The Fiscal Logic of Responsiveness: Public Finance, Elections, and Public Goods Provision in Rural China

Forthcoming in Studies in Comparative International Development

53 Pages Posted: 1 Apr 2019 Last revised: 9 Jan 2023

See all articles by Zhenhuan Lei

Zhenhuan Lei

University of Wisconsin - Madison - La Follette School of Public Affairs; University of Wisconsin - Madison - Department of Political Science

Date Written: January 7, 2023

Abstract

Governmental fiscal transfers can be important tools for redistributing resources and enhancing public services in areas with limited local resources. Meanwhile, politicians can use fiscal transfers to build patronage networks, weaken opposition candidates, or engage in rent-seeking. An understudied feature of governmental transfers is that local governments can become fiscally dependent on higher-level government. This dependence might lead local officials to favor the priorities of higher-level government while compromising responsiveness to local residents. Using panel data from Chinese villages, I demonstrate that when villages become more dependent on fiscal transfers from townships, they provide fewer public goods to villagers, pay more wages to village elites, and have stronger incentives to enforce the policies favored by higher-level governments. The results also suggest that fiscal transfers will not undermine local representation when electoral competition for village leadership positions exists.

Keywords: China, Public Finance, Fiscal Transfers, Public Goods, Government Responsiveness

Suggested Citation

Lei, Zhenhuan, The Fiscal Logic of Responsiveness: Public Finance, Elections, and Public Goods Provision in Rural China (January 7, 2023). Forthcoming in Studies in Comparative International Development, Available at SSRN: https://ssrn.com/abstract=3348778 or http://dx.doi.org/10.2139/ssrn.3348778

Zhenhuan Lei (Contact Author)

University of Wisconsin - Madison - La Follette School of Public Affairs ( email )

1225 Observatory Drive
Madison, WI 53705
United States

University of Wisconsin - Madison - Department of Political Science ( email )

Madison, WI
United States

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