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Fiscal Decentralisation, Chinese Style
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Paper
Fiscal Decentralisation, Chinese Style
2007
Overview
This paper analyses the effect of fiscal decentralisation on health outcomes in China using
a panel data set with nationwide county-level data. We find that counties in more fiscally
decentralised provinces have lower infant mortality rates than counties where the provincial
government remains the main spending authority, if certain conditions are met. Spending
responsibilities at the local level need to be matched with county governments’ own fiscal
capacity. For county governments that have only limited revenues, the ability to spend on local
public goods such as health care depends crucially upon intergovernmental transfers. The
findings of this paper, therefore, support the common assertion that fiscal decentralisation can
lead to more efficient production of local public goods, while also highlighting the conditions
required for this result to be obtained.
Publisher
OECD Publishing
