Grassroots democracy and local governance : evidence from rural China

This paper studies the impacts of village elections on the accountability of the village committee, local fiscal sharing, and state taxation in rural China using data of 48 villages for the period of 19862002. Elections are found to substantially increase the share of public expenditures in the village budget, but reduce the shares of administrative costs and income handed to the township government. These findings suggest that elections have enhanced the accountability of the village committee, but weakened local fiscal sharing and the states grip. No strong evidence is found that state taxation is affected by elections, nor is it found that the role of a more competitive election is different from that of a closed election.