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Democratic participation, fiscal reform and local governance: Empirical evidence on Chinese villages


  • Meng, Xiangyi
  • Zhang, Li


China's rural village elections have been acclaimed as a crucial step in China's democratization and a success in improving villagers' welfare and self-governance. Around 2002 the central government implemented another influential reform: the Tax-for-Fee reform. Using a unique two-year panel of village data from rural China covering more villages than the previous literature and spanning over these two reforms, our dual-goal in this paper is, first to evaluate the impact of village election on local governance, and second to examine the potential interplay between the Tax-for-Fee reform and the village election. We show empirically that village elections do bring about positive consequences, including the enhancement of public expenditure and the improvement in efficiency in public administration, through the check and balances provided by the villagers' representatives meetings. However, the improvement in administrative efficiency has been partly unexpectedly attenuated by the Tax-for-Fee reform. We argue that this conflict is possibly due to the Tax-for-Fee reform's tightening up the villages' budget and that with sticky administration costs, the reduction of administrative share in total expenditure has been weakened. Therefore the tax reform undermines the functioning of village democracy.

Suggested Citation

  • Meng, Xiangyi & Zhang, Li, 2011. "Democratic participation, fiscal reform and local governance: Empirical evidence on Chinese villages," China Economic Review, Elsevier, vol. 22(1), pages 88-97, March.
  • Handle: RePEc:eee:chieco:v:22:y:2011:i:1:p:88-97

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    References listed on IDEAS

    1. Nicola Persico & Alessandro Lizzeri, 2001. "The Provision of Public Goods under Alternative Electoral Incentives," American Economic Review, American Economic Association, vol. 91(1), pages 225-239, March.
    2. Wang, Shuna & Yao, Yang, 2007. "Grassroots Democracy and Local Governance: Evidence from Rural China," World Development, Elsevier, vol. 35(10), pages 1635-1649, October.
    3. Zhang, Xiaobo & Fan, Shenggen & Zhang, Linxiu & Huang, Jikun, 2004. "Local governance and public goods provision in rural China," Journal of Public Economics, Elsevier, vol. 88(12), pages 2857-2871, December.
    4. Luo, Renfu & Zhang, Linxiu & Huang, Jikun & Rozelle, Scott, 2007. "Elections, fiscal reform and public goods provision in rural China," Journal of Comparative Economics, Elsevier, vol. 35(3), pages 583-611, September.
    5. Changqi Wu & Leonard K. Cheng, 1999. "The Determinants of Export Performance of China's Township-Village Enterprises," LICOS Discussion Papers 8299, LICOS - Centre for Institutions and Economic Performance, KU Leuven.
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    Cited by:

    1. Kaiyan Luo & Xingping Zhang & Qinliang Tan, 2016. "Novel Role of Rural Official Organization in the Biomass-Based Power Supply Chain in China: A Combined Game Theory and Agent-Based Simulation Approach," Sustainability, MDPI, Open Access Journal, vol. 8(8), pages 1-23, August.
    2. Junxue Jia & Cong Qin & Yongzheng Liu, 2017. "Do Community-Based Development Projects Alleviate Poverty? Evidence from Rural China," International Center for Public Policy Working Paper Series, at AYSPS, GSU paper1722, International Center for Public Policy, Andrew Young School of Policy Studies, Georgia State University.
    3. James Alm & Yongzheng Liu, 2013. "Did China's Tax-for-Fee Reform Improve Farmers' Welfare in Rural Areas?," Journal of Development Studies, Taylor & Francis Journals, vol. 49(4), pages 516-532, April.
    4. James Alm & Yongzheng Liu, 2014. "China's Tax-for-Fee Reform and Village Inequality," Oxford Development Studies, Taylor & Francis Journals, vol. 42(1), pages 38-64, March.
    5. Caldeira, Emilie, 2012. "Yardstick competition in a federation: Theory and evidence from China," China Economic Review, Elsevier, vol. 23(4), pages 878-897.


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