Determinants of government size: evidence from China

Abstract

This paper investigates the determinants of government size at the provincial level in China. We employ the panel data model as a platform for empirical analysis and control for endogeneity in the study. Our study shows that openness to trade and foreign direct investment (FDI) may curtail government expansion, and that the provincial-level public sector is characterized by economies of scale. This study also documents that Wagner"s law does not hold true for China. Moreover, both expenditure decentralization and revenue decentralization contribute to the expansion of China"s government.

Social Media and Local Governments

“…Government size is gauged by population size, since public sector personnel are commonly determined by jurisdictional population (Wu and Lin 2010 ). Provincial population size is measured by the total number of residents at year-end.…”

Determinants of Expenditure Decentralization: Evidence from China

“…Given the fact that FDI represents the openness of an economy, what would be the impact of both trade and economic openness on fiscal decentralization in a domestic circumstance? A burgeoning scholarship confirms that both trade openness and FDI can serve as a device to improve good governance (see Malesky, 2004;Wu & Lin, 2012). Foreigners, especially those from developed countries purchasing goods or investing in developing countries, may push recipient governments to improve their public services or "leak" some practical hints on good public governance to destinations of trade and investment.…”

Economic Development and Government Spending: An Exploration of Wagner’s Hypothesis during Fifty Years of Growth in East Asia

“…Similarly, Lamartina and Zaghini (2011) [7] and Magazzino (2012) [8] find support for the law using a panel data set on 23 OECD countries and the EU-27 countries, respectively. In contrast, lack of support for the law is reported by Babatunde (2011) [9] for Nigeria; by Wu and Lin (2012) [10] for Chinese provinces; and by Dogan and Tang (2006) [11] for five South East Asian economies. However, Narayan, et al [12] report mixed evidence in support of the law using data on Chinese provinces.…”