The effects of local government investment on economic growth and employment: evidence from transitional China

Based on the panel data of 28 provinces in the year of 1987-2001, this paper examines the effects of the local government investment on economic growth and employment. The empirical result shows that the local government investment plays a significant positive role in economic growth and employment. However, while the proportion of local government investment to GDP had a remarkable rise after 1998, the elasticity of local government investment on economic growth declined, which shows that there is a big room for raising the efficiency of local government investment. Moreover. the empirieal examination shows that although local government investment had positive effect on employment, the elasticity had a decrease after 1994 when the tax-sharing system reform was put into practice. This shows that the positive role of local government investment on employment is also limited This paper argues that the role of local governments as investors must be weakened, and local governments of different levels should lessen direct economic intervention and concentrate on public regulation.

Strategic interaction among local governments, fiscal spending competition and regional economic growth

Using a spatial econometric model, this paper investigates strategic interaction among provincial governments regarding expenditures, the mechanism behind expenditures interaction and their effects on economic growth in China. Our conclusion is as follows: Significant strategic interaction exists among provincial governments regarding expenditures mainly owing to fiscal competition mechanism in China, and expenditures interaction has changed significantly since tax sharing system reform, which has had positive effects on regional economic growth. This conclusion has significant implications for the optimization of public functions, size and structure of local governments in China.

Grand Strategies for Dealing With Chinese Local Government Debts

Local governmental debts in China seem to be in a more precarious position than local government debts in the USA. The scale of Chinese local government debts far surpasses that of the USA. Further, Chinese local government debts appear to be expanding at an alarming rate in the past decade or so. This research focuses on grand strategies for dealing with Chinese local government debts. There are five research questions for this paper： 1） What is the size of the Chinese government debts？ 2） Are Chinese local government debts controllable？ 3） Who or what caused the rapid increase of the Chinese local government debts？ 4） Is it possible to have individual accountability for increasing local government debts in the future？ and 5） Will it be helpful to create a local government debt management organization in the Chinese central government？ Based on the available literature, this analysis also utilizes in death interviews with 13 government officials, policy analyst, and scholars. First, this paper identifies the size and categories of debts related to Chinese local governments. Then this paper illustrates various ways and methods of Chinese local governments to obtain leverage. After analyzing the causes and origins of these debts, the research demonstrates a potential local systematic risk. By contrast to its advantages and disadvantages, the paper suggests that the local governmental debts need to be constrained. It is important to restrict debt growth in terms of issuing, buying, repurchasing, collateralizing, etc. within a legal framework. With the consideration of political mechanisms in China, the research suggests that the central government establishes a specific organization to help normalize the local governmental debts with the function of supervision and management. The research also believes that it will be an effective way to control the growth of local debts if the central government can hold the relevant top leaders/officials of local governments to be accountable for their performances related to debt accumulation.

Decentralization, Supervision, and Chinese Local Government Debt

Decentralization can alter the incentive structure of local governments and one outcome of this is debt accumulation. Based on the “Province-Managing-County” pilot policy, a fiscal decentralization reform devolving fiscal power from the prefecture-level city to the county level, we assess the impact of fiscal decentralization on local government debt using a difference-in-differences model with a unique county-level dataset from 2011 to 2019. According to the study findings, the “Province-Managing-County” reform resulted in an average increase of 5.758 percent in the local government debt ratio across the pilot counties. Mechanism analyses suggest that this may have arisen from changes in the incentive structure, including external pressures from government assessments and internal developmental needs for promotion, leading to a rise in expenditure pressures on local governments. The role of supervision in mitigating the impact of fiscal decentralization on debt growth was also demonstrated, indicating that an appropriate supervision mechanism must be in place in conjunction with a decentralization policy.

Local Government Debt, Factor Misallocation and Regional Economic Performance in China

This paper examines total factor efficiency and productivity performance by taking into account local government debt （LGD） in 31 Chinese provincial regions for the period 2000-2013. The results show that neglecting LGD may overstate economic performance in Chinese provinces. The eastern region shows better performance in single jactor efficiency and total factor efficiency than the non-eastern regions. The western region shows the worst total factor performance. The north-eastern region is the only region that has experienced a decline in total factor performance. The state-dominated, investment- driven development model may help technological progress across Chinese regions but could lead to significant factor misallocation. We argue that biases towards more state- dominated investment and land supply in less productive western, central and north- eastern regions, at the expense of investment and land supply in more productive eastern regions, have contributed to the recent slowdown in economic growth in China. Therefore, .further market-oriented reforms in factor markets should be considered in the future.

