| The Practice of Fiscal Federalism was a world trend over the past decades, the devolution of power to local governments can improve the efficiency of the supply of public goods seems to be a myth. From the1978decentralization take place in China, and the1994tax system reform of local government financial incentives will undoubtedly enhance the vitality of the local economy. The main goal of the Fiscal Federalism by delegation of authority to local governments is to improve the efficiency of the supply of public goods, because the local government is closer to the local residents with a better understanding of the true preferences of the residents.China’s fiscal decentralization profoundly affect the patterns of behavior of the local government, through the analysis of the behavior patterns of the local government fiscal decentralization change, we can find the political economy behind the provision of local public goods. There is a distortion in the structure of provision of Local public goods, which explains the inefficient problems. This article is to explore the behavior of local governments under fiscal decentralization, especially in the transition period, the imperfect institutional environment to bring distorted financial incentives to local governments. Thirsty in economic growth of local government will have the incentive to put more fund in the economic sector, rather than to social welfare sector. From2001to2010, empirical analysis result shows no sign of improvement in the efficiency of this decade. This prompted us to reflect on the theory of decentralization. While the reform is entering a period of complexity, how to enhance the efficiency of the provision of local public goods in such a system context really matters.The provision of local public goods involves a lot of problems, but there are three aspects deserve paid attention. The first aspect is how to meet the public demands; Secondly, the provision mechanism of local public goods. After long-term evolution, there are two types of market in human society: economic markets and political markets. In this paper, the theoretical part this discussion, the two markets has its raison d’etre, the purpose of both markets is the same. Through engage in the market to achieve its demand, no matter whether is private or public. It is noted that the essence is not a matter of trading goods, but an organization of property rights trading system, which is about a "rights" transaction other than "goods" transaction. The person engaged in both markets is essentially the same person, the goal of whom is to maximize their own interests. To really understand the patterns of behavior of the local government and local officials cannot be understood as a completely altruistic saint. Since the government no longer is assumed by classical economics as kindness, then the only incentive mechanism is imperfect, the government will fully carry out the rent-seeking to pursue their own interests. Economic market because of incomplete information on the supply of public goods, externalities, and other issues cannot be optimal principle to provide public goods. It will lead to insufficient supply of public goods and inefficient. Is the private right market cannot effectively supply public goods, is naturally resolved by the public power market. Political organizational system market is a public ownership transactions, and the meaning of its existence it is to meet the public needs of human beings. Thirdly, how to choose provision mechanism to achieve the best performance of the supply of public goods really matters.This paper studies the local public goods supply efficiency, we must consider the system background. Only by understanding the system in the background can find the root causes of the patterns of behavior of the local government as well as incentives, and the patterns of behavior of the local government incentives can affect the bias in the decision-making of public goods supply. On one hand, under Chinese economic decentralization, local government fiscal expenditure accounted for70%; on the other hand, China is authoritarian political system. The central government through a system of appointments with local senior officials of the political promotion fate which led up the local government is responsible rather than down is responsible. Because people cannot be around the job promotion of government officials and local government in the supply of public goods policy-making process, there will be a selection bias. Chinese-style fiscal decentralization brings30years of economic growth miracle, but at the cost of inadequate investment in livelihood areas. Political centralization and economic decentralization is the study of local public goods supply system prerequisite. Not effort on the comparative study of different fiscal regime, but directly to the fiscal decentralization system limited the tax system reform in1994, especially in1998, asked the public finance framework. Public finance framework proposed that local government behavior patterns have changed, the performance evaluation is no longer a single as the only indicator of economic growth, but also to consider the performance of the people’s livelihood. This article focuses on the local government to the functions of the public service into whether to reach the expected goals, so select the two years2001and2010scoring29provincial local government public goods production efficiency, and then carry out in-depth analysis. |
