Stockholm School of Economics Asia Working Paper Series,
Stockholm School of Economics, Stockholm China Economic Research Institute

Abstract: Can political decentralization and the introduction of local elections improve government accountability and public goods provision in a non-democratic regime like China? Political decentralization reforms in China have only been implemented at the village level, and have been implemented unevenly across villages. Villages differ substantially in terms of the quality of their elections and the amount of power given to (or taken away from) their popularly elected village committees.

In light of these differences, this paper investigates the relationship between political decentralization processes and government performance in the rural Chinese context, by addressing the question of whether democratically elected village committees are more responsive to villagers’ demands for better infrastructure in their communities, when given the power to govern.

To explain differences among villages in terms of whether and how much they invest in new infrastructure, a tobit model of village-financed investment is estimated using cross-sectional survey data collected from over 100 villages. Results from the regression analysis indicate that variation in the degree of political decentralization is positively associated with variation in the level of public goods investment across villages: villages governed by democratically elected village committees tend to invest more in new infrastructures. These results are robust to the endogeneity between governance and public goods provision.

Our findings from rural China illustrate the potential and limitations of political decentralization reforms to enhance government accountability in non-democratic regimes. In some communities, they have improved government performance, but in many others they have failed to make elected local governments accountable to citizens because they have failed to devolve authority and resources to them in the first place. The challenge thus is not only to make decentralization work but, more fundamentally, to make decentralization happen.

Keywords: Decentralization; accountability; public goods provision; China

JEL-codes: H41; H70

24 pages, December 1, 2017

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