CHAPTER 6. CONCLUDING REMARKS AND POLICY
6.2 Policy Implications
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6.2 Policy Implications
While China has achieved remarkable economic growth over the past 30 years, the economic disparity among provinces has become a serious problem in China. As indicated by Huang, Kuo, and Kao (2003), the level of inequality in China’s regional economies clearly exhibited a slight upward trend after 1991. What worse is this economic disparity results in a lot of social problems, such as social welfare, social security, the quality of living, hygiene, health, and poverty. In order to examine how big this difference of social problem is, this study investigates the efficiency of provincial government’s social security and its affected factors.
In this study, it is suggested that fiscal decentralization could improve the efficiency of provincial government’s social security. If the central government in China would like to mitigate this social security gap among provinces, it could release its fiscal power to those provinces with lower efficiency score. With larger revenue autonomy as administrative resource, provincial governments can draw up and implement policies about social security more flexible and easier. Hence, this study suggests that with a view of eliminating the unequal social development among provinces, the central government in China could release the power of fiscal decentralization in some provinces with lower efficiency to improve their
implementation about social security. However, it should be aware of the degree of fiscal decentralization which is too high to improve the efficiency of social security.
The provinces with higher efficiency score of social security can help the residents to have better living qualities. Taiwanese businessmen in China should also pay attention to those social policies to take care of their employees and adopt the recommendations of this study as references for future operations and investments.
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