科学研究

The Chinese government is active in designing and implementing programs and rules to promote economic development and industrialization. In the past decade, many policies related to fiscal decentralization were implemented. However, whether fiscal decentralization acts as a helping hand or grabbing hand on firms remains an open empirical question. This research, in contrast with the extant literature, makes use of micro-data to study the question. It integrates two sets of longitudinal data of individual firms and county-level governments. Using fixed effect and Poisson regression, the research shows that counties given greater fiscal autonomy or implemented with the “County-Power Expansion” or “Province-Managing County” policy are more capable of stimulating productivity growth of firms and attracting new firms. The fiscal autonomy and policies can account for as much as a 5% point difference in productivity growth rate and a 2-fold difference in firm birth rate per annum in China. Administrative inefficiency, however, can hamper firms’ performance and deter new firms.