Fiscal decentralization and rural resource utilization efficiency: Evidence from quasi-natural experiment in China

Abstract

The depletion of resources has triggered numerous climate and health challenges, making fiscal policy responses a primary concern for governments. The existing literature places less emphasis on sub-provincial decentralization plans and more on fiscal decentralization “between the central government and the local government.” This study investigates the influence of fiscal Digitalization policies on resource utilization efficiency (RUE) from China's “province directly supervising counties” reform based on 34,251 observations from 2060 counties from 2000 to 2017, using the difference-in-difference (DID) model. The research demonstrates that the execution of fiscal Digitalization policy benefits greatly the RUE. This effect is further enhanced by the digitisation of the regional economy and the presence of an advanced industrial structure, which act as positive moderating factors. Additionally, the fiscal Digitalization policy has a more significant effect on less developed regions, regions with high fiscal freedom, and Western Region of China. This paper provides empirical evidence that fiscal Digitalization policy at the sub-provincial level optimizes the RUE and provides ideas for fiscal reforms to advance global sustainable development.