Fiscal Policy Research Of Regional Economic Development

Since the reform and opening-up policy, the central government hasimplemented the strong and gradient policy in the eastern coastal areas, and make itbecome economic growth pole across the country, promoted the rapid growth of thewhole national economy and improved the economic power of China. But thewidening economic gap and imbalance between east and the other regions hasaffected our country’s goal of building well-off society in an all-around way. At theend of the20th century, China had to Implement the strategy of regional economycoordination development. Regional economic coordinated development is not theabsolute equality between different regions, but in promoting the overall economicdevelopment conditions, every region developing comparative advantages to narrowthe regional gap as much as possible.Fiscal policy as the main way that government fulfills its three economicfunctions: resource allocation, income distribution and economic stability, not onlycan expand regional economic disparity in the regional development strategy, butalso be effective entry point of promoting the coordinated development of regionaleconomy. In recent years, along with a series of development strategies deepening,that the development of the western region, revitalization of the northeast China andrise of the central China, the national regional development plannings have frequentlypromulgated, the local governments across the country are declaring a nationaldevelopment strategy. In the back, it’s the fierce financial competition. This articlestudys ways to promote coordinated development of regional economy from theperspective of finance, combining the theory of regional economy development andfinance, and reveals the influence on regional economic development from the localgovernment fiscal competition through the empirical analysis.Firstly, this article presents the regional economic development strategy andcorresponding fiscal system and policy of comb in different periods since thefounding of our country, found that after the founding of our country, the changeprocess of area development strategy is also the process that our financial competitiondeveloped from simple to complex. Secondly, the ratio of fiscal expenditurecoefficient of variation and fiscal income coefficient of variation and the standard deviation of per capita GDP measure the fiscal competition degree during1995-2011and the absolute gap of31provinces, a simple econometric model also explains thefinancial competition’s influence on the regional economic development. Thirdly, thispaper analyzes the process of local government’s competition in the fiscalexpenditure in economy through the prisoner’s dilemma" game model, and explainsthe reason for the widening gap of local fiscal competition to regional economy byusing circular cumulative causation theory. Finally, this article starts off with thecauses of local government fiscal competition’s formation and mechanism of actionthat financial competition increases regional economic gap, and puts forward thesolutions to narrow regional economic gap and policy recommendations to promotethe coordinated development of regional economy: increase the transfer payments tothe Midwest, and improve the financial competitiveness of the Midwest; Optimize thefiscal expenditure structure of the Midwest; Establish different fiscal policy tocoordinate regional conflict of interest and strengthen regional cooperation; Improvethe fiscal relationship between central and local, while balance the financial powerand administrative power of local government; Construct scientific assessment indexsystem of official performance and reform the household registration system.