Decentralised Governance and Empowerment of County Governments in China: Betting on the Weak or the Strong?

36 Pages Posted: 18 Jun 2018

See all articles by Yong Fan

Yong Fan

Central University of Finance and Economics (CUFE)

Yan Wu

South China Agricultural University

Alfred M. Wu

National University of Singapore (NUS) - Lee Kuan Yew School of Public Policy

Wei Wang

Tsinghua University, School of Economics & Management

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Date Written: June 7, 2018

Abstract

Decentralised economic development initiatives empowering local governments have gained currency in both developed and developing contexts. The empowerment of county governments in China is a case in point. This study uses difference-in-differences (DID) and the fixed-effects model with panel data (1997-2008) in counties in Zhejiang Province to empirically investigate the different impacts of the empowerment reform on county economies and fiscal revenue (FR). The results reveal that the reform has not promoted county economies as expected but has significantly increased FR. The reform has had a larger impact on less developed counties than on developed ones, which suggests a positive outcome of this decentralization policy in China with regard to revenue generation. This study on county empowerment in Zhejiang Province provides some policy implications for other regions in China or developing countries.

Keywords: decentralization, federalism, economic growth, local government, province managing county reform, empowerment, China

Suggested Citation

Fan, Yong and Wu, Yan and Wu, Alfred M. and Wang, Wei, Decentralised Governance and Empowerment of County Governments in China: Betting on the Weak or the Strong? (June 7, 2018). Lee Kuan Yew School of Public Policy Research Paper No. 18-10, Available at SSRN: https://ssrn.com/abstract=3194367

Yong Fan

Central University of Finance and Economics (CUFE)

39 South College Road
Haidian District
Beijing, Beijing 100081
China

Yan Wu

South China Agricultural University

Guangdong, Guangzhou, Tianhe
China

Alfred M. Wu (Contact Author)

National University of Singapore (NUS) - Lee Kuan Yew School of Public Policy ( email )

Singapore
Singapore

Wei Wang

Tsinghua University, School of Economics & Management ( email )

Beijing
China

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