Growth Model of Local Government Websites

To clarify the concept framework to assess web based information systems (WIS) evolution from an information perspective instead of the usual systems perspective, and to seek for in-depth understanding of maturing patterns of WISs based on the framework, several central concepts related to the information aspect of WIS are firstly discussed, then a growth model of local government websites based on a survey study is proposed.

Socio-Economic Implication of Nigeria Liquefied Natural Gas (NLNG) Project in Bonny Local Government Area, Rivers State, Nigeria

Notably, the Nigeria Liquefied Natural Gas (NLNG) project is the pioneer Liquefied Natural Gas (LNG) plant in Nigeria, aimed at both the diversification of the petroleum industry and utilization of the vastly flared natural gas resources of the nation. However, large scale energy projects have been known to generate both positive and/or negative impacts. Environmental Management Plans (EMP) have often been the compendium of information on approved mitigations, which normally include activities that could maximize the benefits of the host communities, and it’s not unusual for the Community Development and Corporate Social Responsibility (CDCSR) department of such an organization to be saddled with these contributions. But the activities of Nigeria LNG Ltd.’s CSR department have often been the source of criticism, as well as aspiration for improvement by host communities and other stake holders. This article thus aims to present a comprehensive compendium of NLNG’s CDCSR activities, up to the year 2010, and also highlight the level of satisfaction of the immediate and distant host communities against the level of performance of other donors in the area. Also the arrays of negative socio-economic consequences of the Nigeria LNG Ltd.’s activities were identified based on community perception. The results generally showed that comparatively, NLNG project has made more innovative positive socio-economic and health contributions to its areas of operation than the three tiers of government and other donors (including SPDC and Mobil Producing Nigeria). Surprisingly, agitations against Nigeria LNG Ltd.’s activities have not overshadowed its community development provisions, which have been of major assistance in several communities. There is however a dire need to review several aspects of Nigeria LNG Ltd.’s CDCSR activities, especially in the fulfilment of documented promises, as well as in project conception and community participation, for better completed projects acceptance by indigenous host communities. Conflict management strategies also need to be improved, while the dissatisfaction over benefits in New Finima needs to be urgently addressed.

China-Africa Local Government Cooperation Essential for Growth

The First Forum on China-Africa Local Government Cooperation was held in Beijing on August 27-28, 2012. Vice President of the Chinese People＇s Association for Friendship with Foreign Countries （CPAFFC） Feng Zuoku, shared his insights on the Forum and China-Africa local-level cooperation with ChinAfrica reporter Yu Nan. Excerpts follow：

Relationship Among Reserve Ratio, Government Spending and Economic Growth

The relationship among reserve ration, government spending and economic growth was analyzed. A monetary endogenous growth model is well developed by taking into account the growth-enhancing effects of re- serve-augmenting seigniorage. If the government spends all the seigniorage revenue on the provision of a public input which has positive externality on the private sector’s production, some results to be utterly different from Bronx’s have been obtained: the economy has a unique saddle-balanced growth path, but it has nothing to do with reserve ratio. However, the higher reserve ratio, the faster speed of economic convergence.

Financial Reporting Dilemmas for the Maltese Local Government

Maltese Local Councils are required to prepare financial reports compliant with International Financial Reporting Standards （IFRS）. Through documentary research, this study examined the suitability of this requirement and implications for institutional relationships. This study showed that IFRS statements are problematic to produce and interpret at the local level of government, and that, on their own, they are undermining the control needs of the Central Government. This study highlighted the important role of financial reporting for accountability by showing that the use of financial reporting systems that do not fit the reporting entity may actually lead to avoidance of accountability by mystifying reality.

Local Government Debt,Sectoral Linkage and Resource Allocation Efficiency

Increasing the efficiency of resource allocation is the basis and guarantee for boosting high-quality economic development.Based on the panel data of Chinese industrial enterprises and cities from 2008 to 2013,this paper studies the influence of infrastructure construction demand shocks represented by local government debt expansion on the efficiency of sectoral resource allocation from the perspective of sectoral linkage.According to the empirical findings,local government debt significantly reduces the resource allocation efficiency of manufacturing sector that is highly related to infrastructure construction.This conclusion is still tenable after the robustness test using the simulated local government debt as an instrumental variable.Further mechanism tests show that there are two reasons for the decline of the efficiency of resource allocation in manufacturing sector that is highly related to infrastructure construction.First,more product demands and investments brought by the expansion of local government debt flow to less productive enterprises in the sector.Second,resource misallocation reduces the probability of high-productivity enterprises entering the market and low-productivity enterprises exiting the market,and the effect is more prominent in cities with high dependence on state-owned enterprises and high pressure on officials to be promoted.According to this study,the performance management of local government debt should be further strengthened,and particular attention should be paid to the influence of local government debt on enterprise investment and financing crowding out and resource misallocation.

