishment, would shirk the investment responsibilities in rural compulsory education. The incompleteness of fiscal transfer system cannot compensate for government investment shortage in rural compulsory education. And besides, the equality of rural compulsory education cannot be achieved national wide.The weakness of client: Rural residents as the clients have low educational level, little awareness in democracy and participation in public affairs, and lack organization. Due to high cost for supervision for the mass rural residents, they would prefer free-riding-- hope for others' supervision towards government officials and they would enjoy the fruits. All these make government officials lack supervision and restriction, which encourages these problems in rural compulsory education and thus the shortage of investment in rural compulsory education. Multiple disciplines and integrated governance should be adopted to solve these problems. First, effective stimulating and restraining mechanism should be established. By increasing the proportion of education evaluation in the whole evaluation system for officials in public areas, the inertial passion and dynamics for officials can be stimulated. Legal instruments can be used to regulate the investment policy via making the rural compulsory education decision-making under laws and regulations. Administrative culture, especially ethics and morality, is needed to build a self-discipline system in government which aims to increase the psychological cost of agent's action and therefore urge the normalization of government actions. Second, sound information communication system is needed. To ensure legitimacy of government actions through"the right to know"of rural residents to restrict information monopoly formerly enjoyed by government and its officials, we should promote institutional construction of publicizing government affairs in local governments, stipulate specialized Open Administration Law as soon as possible to ensure the share of information. Third, public educational finance system should be established under public finance system and increase absolute quantity of fiscal investment. Investment shortage should be relieved by financial resources as a guarantee.