The tradeoff between growth and equity in decentralization policy: China's experience |
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Authors: | Baoyun Qiao Jorge Martinez-Vazquez Yongsheng Xu |
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Institution: | 1. School of Public Finance and Public Policy, Central University of Finance and Economics, Beijing, China;2. Department of Economics, Georgia State University, USA |
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Abstract: | This paper investigates the potential tradeoff between economic growth and regional equity in the design of fiscal decentralization policy in the context of China's experience. We develop a theoretical model of fiscal decentralization, where overall national economic growth and equity in the regional distribution of fiscal resources are the two objectives pursued by the central government. The model is tested using panel data for 1985–98. We find that fiscal decentralization in China has led to economic growth as well as to significant increases in regional inequality. |
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Keywords: | H73 P21 P51 R11 |
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