Study On The Impact Of The Establishment Of China’s Free Trade Zones On Local Fiscal Revenue

The 17th National Congress of the Communist Party of China decided to elevate the construction of Free Trade Zones to a national strategy to promote comprehensive reform and opening up.At present,the construction of Free Trade Zones in China has formed a"1+3+6+1+7+3" pattern which plays an important role in promoting local economic development.With the implementation of the "tax cuts and fee reductions" policy,local fiscal pressures have further increased.To make up for the local fiscal gap,local fiscal revenues need to be increased.Therefore,it is of practical significance to explore the impact of the establishment of Free Trade Zone on local fiscal revenue.The structure of this thesis is as follows:Chapter 1 mainly introduces the writing background of the thesis,defines the concept of Free Trade Zone and local fiscal revenue in this thesis.Also,introduce research methods and content.And then,propose research innovations and shortages.The chapter 2 reviews literatures,sorting out the research on the influence of the establishment of Free Trade Zones on economic growth,sorting out the research on the influence factors of local fiscal revenue and tax revenue,and making a summary.Chapter 3 is a general theoretical analysis.Based on the classic trade theory,growth pole theory,and optimal tax system theory,the theoretical mechanism of the impact of the Free Trade Zone on the regional economy and local fiscal revenue is explained.About the influence mechanism:Firstly,the establishment of Free Trade Zone has created economic dividends and increased local fiscal revenue in terms of stimulating investment,creating employment,and driving economic growth.Secondly,the improvement of tax collection and management efficiency in the region will increase local fiscal revenue.Thirdly,the implementation of preferential tax policies will affect local governments.The impact of fiscal revenue is uncertain,and the direct effect is negative,but the indirect effect can promote the growth of local fiscal revenue.The chapter 4 sorts out the development history of Chinese Free Trade Zone and related system innovation policies,analyzes the current situation of local fiscal revenue,and describes the evolution of local fiscal revenue with the establishment of Free Trade Zone.Chapter 5 is an empirical study on the impact of the establishment of Free Trade Zones on local fiscal revenues.Using the panel data of 269 prefectures and cities from 2009 to 2019,the impact of the establishment of the first four batches of Free Trade Zones on local fiscal revenues is studied with the multi-period Differences-in-Differences model.And then,implement related robustness tests and lag effect tests,and perform heterogeneity analysis on different regions and cities at different levels.At the same time,use the intermediary effect model to examine the impact.The chapter 6 is conclusions and policy recommendations.Overall,this thesis invents that,the establishment of China’s Free Trade Zone significantly promotes the addition of local fiscal revenue.What’s more,there is a certain lag for this positive effect.With the extension of the Free Trade Zone construction,the promotion effect is more distinct.The effect is more manifest in the eastern economically developed areas than other regions of China.The promotion effect is significant in the statistical significance of provincial and sub-provincial cities,but the positive effect on ordinary prefecture-level cities is not obvious.The test result of the intermediary effect shows that the establishment of the Free Trade Zone ultimately promotes the growth of local fiscal revenue by promoting the inflow of capital,the inflow of labor services,and the growth of regional economic aggregates.The innovation of this thesis is that,first,the impact of the first four batches of Free Trade Zones on regional fiscal revenues is studied using city-level panel data from 2009 to 2019.Utill now,there is not much research on the impact of the establishment of Free Trade Zone on local fiscal revenue.The researches are only focused on the provincial level,and most focus on the effects of Shanghai Free Trade Zones.My paper expands the research period and conducts a more detailed study on the cities of Free Trade Zone.Second,the thesis analyze the heterogeneity of the establishment of Free Trade Zone on local fiscal revenue by classifying different regions and cities separately,which is not covered by the existing literature.