Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/63529
Authors: 
Zhang, Xiaobo
Year of Publication: 
2006
Series/Report no.: 
Research Paper, UNU-WIDER, United Nations University (UNU) 2006/93
Abstract: 
China’s current fiscal system is largely decentralized while its governance structure is rather centralized with strong top-down mandates and a homogenous governance structure. Due to large differences in initial economic structures and revenue bases, the implicit tax rate and fiscal burdens to support the functioning of local government vary significantly across jurisdictions. Regions initially endowed with a broader nonfarm tax base do not need to rely heavily on preexisting or new firms to finance public goods provision, thereby creating a healthy investment environment for the nonfarm sector to grow. In contrast, regions with agriculture as the major economic activity have little resources left for public investment after paying the expenses of bureaucracy. Consequently, differences in economic structures and fiscal burdens may translate into a widening regional gap.
Subjects: 
Chinese economy
growth
fiscal decentralization
regional inequality
JEL: 
E62
H20
O40
P20
ISBN: 
9291908738
Document Type: 
Working Paper

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