FISCAL DECENTRALIZATION, PUBLIC SPENDING, AND ECONOMIC-GROWTH IN CHINA

This study of China demonstrates how the allocation of fiscal resource s between the central and local governments has affected economic grow th since reforms began in the late 1970s. We find that a higher degree of fiscal decentralization of government spending is associated with lower provincial economic growth over the past fifteen years. This con sistently significant and robust result in our empirical examinations is surprising in light of the argument that fiscal decentralization us ually makes a positive contribution to local economic growth. (C) 1998 Elsevier Science S.A.