IDEAS home Printed from https://ideas.repec.org/a/fec/journl/v2y2007i2p237-249.html
   My bibliography  Save this article

Fiscal competition and the structure of local public expenditure in China

Author

Listed:
  • ZHANG Henglong

    (China Research Center for Government Effi ciency, Shanghai University, Shanghai 201800, China)

  • CHEN Xian

    (School of International Business & Management, Shanghai University, Shanghai 201800, China)

Abstract

This article examines the impact of intergovernmental fiscal competition on local public expenditure in China under current performance assessment system in which GDP is a critical factor. First, we present the assignment of public goods and tax burden and the share of foreign direct investment (FDI) of 30 provinces, and we find that current fiscal competition in China has taken the form of public expenditure improvement accompanied by preferential tax policies. Second, we regress the share of FDI on different components of provincial public expenditure, and find that the share of FDI is correlated negatively with the public service, tax burden and health care service while positively with infrastructure development. Therefore, FDI-based infrastructural investment crowds out public services investment, which fails to support the view that fiscal competition improves social welfares.

Suggested Citation

  • ZHANG Henglong & CHEN Xian, 2007. "Fiscal competition and the structure of local public expenditure in China," Frontiers of Economics in China-Selected Publications from Chinese Universities, Higher Education Press, vol. 2(2), pages 237-249, June.
    • Handle: RePEc:fec:journl:v:2:y:2007:i:2:p:237-249
    as

    Download full text from publisher

    File URL: http://journal.hep.com.cn/fec/EN/10.1007/s11459-007-0013-1
    Download Restriction: no
    ---><---

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Wang, Ruixin, 2015. "Essays on development economics and public economics," Other publications TiSEM e1779514-5b71-4726-925b-2, Tilburg University, School of Economics and Management.
    2. Kai Kajitani & Daisuke Fujii, 2016. "Spatial analysis of competition among local governments and the price of land: the case of Zhejiang Province," Journal of Chinese Economic and Business Studies, Taylor & Francis Journals, vol. 14(3), pages 229-242, July.

    More about this item

    Keywords

    intergovernmental fiscal competition; FDI; public goods;
    All these keywords.

    JEL classification:

    • O53 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - Asia including Middle East
    • P35 - Political Economy and Comparative Economic Systems - - Socialist Institutions and Their Transitions - - - Public Finance

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:fec:journl:v:2:y:2007:i:2:p:237-249. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Frank H. Liu (email available below). General contact details of provider: .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.