CCP Seminar: Fiscal decentralisation and efficiency of public service delivery: the case of UK and China

The CCP’s Spring seminar series continues on Friday 3rd May with our resident research associate Minyan Zhu (CCP). She will be presenting her research on ‘Fiscal decentralisation and efficiency of public service delivery: the case of UK and China‘ which has been conducted alongside Antonio Peyrache (University of Queensland). An abstract for her seminar can be found below.

Abstract

We consider government inefficiency in delivering public services for the UK and China by using a production model where one input (government expenditure at regional level) produces outputs in main service areas including education (teacher availability and student achievements), health services (doctor and hospital bed availability), transport (road traffic flows and public transport availability) and housing (affordability). We use two different regional level datasets separately for the UK and China over the period from 2000 to 2010. The reason for choosing these two countries is that they show very different levels of fiscal centralisation/decentralisation.

In the UK local authorities’ expenditure accounts for around a quarter of total government expenditure and public services in each region are mainly funded and delivered by the central government. On the contrary in China, local governments (financed mainly by local tax revenue) are the key provider of public services in each region. Local government expenditure accounts for more than 80% of total government expenditure in 2010.

We firstly construct and estimate an inefficiency measurement that measures the overall inefficiency of each system against the production possibility sets defined at the national level. We then compare in each system whether inefficiency arises from inefficient performance within regions or from inefficient organisation of resources across regions.  Preliminary results show that the inefficiency regarding the public service provision in the UK is attributed more to inefficient organisation of resources across regions than to inefficiency within individual regions; whereas in China, inefficiency is attributed more to inefficient performance at regional level than to organisation of resources across regions.

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