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Transfer-Based Decentralization and Poverty Alleviation: Evidence from a Quasi-Experiment in China

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  • Fubing Su
  • Ming Li
  • Ran Tao

Abstract

China launched a massive poverty alleviation program in the 1990s that focused on nationally designated poverty counties. By injecting earmarked transfers with clear spending mandates, the central government hoped for major investments in productive capacities in the poverty counties so they could develop sustainably. Comparing fiscal data of county governments through a regression discontinuity approach, we show that the opposite was true. Poverty county officials failed to make extra investments in production-oriented areas while diversion of central transfers for administrative consumption was rampant. This article develops a better empirical strategy to challenge some earlier findings. Theoretically, this article offers a different case of elite capture under a non-democratic regime. Our focus on poverty regions also reveals the importance of maintaining bureaucratic support in local politics. It complements the popular notion that Chinese local officials are mostly geared toward growth.

Suggested Citation

  • Fubing Su & Ming Li & Ran Tao, 2019. "Transfer-Based Decentralization and Poverty Alleviation: Evidence from a Quasi-Experiment in China," Publius: The Journal of Federalism, CSF Associates Inc., vol. 49(4), pages 694-718.
    • Handle: RePEc:oup:publus:v:49:y:2019:i:4:p:694-718.
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    File URL: http://hdl.handle.net/10.1093/publius/pjy044
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    Cited by:

    1. Vassilis Tselios & Andres Rodriguez-Pose, 2022. "Can decentralisation help address poverty and social exclusion in Europe?," Papers in Evolutionary Economic Geography (PEEG) 2212, Utrecht University, Department of Human Geography and Spatial Planning, Group Economic Geography, revised Jul 2022.
    2. Tselios, Vassilis & Rodriguez-Pose, Andres, 2022. "Can decentralization help address poverty and social exclusion in Europe?," LSE Research Online Documents on Economics 115545, London School of Economics and Political Science, LSE Library.
    3. Kosec, Katrina & Song, Jie & Zhao, Hongdi, 2021. "Bringing Power to the People or the Well-Connected? Evidence from Ethiopia on the Gendered Effects of Decentralizing Service Delivery," 2021 Conference, August 17-31, 2021, Virtual 315258, International Association of Agricultural Economists.

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