Study on the Influence of Chinese Style Fiscal Decentralization on Industrial Structure Upgrading

Abstract

At present, China is starting a new round of fiscal system reform, how to build a fiscal system to match the economic transformation has been widely discussed in the industry. Using the panel data of 30 provinces from 2000 to 2020, This paper uses two-way fixed effects model to empirically test the impact of Chinese style fiscal decentralization on industrial structure upgrading. The results show that :(1) On the whole, fiscal decentralization has a significant role in promoting the upgrading of industrial structure. (2) At the regional level, both revenue and expenditure decentralization play a role in promoting the upgrading of industrial structure in the central region. In the eastern region, income decentralization has a positive effect on industrial structure upgrading, while expenditure decentralization has a negative effect. In the western region, the income decentralization has no obvious effect on it, while the expenditure decentralization has a significant positive effect. (3) Based on the time dimension, the promotion effect of fiscal decentralization on the upgrading of industrial structure during 2009-2020 is significantly higher than that during 2000-2008. (4) From the perspective of industry, fiscal decentralization has an obvious inhibitory effect on the primary industry and an obvious promoting effect on the secondary industry. Compared with the primary and secondary industries, expenditure decentralization has no significant impact on the tertiary industry, while income decentralization will significantly inhibit it. Therefore, the government should vigorously promote the reform of fiscal decentralization to provide good financial incentives for economic transformation and upgrading.