Intergovernmental Fiscal Transfer System - A new Model from a Comparison between Sweden and China

Abstract: Intergovernmental fiscal transfer is a kind of transition of fiscal revenues between the central government and a local government; it plays an important role in leveling social disparities, furthermore, it further promotes the long-term development of a country’s economy. As a well-known social welfare state in the world, Sweden has a rich experience of social equalization. Our dissertation carries out a comparison between Sweden and China in respect of the intergovernmental fiscal transfer system, by means of case study. In addition, we conduct some research into related theories, such as the rationale of intergovernmental grants and the decentralization issue, to provide necessary support for our argument. In conducting our research we adopt an inductive approach. The case studies help us identify nine factors that impact the fiscal transfer system, along with the performances they respectively have in these two countries. We make a further investigation into their impacts and propose suggestions to improve China’s transfer system. As the result of our research, we finally develop a new model which may help push China’s intergovernmental fiscal transfer system towards the direction of equalization.