Assessment system and empirical study on China’s local governance quality

Abstract

Good governance is an important guarantee for the sustainable development of regional economy. Since the Reform and Opening-up, China's local economic development has made remarkable achievements, which has aroused the concern of the academic community. The main contents of China's local governance quality assessment include: government capacity, marketization, and rule of law, which means a new multidimensional perspective on local governance assessment: "power allocation + governance capacity + rule of law". This paper designs the index system of China's local governance assessment based on literature investigation and coefficient of variation, which utilizes two approaches: qualitative analysis and quantitative analysis. Furthermore, the investigation analyzes the panel data (2001-2014) of provincial regions in China by utilizing global factor analysis and weighted average. The results indicate that the improvements in government capacity, marketization, and rule of law were higher in the majority of provinces studied in central and western China between 2001 and 2014, while they were lower in most of provinces researched in northeastern China in the same period, which resulted from policy differences. In 2014, government capacity, marketization, and rule of law were higher in the majority of provinces investigated in eastern China, while they were lower in most of provinces surveyed in the rest of China, which was due to the differences in policies support, resources management, absolute geographical location, per capita GDP, and market economy. In order to improve local governance quality and achieve sustainable economic growth, it is very important to establish local governance structure as "effective government + efficient market", China should pay more attention to weak aspects of local governance and some provincial regions in western, central and northeastern China.

The Effect of Governance Quality on Economic Growth: Based on China’s Provincial Panel Data

“…Since the 1980s, the local governance in China has changed greatly, which can be understood from six aspects: marketization, civil society, community/villager autonomy, decentralization, service-oriented government, and rule of law (Tang et al 2018). At the same time, governance quality has been operationalized in provincial regions of China by existing studies, which can be divided into three categories according to the dimensions of governance perspective.…”

“…Shi and Fang (2010), starting from three aspects (i.e., policy, system, and behavior), designed the evaluation system of public governance efficiency, and emphasized on a multi-dimensional perspective of "supervising power + governance capacity + governance output", but they only considered the cross-sectional data of five provincial regions, and did not calculate the comprehensive index of governance quality. Tang et al (2018) discussed the main contents of China's local governance quality assessment: government capacity, marketization, and rule of law, which meant a new multi-dimensional perspective of "horizontal allocation of power + governance capacity + supervising power", and designed the index system of governance assessment based on literature investigation and coefficient of variation, and measured the three sub-indexes of governance quality (2001)(2002)(2003)(2004)(2005)(2006)(2007)(2008)(2009)(2010)(2011)(2012)(2013)(2014), without calculating the comprehensive index of provincial governance.…”

“…Compared with the most popular research from Fan et al (2011b), who focused on the one-dimensional perspective, Tang et al (2018) chose the multi-dimensional perspective, which described the reality of China's provincial governance more comprehensively. Besides, previous studies designed the index system based on literature investigation, while Tang et al (2018) based their system on literature investigation and coefficient of variation, which made their index system more scientific.…”

“…Compared with the most popular research from Fan et al (2011b), who focused on the one-dimensional perspective, Tang et al (2018) chose the multi-dimensional perspective, which described the reality of China's provincial governance more comprehensively. Besides, previous studies designed the index system based on literature investigation, while Tang et al (2018) based their system on literature investigation and coefficient of variation, which made their index system more scientific. Therefore, this paper adopted the index system (see Table 1) from Tang et al (2018), calculated the factor loadings of 14 variables (see Appendix A), and got the comprehensive index (see Appendix B) of provincial governance (2001-2015) using the global factor analysis method (Tang et al 2018).…”

“…The core connotations of "China's local governance" are the following: effective government, efficient market, and rule of law (Liu et al 2017;Tang et al 2018). According to the economic growth miracle in China, good governance encourages the "helping hand" of power, while it inhibits the "grabbing hand" of power, resulting in a positive impact on economic growth in China's provincial regions, which is through three possible routes or channels: marketization, government capacity, and rule of law.…”