7.4.1 Fiscal Decentralization
One of the puzzling features of the Chinese regime is that the country has one of the most decentralized fiscal arrangements in the world despite its one-party political system. Xu (2011) calls the Chinese regime a regionally decentralized authoritarian (RDA) regime. He provides an excellent review for the historical roots and implications of this regime. This subsection is not intended to repeat his review. Instead, we will first describe the extent of fiscal decentralization in China, then move on to a discussion of its implications for economic growth, and finally conclude the subsection by pointing out what seems like contradictions in the Chinese RDA regime.
To begin with, we realize that even in the era of ...
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