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Democratic participation, fiscal reform and local governance: Empirical evidence on Chinese villages

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  • Meng, Xiangyi
  • Zhang, Li

Abstract

China's rural village elections have been acclaimed as a crucial step in China's democratization and a success in improving villagers' welfare and self-governance. Around 2002 the central government implemented another influential reform: the Tax-for-Fee reform. Using a unique two-year panel of village data from rural China covering more villages than the previous literature and spanning over these two reforms, our dual-goal in this paper is, first to evaluate the impact of village election on local governance, and second to examine the potential interplay between the Tax-for-Fee reform and the village election. We show empirically that village elections do bring about positive consequences, including the enhancement of public expenditure and the improvement in efficiency in public administration, through the check and balances provided by the villagers' representatives meetings. However, the improvement in administrative efficiency has been partly unexpectedly attenuated by the Tax-for-Fee reform. We argue that this conflict is possibly due to the Tax-for-Fee reform's tightening up the villages' budget and that with sticky administration costs, the reduction of administrative share in total expenditure has been weakened. Therefore the tax reform undermines the functioning of village democracy.

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  • Meng, Xiangyi & Zhang, Li, 2011. "Democratic participation, fiscal reform and local governance: Empirical evidence on Chinese villages," China Economic Review, Elsevier, vol. 22(1), pages 88-97, March.
    • Handle: RePEc:eee:chieco:v:22:y:2011:i:1:p:88-97
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    References listed on IDEAS

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    Cited by:

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    5. Li, Shi & Vendryes, Thomas, 2018. "Real estate activity, democracy and land rights in rural China," China Economic Review, Elsevier, vol. 52(C), pages 54-79.
    6. Olivier Marie & Thomas Post & Zihan Ye & Xiaopeng Zou, 2024. "From Two Heads to One: The Short-Run Effects of the Recentralization of Political Power in Rural China," Tinbergen Institute Discussion Papers 24-040/V, Tinbergen Institute.
    7. Ma, Meilin, 2023. "Interdependent investments in attached and movable assets under insecure land rights," China Economic Review, Elsevier, vol. 77(C).
    8. Junxue Jia & Cong Qin & Yongzheng Liu, 2017. "Do Community-Based Development Projects Alleviate Poverty? Evidence from Rural China," International Center for Public Policy Working Paper Series, at AYSPS, GSU paper1722, International Center for Public Policy, Andrew Young School of Policy Studies, Georgia State University.
    9. James Alm & Yongzheng Liu, 2013. "Did China's Tax-for-Fee Reform Improve Farmers' Welfare in Rural Areas?," Journal of Development Studies, Taylor & Francis Journals, vol. 49(4), pages 516-532, April.
    10. Zhang, Jing & Gan, Li & Xu, Lixin Colin & Yao, Yang, 2014. "Health shocks, village elections, and household income: Evidence from rural China," China Economic Review, Elsevier, vol. 30(C), pages 155-168.
    11. Lu, Jie, 2015. "Varieties of Governance in China: Migration and Institutional Change in Chinese Villages," OUP Catalogue, Oxford University Press, number 9780199378746.
    12. James Alm & Yongzheng Liu, 2014. "China's Tax-for-Fee Reform and Village Inequality," Oxford Development Studies, Taylor & Francis Journals, vol. 42(1), pages 38-64, March.
    13. Jinrui Xi & Feng Wen, 2019. "Sustainable Rural Governance: How Rural Elections in China Lead to Long-Term Social Stability?," Sustainability, MDPI, vol. 11(22), pages 1-13, November.

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