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Fiscal Decentralization in China and India: Competitive, Cooperative or Market Preserving Federalism?

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  • Singh, Nirvikar

Abstract

This paper provides a comparative assessment of fiscal decentralization in China and India, including the standard components of expenditure and revenue assignments and institutions for intergovernmental transfers, as well as the nature of subnational authorities over general economic activity. In particular, the case of China, where town and village enterprises have been very active, is contrasted with that of India, where local governments remain circumscribed in their authority, despite decentralizing reforms. The implications of differences in decentralization for fiscal outcomes and economic growth are discussed. The characterization of each country in terms of concepts of federalism, i.e., competitive, cooperative and market preserving federalism, is discussed, in attempting to abstract from the two cases to more general lessons for fiscal decentralization.

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Paper provided by University Library of Munich, Germany in its series MPRA Paper with number 1705.

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Date of creation: Jan 2007
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Handle: RePEc:pra:mprapa:1705

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Keywords: cooperative federalism; competitive federalism; market-preserving federalism; decentralization; economic development;

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  1. Heady, Christopher, 1998. " Local Government Finance and Industrial Policy in China," Economic Change and Restructuring, Springer, vol. 31(2-3), pages 195-212.
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Cited by:
  1. Singh, Nirvikar, 2007. "The Dynamics of Reform of India’s Federal System," MPRA Paper 2282, University Library of Munich, Germany.
  2. Singh, Nirvikar & SRINIVASAN, T N, 2006. "Federalism and Economic Development in India: An Assessment," Santa Cruz Department of Economics, Working Paper Series qt2qs4h3t9, Department of Economics, UC Santa Cruz.

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