Local Governance Performance in China: A Fiscal Perspective

Abstract:

In this paper, we attempt to take undesirable fiscal outcomes into account and adopt the directional distance function method to calculate the efficiency scores of local governments in China. The measures indicate that the eastern provinces have higher governance performance than other regions, and, overall, governance efficiency is slightly decreasing over the period of fiscal decentralization reform. This is statistically confirmed by the following determinants analysis of governance efficiency at the second stage. The most important way to improve local governance performance is to substantially enhance the transparency of governmental fiscal behaviors by putting them under the complete budget and supervision of local legislature.

Key Words::

• budgetary transparency
• efficiency evaluation
• fiscal decentralization
• local governance

Additional information

Notes on contributors

Shujian Zhang

Shujian Zhang ([email protected]) is assistant professor in the School of Social Development and Public Policy at Fudan University, Shanghai, China. Shiyi Chen ([email protected]), corresponding author, is a professor of economics in the China Center for Economic Studies of the School of Economics at Fudan University, Shanghai, China. The authors thank two anonymous referees for their constructive comments. Shiyi Chen acknowledges the support from the Chang Jiang Scholars Program, National Social Science Foundation (Major Program: 14ZDB144; Key Program: 12AZD047), National Natural Science Foundation (71173048), Shanghai Leading Talent Project and Fudan Zhuo-Shi Talent Plan.

Shiyi Chen

Shujian Zhang ([email protected]) is assistant professor in the School of Social Development and Public Policy at Fudan University, Shanghai, China. Shiyi Chen ([email protected]), corresponding author, is a professor of economics in the China Center for Economic Studies of the School of Economics at Fudan University, Shanghai, China. The authors thank two anonymous referees for their constructive comments. Shiyi Chen acknowledges the support from the Chang Jiang Scholars Program, National Social Science Foundation (Major Program: 14ZDB144; Key Program: 12AZD047), National Natural Science Foundation (71173048), Shanghai Leading Talent Project and Fudan Zhuo-Shi Talent Plan.