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Fiscal Decentralization and Manufacturing Upgrading

In: Proceedings of 2025 2nd International Conference on Applied Economics, Management Science and Social Development (AEMSS 2025)

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  • Hui Zou

    (Nanjing Agricultural University)

Abstract

Fiscal decentralization plays a crucial role in guiding government actions, thereby influencing the upgrading of the manufacturing industry. This study employs panel data from 30 Chinese provinces spanning the years 2004 to 2021 to investigate the impact of fiscal decentralization on manufacturing upgrading. Using a two-way fixed effects model, the paper examines the relationship between fiscal decentralization and manufacturing upgrading. The findings reveal an inverted U-shaped relationship between fiscal decentralization and manufacturing upgrading. Specifically, when the degree of fiscal decentralization exceeds 0.6283, it exerts a negative impact on manufacturing upgrading. Based on these findings, the paper proposes policy recommendations focusing on the proper alignment of central-local government relations and the enhancement of fiscal expenditure in science and education.

Suggested Citation

  • Hui Zou, 2025. "Fiscal Decentralization and Manufacturing Upgrading," Advances in Economics, Business and Management Research, in: Jiye Hu & Huaping Sun & Au Yong Hui Nee & Paulo Batista (ed.), Proceedings of 2025 2nd International Conference on Applied Economics, Management Science and Social Development (AEMSS 2025), pages 227-240, Springer.
    • Handle: RePEc:spr:advbcp:978-94-6463-752-6_24
    DOI: 10.2991/978-94-6463-752-6_24
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