The Neighborhood Effect and the Provision of Public Goods in China

1. The Neighborhood Effect and the
Provision of Public Goods in
China
By: Philip H Brown Economist

2. The Neighborhood Effect and the Provision of Public
Goods in China
Philip H. Brown is a noted development economist who specializes in the economics of poverty and
inequality. He has lived and worked in China, Central America, Africa, and Chile. Philip H. Brown has
published extensively on the economic affairs of these regions. The economist co-authored a paper on
the neighborhood effect and the encouragement that it provides to fiscal mimicking and competition in
rural Chinese administrative villages.

3. The Neighborhood Effect and the Provision of Public
Goods in China
Until the 1980s, appointments to local office in China were made by higher authorities. Therefore,
appointees were more eager to satisfy their superiors than the villagers for whose benefit they were
supposed to work. However, with the introduction of democracy in Chinese villages, this trend began
to change and officials became more concerned with responding to public demand than they had been
before. Moreover, local officers also seemed to respond to public projects and works done in
neighboring villages by trying to match their accomplishments. They increased the number of public
projects undertaken in their own jurisdiction, as well as the funding allotted to them.

4. The Neighborhood Effect and the Provision of Public
Goods in China
Philip H. Brown and co-authors Claudio Agostini and Xiabo Zhang suggest that this sort of fiscal
matching implies that interactions among villages plays an important part in the provision and
distribution of public goods and services in China. They also argue that this tendency toward local
competition is generally strongest among newly elected officials and tends to taper off among
officials with more than one year of service, as they are less sensitive to neighbors' performance.
Competition and matching also increases in the year before elections.