Locals Competition and Government Reform

Abstract

China's reform to decentralization conduced to the competition in the locals, which helped the marketization of the economy. It also can induce to the government reform, through the locals' need to absorb the economic resources. But this result is restricted by other conditions, especially to the naturally backward areas, it's difficult for them to attract investment, so there are no reform incentives in such locals. Use the public finance transfer to build such areas' infrastructure can mitigate these difficulties and result in the government reform.