An Empirical Analysis of Fiscal Decentralization and Local Economic Growth at Lower-Provincial Level: A Case Study of Fujian Province

The relationship between fiscal decentralization and economic growth is an important research field of financial subjects. Most domestic empirical researches on the relationship between fiscal decentralization and economic growth focus on the decentralization of the cen tral and provincial governments, while less empirical analysis has been done on the relationship at lower-provincial level.Based on the panel data of the counties and cities of Fujian province during the period of 2003-2010,this paper conducts an empirical analysis of the relationship between the local economic growth and the four fiscal decentralization indicators, i.e. the tax revenue decentralization, the fiscal revenue decentralization, the fiscal expenditures decentralization and the degree of fiscal self-financing at lower-provincial level. The results show that the tax revenue decentralization, the fiscal revenue decentralization and the improvement of the fiscal self-sufficiency rate at lower-provincial level can play a significant role in promoting the local economic growth; while the fiscal expenditure decentralization has no significant effect on local economic growth. Based on these empirical results, this paper offers such suggestions as promoting tax revenue decentralization, having a multi-dimensional understanding of the fiscal decentralization, and making an in-depth study of the system and humanity factors underlying the fiscal decentralization.