Fiscal Decentralization, Political Promotion And The Composition Of Public Expenditure

China’s economic transition has been one of the most spectacular events of the past three decades. In the 1970s, China was an isolated poor country that had just emerged from years of political turmoil, ideological radicalization, and economic disasters. By 2010, China has become one of the largest and fastest growing economies in the world, the largest recipient of foreign direct investment, and a major player in international trade.With rapid economic growth, the Chinese government’s public service expenditures are not synchronized growth, and the inadequate public services, the total expenditure, public services, the relative lack of serious supply problems has attracted wide attention. A more intuitive feeling that, despite many people’s livelihood and the central document written report on the work, and become the focus of all levels of government work, but the actual effect is not satisfactory, problems of housing, schooling and other livelihood issues, and medical treatment is difficult remains grim. This shows that the Chinese government, particularly local government areas of public service provision in the absence of the phenomenon still not been fundamentally reversed. Inadequate supply of public services because the Government’s public expenditure structure is distorted and biased, that is, the structure of public spending on economic growth has a direct role in promoting systematic increase in the proportion of expenditure on the project, but more closely linked with people’s livelihood and promoting effect on economic growth insignificant proportion of the expenditure items appeared in the systemic decline.This dissertation will consider the problem of the distortion in public expenditure structure in China’s economic transformation, the big background down examine thoroughly inspected the fiscal decentralization reform, political promotion and public expenditure structure among the internal relations. Both literature is widely considered China’s fiscal decentralization reform and science-induced local government competition caused public expenditure structure, and the systematic distortion analysis in this paper for financial incentives and political incentives of public expenditure structure size of distortion effect difference and whether China, and use the 1995～2006 panel data of 29 provinces this was verified. The results show that fiscal decentralization and political promotion of public expenditure structure between significant inconsistencies. Fiscal decentralization of the basic construction expenditure, and has negative influence on the construction of basic political promotion spending are significantly positive effects. Fiscal decentralization increased the proportion of the administrative expenses, and reduces the science-education-culture-health expenditure, while officials in proportion of the influence of both promotion is not significant. For different regions, however, fiscal decentralization and promotion of public expenditure structure political influence of heterogeneity, so this text will exist all samples are divided into east and west and central three sons, analyze, to examine samples of different parts of the difference. Through the System generalized moment estimators (GMM) test, this paper views the discovery is steady, it can enhance for fiscal decentralization, political promotion and public expenditure structure understanding the inner link between the three.This dissertation establishes a model question, follow, export hypothesis, empirical test and draw the conclusion and policy Suggestions logic thinking and technical route, five chapter on analysis and research. The structure of dissertation the arrangement is as follows:The first chapter, introduction. Explain the background and ideas is studied in this paper, the research content and the main research method, and the innovation and the insufficiency. MayThe second chapter about fiscal decentralization, promotion, incentive and public expenditure structure of the literature for the full text research made retrospective, theoretically prepared for it. This part of the first comb and evaluation respectively fiscal decentralization, promotion stimulation and public expenditure structure three areas of the existing literature. On this basis, then focuses on the study of the relationship between the three. Specifically, the article systematically the domestic literature in this area, the latest progress that the existing literature for fiscal decentralization, promotion stimulation and public expenditure structure between the although made great progress, but still very limited in quantity, and the experience of the relevant research have different limitations.In the third chapter, the proposed theory analysis and hypothesis. This is one of the core part of this paper, aiming at providing solid empirical part theoretical basis. In this paper, on the basis of related literatures establish fiscal decentralization, promotion stimulation and public expenditure structure theory model based on the strict logical investigation, fiscal decentralization and political promotion to the influence of public expenditure structure. For fiscal decentralization and political promotion of public expenditure structure may the existence of the influence of different directions, this paper puts forward four reasons:first, fiscal incentives have continuity and stability, and political incentives for intermittent and volatility performance. Secondly, in recent years the network supervision by public opinion, news supervision and citizens awareness from two directions constrains local government behavior, which essentially is by hand to "the alternative vote" mechanism. Again, basic construction spending in different regions of the economic performance in the effect of heterogeneity, local officials also exists heterogeneity, this make the government faces financial incentives and political motivation is foreign. Finally, the household registration system that labor could relatively loose free flow and migration, thus make "voting with their feet in a certain extent" mechanism played a role.The fourth chapter is empirical research part, one of this article core. First introduces the econometrics model setting, sample data description and variable structure; Then report the empirical results and the explanation; Finally the robustness inspection.The fifth chapter is the conclusions and policy recommendations.