Exploring the Influence of Digital Infrastructure on Fiscal Self-Sufficiency: Empirical Evidence From 29 Provincial in China

• Published in: SAGE open Vol. 14; no. 4
• Main Authors: Mai, Wenjun, Li, Cunlin, Chen, Yanpeng, Mai, Lijun
• Format: Journal Article
• Language: English
• Published: SAGE Publishing 01-10-2024
• ISSN: 2158-2440; 2158-2440
• DOI: 10.1177/21582440241284108

As a major emerging economy, China government debt burden on local governments remains substantial, so enhance fiscal self-sufficiency and debt sustainability is so important. Utilizing panel data spanning from 2004 to 2020 across 29 provincial-level governments in China, this study employs the SYS-GMM approach to empirically validate the significant negative impact of digital infrastructure development on governments’ fiscal self-sufficiency rates. Furthermore, the research shows the significant positive mediating role of technological expenditure efficiency between digital infrastructure and fiscal self-sufficiency, implying that digital infrastructure can enhance fiscal self-sufficiency by augmenting technological innovation efficiency. Under the moderating effect mechanism, fiscal decentralization positively moderates the relationship between digital infrastructure and fiscal self-sufficiency. Heterogeneity analysis reveals that the impact of digital infrastructure on fiscal self-sufficiency is more pronounced in high-density regions. At the same time, its effect is less significant in low-density areas, indicating regional disparities in China’s digital infrastructure development. The contribution of this study is grounded in fiscal decentralization theory, policy recommendations advocate granting local governments greater autonomy over tax categories and broadening their fiscal revenue. Concurrent efforts should be directed towards deepening reforms in the fiscal and taxation systems, as well as budget management mechanisms.