Decentralization Of China Compulsory Education Level Deficiencies And Regional Differences In The Reasons

From the angle of fiscal decentralization,this paper explores the factors behind inadequate investment on compulsory education and inter-region disparity of educational expenditures.Using provincial panel data from 1997 to 2006,we have conducted econometric study and found that:first,fiscal decentralization and thus caused inter-government competition creates incentive for local governments to focus on infrastructure while neglecting education,thereby contributing to inadequate investment on compulsory education;second,The different mechanisms that fiscal decentralization induces in different regions lead to inter-region disparity of educational expenditures.In order to attract capital,the middle and western provinces have a relatively stronger incentive to direct fiscal expenditures to infrastructure.Eastern provinces also engage in fierce competition for capital but they have to offer good public service to attract talents;third,the negative impact of fiscal decentralization on middle provinces is stronger than that on western provinces.We suggest that shifting the major finance responsibility for compulsory education to higher level of government,setting up a separate budgeting system for education and altering the current incentive fiscal decentralization poses for local governments might be an effective way to secure adequate investment on compulsory education and narrow inter-regional disparity.