Political Centralization, Fiscal Decentralization and Economic Growth
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| Title | Political Centralization, Fiscal Decentralization and Economic Growth
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| Author | Xiao Jie, Yang Longjian and Gong Liutang |
| Organization | Guanghua School of Management, Peking University |
| Email | xiaojiepku@pku.edu.cn，longkong001@126.com，ltgong@gsm.pku.edu.cn。 |
| Key Words | Political Centralization; Fiscal Decentralization; Economic Growth |
| Abstract | This paper establishes a two-level administration model to analyze the role of political centralization and fiscal decentralization in the policy making process of local government. We then conduct an empirical study to identify their impacts on economic growth using prefecture and county level data from 2002 to 2009. Our findings show that: First, political centralization and fiscal decentralization reinforce each other and have significantly positive effect on economic growth. Secondly, “Chinese Style” political centralization can increase the promotion incentives of subordinate officials, thus accelerating economic growth. Third, even controlling for political centralization, fiscal decentralization is positively correlated with economic growth, which lends evidence to the classic decentralization theory. |
| Serial Number | WP889 |
| Time | 2015-06-30 |
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