The Governance of Local Government Debt from the Perspective of Fiscal and Financial Coordination:Evidence from Financial Markets

Theories based on fiscal guarantees cannot explain either the fact that the continuously decline in local fiscal resources has not significantly increased local government financing costs,or the fact that local government debt has been rising at a time of strict central government regulation.The theoretical and empirical analyses provided in this study show that it is the financial resources under local government control that provide the implicit guarantee for local government debt.Such financial resources lower local governments’financing costs but have the potential to lead to the contagion of financial risk through local government to the financial sector.Therefore,to look at the question solely in terms of either fiscal or financial sector guarantees will not be sufficient to resolve the problem of local government debt.The central government needs to coordinate fiscal and financial policies under a joint management framework in a way that rationally disperses and resolves the risks attached to local government debt and avoids the assumption of excessive risk by either sector.At the same time,close attention should be paid to local financial institutions’asset quality and their money market reputation to avoid the risk of contagion from local financial institutions to local public finance.

Local Government Debt in China:Development in Seven Decades,Current Situation,and Reform Suggestions

Since 1949,local government debt in China has gone through the stages from scratch,then banned,and reintroduced,and then to the scale expansion,market construction and improvement under the system construction.In the past 70 years,although there have been twists and turns in its development,local government debt has undergone a“perfect transformation”.Based on a comprehensive review of the development of local government debt in China from 1949 to 2019,this paper refi nes its evolution logic,forecasts its development trend,and puts forward relevant policy recommendations for the future management and risk control of local government debt in China.

Local Government Debt Governance in China in the Past 70 Years:Review and Prospect

This paper gives an overview of local government debt governance in China in the past 70 years and looks ahead to its strategic prospect in the new era based on a theoretical analysis of debt characteristics in the transition period.For this purpose,we divide the past 70 years into fi ve stages:planned regulation,exploration,wide fl uctuations,pilot expansion,and comprehensive transformation,which is a prudent trade-off process between“incentive”and“control”objectives to deal with the strategic fi nancing game of local governments and striving to make debt governance regulated,transparent,and institutionalized.With the historic changes in social and economic development concepts in the new era,the debt governance mode needs to shift from the conventional GDP-based quantitative governance to performance governance which is oriented towards long-term benefi ts,with a focus on improving the quality and efficiency of debt financing.Guided by the new development concepts,debt governance in the new era can continue to unleash reform dividends and promote strategic adjustments at the institutional,structural,mode,and technical levels in an orderly manner,so as to lay a solid foundation for ensuring the security of fi scal operations and the sustainability of local government debt fi nancing.

Governance Quality,Public Expenditure Efficiency,and Economic Growth

In this paper,we first examine the impact of governance quality on public expenditure efficiency.Then,we try to determine the effect of these expenditures on economic growth.Our starting point is the idea that public expenditure efficiency of a government program is significantly affected by the country’s governance quality.In other words,changes in government expenditure and the returns they generate on a government program depend on governance quality.Our sample consists of 36 countries observed over the 1996 to 2020 period.This period is known by a significant transition of political regimes.Our research model links government expenditure with the returns generated in a country in a given sector.In this model,we introduce the governance variable to examine the impact of government expenditure on returns on a government program in terms of schooling rates and life expectancy.The results indicate that governance quality affects expenditure structure and that efficiency of this expenditure positively correlates with a better governance quality as measured by corruption control and government efficiency.We also found that efficient expenditure has a positive impact on economic growth.

Reassessing the Empirical Relationship between Health Expenditure,Governance and Economic Growth in Africa:Analysis of Nigerian

As an aspect of human capital,a positive association exists amongst health,productivity,and growth in output per capita.On the other hand,social infrastructure defined by the institution of governance has a direct effect on the environment upon which productive activities take place to determine outcomes.Nigeria like most African countries is bedevilled by the high prevalence of inadequate health financing and poor governance.Health financing for Nigeria consistently has fallen short of the AU health funding commitment of 15%of annual budgetary allocation to the health sector.Secondly,poor governance conditions available resources and shape the state of infrastructure,particularly health infrastructure and socioeconomic conditions.In turn,this determines individuals’level of exposure to health risks and their capacity to actively contribute to productive activity for growth stimulation and sustainability.Against this backdrop,this study added to the existing literature in the context of Nigeria,by theoretically applying the Solow augmented Mankiw-Romer-Weil structural model in the examination of the impact of government size and governance quality in the health sector,on economic growth.Autoregressive Distributed Lag(ARDL)model was adopted in the estimation.Findings show that governance quality adversely affects growth and this reduces the capacity of health spending to stimulate growth by an almost equal margin.As a result,this study recommends legislative backing to the AU health funding commitment in Nigeria.

