Official Tenure, Fiscal Capacity, and PPP Withdrawal of Local Governments: Evidence from China’s PPP Project Platform

PPP withdrawal policy is helpful to reduce over-investment in PPPs leading to sustainable development. However, little is known about the role of local governments on over-investment in PPPs. Using the PPP Project Platform Data, a unique dataset, this article is able to quantify over-investment in PPPs by coding PPP withdrawal for the first time. This research tests the influencing factors of PPP withdrawal at the municipal level, according to the centralized withdrawal policy in late 2017 as an exogenous treatment. Based on the theory of over-investment to rapid economic growth, this study develops a two-pillar framework under the combination of political man and economic man assumptions to explain the PPP withdrawal of local governments. The results show that both official tenure and fiscal capacity are significant factors. In addition, debt partially mediates the mayor tenure on PPP withdrawal, and the land revenue growth can hinder the negative relationship between mayor tenure and PPP withdrawal. It implies that over-investment in PPPs is strongly influenced by official leaders’ personal promotion incentive and official group members’ collective benefit. Thus, our findings indicate that the centralized withdrawal policy is an effective instrument to prevent over-investment in PPPs. Moreover, a match should be formed between local development planning and investment plans to promote sustainable of PPP investment.

Fiscal capacity in ‘‘responsible government’’ colonies: the Cape Colony in comparative perspective, c. 1865–1910

This study contributes to debates on the efficacy of institutions in settler colonies by comparing the Cape Colony’s fiscal path to the experiences of Australia, New Zealand, and Canada. I find that the Cape’s fiscal trajectory was divergent. Agricultural and mining taxes were important surrogates of income taxes in other colonies, but the Cape’s narrow interests pushed for insulation from direct taxes. This made the Cape’s fiscal path unsustainable with comparatively low per capita taxes, high deficits, and the highest level of indebtedness. I argue that the instrumentality of ‘‘responsible government” status was conditional on how imported self-government institutions were endogenized.

Erosion of State Power, Corruption Control, and Fiscal Capacity

We model how corruption erodes state power, i.e., the state’s ability to keep its apparatus under control in crises. Under a general assumption about fat-tailed risk of crisis, we show that given strong fiscal capacity, the head of the state will control local corruption at such a level that its power is secured; given weaker capacity, the state will over-tolerate corruption to retain officials, risking control in crises; moreover, a state may be trapped with too weak fiscal capacity, rampant corruption, and the state losing control in any real crisis, while having little incentive to invest in fiscal capacity. By developing historical narratives, we show that these theoretical results are consistent with experience from the Roman Empire, New Kingdom of Egypt, Ming China, and many other powerful states in history.

The Effect of Financial Performance on Performance Accountability of Regency/City Governments in Indonesia

This research is intended to provide empirical evidence of the influence of financial performance on the accountability of city government performance in Indonesia. The sample in this study is 1226 district / city governments in indonesia 2012-2014. The data is formed into a combined panel data between time series data and cross section data that is processed using multiple regression model. Financial factors are proxied by regional financial independence, activity ratios, ratios of development function, intergovernmental income, and fiscal capacity. The results of this study indicate the ratio of regional financial independence, health ratio, fiscal capacity positively affect the performance accountability of local governments in Indonesia. While the ratio of development activities and intergovernmental income does not apply to the performance accountability of local governments in Indonesia.