Local Government Finance and Industrial Policy in China

Christopher Heady

Economic Change and Restructuring, 1998, vol. 31, issue 2, 195-212

Abstract: The paper considers the way in which the system of local government finance in China affects the design of local industrial policy. It starts by using recently collected data from selected cities to demonstrate the importance of indirect taxes for financing local services. It then presents a theoretical model which shows how the financing system can lead local governments to distort local industrial structure. Finally, it uses this model to consider whether the 1994 tax reforms can be expected to reduce these distortions. Copyright Kluwer Academic Publishers 1998

Keywords: industrial policy; local taxes; public goods (search for similar items in EconPapers)
Date: 1998
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DOI: 10.1023/A:1003447810738

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