Status analysis and control measures of the debt risk in Chinese local government:based on the study of the relationship among“power,responsibility and interests”

From the view of current condition and developing trend of the debt scale in Chinese local government,if it could not be controlled by an effective way,the debt crisis will explode in the near future.According to the regional distribution in our country,except for Beijing,Shanghai,Tianjin and Hainan,the debt risk mainly concentrates in the western region.In a further step,it can be seen that this risk of debt is resulted by the imbalanced relationship among“power,responsibility and interests”which contains none-accordance of debt power(such as debt financing power),confusion of debt responsibility(such as debt management responsibility)and distortion of debt interests(such as the private benefit and the public interests).If we want to correct this problem,the keynote is to prevent the local government’s debt to be used by the purpose of reaching the private interests.Actually,it should play a role that the local debt financing takes to the“faithful”service for the social interests.For realizing this purpose,it should keep eyes on the relationship among“power,responsibility and interests”,which is the most important factor as for setting up the control system of debt risk about our local governments.Particularly,it includes the following aspects.First of all,it should find the right time to empower the local government with the debt power.Secondly,on the basis of both positive and negative sides,it should design a system to restrict the debt responsibility in the local government,in order to solve the problems such as new debt,invalid debt and overdue debt expansion.Thirdly,it should propose the guidance mechanism to realize the convergence from the private benefit to the social interests on the local debt.

Disclosure of government financial information and the cost of local government's debt financing——Empirical evidence from provincial investment bonds for urban construction

China's slowing economic growth and rapid urbanization have made local government debt financing a significant issue.This study uses a sample of China's provincial government data for the 2006–2012 period to examine the effect of the disclosure of financial information by local governments on their debt financing costs.The results show that financial information disclosure is conducive to public supervision and enhances government credibility,leading to a decrease in the cost of debt financing.Furthermore,increased government economic intervention increases the strength of the association between financial information disclosure and the cost of debt financing.Increased government audit prevention function weakens the strength of the association between financial information disclosure and the cost of debt financing.

Government involvement in banking systems and economic growth:a comparison across countries

This study investigates 92 countries of different legal origins,including 25 English origin,44 French origin,11 Scandinavian and German origin,and 12 socialist origin countries.Compared to other countries,China has the highest government ownership of banks,and lies in the middle in terms of official supervisory power over banks,and government efficiency in governance.As regards economic development measured by per capita GDP growth,in the period from 1995 to 2015,China performed significantly better than all the other countries in the sample–countries varying in legal origin,government ownership of banks,level of economic and financial development,supervisory power over banks,and government efficiency.The findings are robust when we examine the country-years with similar per capita GDP as that of China.The regression results show that in some circumstances,higher government ownership of banks is associated with higher economic growth and the positive association is more significant in socialist origin countries.Further discussions suggest that the high government involvement in commercial banks fits in well with the unique characteristics of China–such as a large population,underdeveloped economy,imbalance in resources and development in different areas,as well as the utmost trust placed on the Chinese government and government owned banks–thus may benefit economic growth.

The Effect of the Model-Shaping Forms of Government Intervention in the Economy on the Economic Growth

This paper argues that the comparative assessment of the market liberalism-dirigisme in different economies should be done based on some specific forms of the government regulation,which are called the model-shaping forms of government intervention in the economy.For its measurement a composite indicator,called the Index of Leftness(Rightness)of Economy,is introduced.IL(R)E is calculated for 62 countries as a weighted average of six sub-indices.Then,IL(R)E(both the Index in general and each of its sub-indices)is used to identify the dependence of economic growth rates on governments’model-shaping interference in the economy.Cross-country regression analysis shows that an increase in model-shaping government intervention in the economy(indicated by IL(R)E’s change towards one)has a negative impact on economic growth,but different forms of that intervention(measured by individual sub-indices)have different impact.Besides,there is a rather profound difference between the countries with GDP per capita less and more than 30 thousand International dollars.In the second group of countries the impact is less significant.In conclusion the authors hypothesize that the process of moving the economy to the right has a more positive impact on the economic growth than its static(unchanging)proximity to the right pole.