The Impact of Deindustrialization on Fiscal Sustainability of Local Governments
The history and general law of economic development show that the high-quality development of real economy and manu-facturing industry is the cornerstone and guarantee of government finance.Deindustrialization,measured by industrial output or em-ployment share,will cause fiscal revenue and expenditure changes,which will profoundly affect the fiscal sustainability of local gov-ernments.Based on the data of 263 prefecture-level cities,this paper empirically analyzes the impact of deindustrialization on local fiscal sustainability by using dynamic panel model.The results show that deindustrialization significantly reduces local fiscal sustain-ability,and its internal mechanisms include restraining labor productivity,expanding tax loss scale and strengthening social protec-tion expenditure rigidity.Further research shows that when the proportion of direct tax exceeds the threshold value,the adverse im-pact of deindustrialization on fiscal sustainability will be suppressed;in addition,the moderate participation of local governments in tax competition is conducive to the promotion of fiscal sustainability in the context of deindustrialization,while when the competition intensity exceeds the threshold value,the negative impact of deindustrialization on fiscal sustainability will be strengthened.There-fore,local governments should put the focus of economic development on the real economy,especially the development of manufac-turing industry and industry.They need to adopt various policies to keep the proportion of manufacturing industry basically stable,do a good job of"increasing efficiency","plugging"and"throttling"articles,coordinate misplaced competition and coordinated devel-opment,and constantly consolidate and enhance the sustainability of local finance.
DeindustrializationFiscal SustainabilityTax LeakageTax CompetitionLocal Government
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