Local Governments'Fiscal Capacity and the Intergovernmental Competition for Emergency Spending
China's local emergency spending has long been insufficient and unevenly distributed among different regions,and a series of emergency management reforms that centered on the"one case,three systems principle"implemented since 2003 have not changed this situation.Local emergency spending is usually constrained by local fiscal capacity,and the sharp decline in local financial resources following the tax-sharing reform of 1994 has resulted in an overall low level of emergency spending in China.In recent years,along with the establishment of the shared authority of emergency management in China,local governments have gradually acquired the necessary authority and expenditure responsibility of emergency management.Given that the total financial resources are constant,local governments may seek to obtain more emergency management resources through strategic implementation and jurisdictional competition.In addition,the long-standing phenomenon of promotion tournaments and intergovernmental competition for economic development has further strengthened the interdependence of local governments in emergency expenditures,exacerbating the downward competition trend of local emergency spending.However,most studies on the issue of emergency spending focus on the central and local fiscal relationships or single local governments,paying little attention to the interrelations of local fiscal capacity,intergovernmental competition,and promotion tournaments.Therefore,existing literature cannot explain the overall low and uneven distribution of the local emergency budget,nor can it propose an overall solution to the problem.This study first establishes a comprehensive evaluation system for measuring local fiscal capacity.Using provincial panel data from 2019 to 2021 and the entropy weight method,this study first calculates a comprehensive index of China'local fiscal capacity.Then,a bidirectional fixed effects SDM model is employed with the geographical spatial weight matrix and economic spatial weight matrix,and a partial differential decomposition is performed to verify the multiple impacts and interactions of local fiscal capacity on emergency spending from three aspects:direct effects,indirect effects,and total effects.The results of this study show that there is a positive and significant association between local government fiscal capacity and emergency spending in the neighboring region.Moreover,local fiscal capacity has a negative spillover effect on emergency spending in neighboring regions possibly due to the influence of the promotion tournament and the"race-to-the-bottom competition"in emergency spending.After changing some of the explanatory variables and using different spatial weight matrixes,the above regression results remain robust.This study contributes to existing literature on at least two fronts.First,it comprehensively considers local fiscal capacity and the competition in intergovernmental emergency spending.Based on the definition of the concept of local fiscal capacity and emergency management,this study,according to the basic economic and organizational theories,builds a holistic analysis framework to explain the divergent impact mechanisms of local fiscal capacity on emergency spending in localities and their neighboring areas.Second,by considering local governments as interconnected actors in emergency management,this study not only investigates the spatial impact of local fiscal capacity on local emergency spending but also explores the potential spillover effects on emergency spending in neighboring areas.The findings of this study provide a theoretical basis and empirical support for solving the problem of"race-to-the-bottom competition"in local emergency spending,ensuring an adequate level of local emergency reserves and spending and reducing local governments'reliance on central government in emergency management.These conclusions help promote further deepening reforms in emergency management in China,especially in the area of emergency budgeting.
local governments'fiscal capacityemergency spendinginter-governmental competitionspillover effectspatial econometric analysis for panel data
万方数据
维普
