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Fiscal Decentralisation and Local Public Good Provision in China

Author

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  • Xin-Qiao Ping

    (China Centre for Economic Research)

  • Jie Bai

Abstract

Fiscal incentive is closely related with the extra-budgetary revenues. Based on our definition of 'fiscal incentive', we explore the impacts of fiscal incentives under decentralisation on responsiveness of public good provision to real local needs. There are also some problems in fiscal decentralisation in China : first, with a huge basis of extra-budgetary revenue, the size of local government would be expanded, resulting in a heavier burden on the shoulder of local citizens and peasants; second, there exist some decreasing return to scale in local extra-budgetary expenditure; thirdly, 'urbanisation' (measured as the ratio of rural population to the total population) is negatively correlated with the local extra-budgetary expenditure on urban maintenance, indicating that in China, the process of industrialisation and urban construction are not consistent.

Suggested Citation

  • Xin-Qiao Ping & Jie Bai, 2005. "Fiscal Decentralisation and Local Public Good Provision in China," Finance Working Papers 22027, East Asian Bureau of Economic Research.
    • Handle: RePEc:eab:financ:22027
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    References listed on IDEAS

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    Cited by:

    1. Firth, Michael & Gong, Stephen X. & Shan, Liwei, 2013. "Cost of government and firm value," Journal of Corporate Finance, Elsevier, vol. 21(C), pages 136-152.
    2. United Cities and Local Governments, 2011. "Local Government Finance," Books, Edward Elgar Publishing, number 14696, March.

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    Keywords

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    JEL classification:

    • H61 - Public Economics - - National Budget, Deficit, and Debt - - - Budget; Budget Systems
    • H71 - Public Economics - - State and Local Government; Intergovernmental Relations - - - State and Local Taxation, Subsidies, and Revenue
    • H72 - Public Economics - - State and Local Government; Intergovernmental Relations - - - State and Local Budget and Expenditures

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