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Fiscal Decentralization and Industrial Structure under the Supply-Side Structural Reform

April 25, 2019
Li Hui1, Cui Xiaoyong2, Liu Yunhao3 and Guo Yu3

(1.School of Agricultural Economics and Rural Development, Renmin University of China;2.School of Economics, Peking University;3.large Corporate Client Department, China Development Bank)


Abstract: Based on provincial panel data, we use fixed effects and random effects models to investigate the effects of fiscal decentralization on local ownership and industrial structure. Fiscal decentralization can have an important influence on economic development. With the improvement of economic development in China, ownership and industrial structure are constantly changing. At present, China’s economy has entered the New Normal, and it is facing a series of structural contradictions. Adjusting and optimizing the economic structure is the key breakthrough to solve structural problems. As it is noticed, the improvement of local fiscal decentralization can not only promote local economic growth, but also change local economic structure, especially the ownership and industrial structure. The empirical results show that a higher fiscal decentralization will not only reduce the proportion of state-owned enterprises in industrial enterprises, but also increase the value added share of secondary and third industry, while the positive impact on the secondary industry is larger than the third one. In addition, the analysis results also show that the fiscal decentralization can affect the structure of the industry through influencing the ownership structure. Our conclusion provides a new way of thinking for the current optimization of economic structure, and has important reference significance for policy.


Key Words: Fiscal Decentralization; Ownership Structure; Industrial Structure