Fiscal decentralization and economic growth revisited: an empirical analysis of poverty governance.

Abstract

Based on the panel data of 24 provinces from 2010 to 2018, the static panel model was utilized to analyze the impact of fiscal decentralization and economic growth on poverty reduction, and the Moran index was used to calculate the spatial agglomeration effect of poverty degree. Further, we employed Spatial Dobbin model to examine the spatial effect of fiscal decentralization, economic growth, and poverty reduction. Findings of our results revealed that the rapid economic growth and fiscal revenue decentralization have a substantial inhibitory effect on poverty reduction, and fiscal expenditure decentralization has an important promoting influence on poverty reduction. Our results further showed that the degree of inter provincial poverty has significant effect on regional spatial agglomeration, indicating a pattern of high-value agglomeration in the northwestern and southern border areas and low-value agglomeration in the northeastern and central regions. Finally, the results revealed that economic growth rate and fiscal decentralization have spatial spillover effects on the poverty governance. Based on our study findings, policy suggestions are suggested, such as adjustment of the structure of fiscal expenditure, building a coordination mechanism between fairness and efficiency, and encouraging the activities of agricultural production departments.