Local Government Governance Capacity,Audit Supervision,and the Equalization Level of Basic Public Services: Evidence from Yangtze River Delta Region in China

Abstract

Enhancing local government governance capacity and promoting the equalization level of basic public services are critical steps toward achieving common prosperity. This article empirically studies the impact of local government governance capacity on the equalization of basic public service with a system generalized method of moments (sys-GMM) and examines the moderating effect of audit supervision. The findings indicate that the equalization degree of basic public services can be considerably increased by local government governance capacity and the dimensions of resource governance capacity and tool governance capacity. The revealing and rectifiable function of audit has a positive moderating effect in the governance of equal provision of basic public services for government. Therefore, the Yangtze River Delta Region in China should continue to play the role of audit supervision, strengthen the governance capacity for government, and further promote the equalization of basic public service provision.

Keywords

the equalization of basic public services local government governance capacity audit supervision sys-GMM

Introduction

Ensuring that all people have access to basic public services and promoting equal access to these services are higher demands to meet the aspirations of the people for a better life. Simultaneously, these efforts are core components of reforming governmental administrative functions and establishing a service-oriented government. Promoting the equalization of basic public services has long been a hot topic in academic research, primarily discussing from dimensions such as measurement systems, variable studies, and implementation pathways. Scholars have measured and comparatively analyzed the equalization of basic public services by constructing an index system and using various calculation methods, but a unified measurement standard has not yet been formed. Existing literature mostly indicators such as basic education, health care, social security, employment, applying methods like Principal Component Analysis (L. C. Wu et al., 2014), Data Envelopment Analysis (Benito et al., 2019), and Entropy Weight Method (Xin & Chen, 2019) to calculate the level of basic public services. They have also compared the structural differences in the equalization of basic public services among urban agglomerations, between urban and rural areas, and across different service projects (Z. Y. Li & Li, 2020) using Coefficients of Variation (Psacharopoulos, 1977), Thiel Index (Z. A. Yang & Qiu, 2018), and Dagum Gini Coefficient (Dong & Li, 2022). Factors influencing the equalization of basic public services have been explored. It was found that aspects such as the level of regional economic development (Y. L. Peng et al., 2022), fiscal decentralization (Arends, 2020), government transfers (S. M. Liu & Wang, 2023), government fiscal capacity (T. Qian et al., 2023), and demographic factors (Zhang, Chen et al., 2023; Zhuravskaya, 2000) can affect the quality of basic public services. Therefore, in the study of the path to achieve the equalization of basic public services, optimizing the institutional mechanism and improving transfer payments are the two key research directions to promote the equalization of basic public services. Some scholars have suggested promoting the equalization of basic public services through optimizing the financial direct control of counties (Gao & Du, 2019), diversifying the supply of basic public services (Y. O. Liu, 2022), advancing household registration system reform (Zhao & Sun, 2023), and financial support, as also proposed by Garrido (2017) and Sir and Caliskan (2019), which can enhance the supply performance of basic public services.

Entering a new phase of development, China places a high value on safeguarding and enhancing people’s livelihoods in high-quality development, and has made notable strides toward the development of basic public services. In terms of economic strength, infrastructure, and regional factor flows, the Yangtze River Delta (YRD) region walks ahead in China. However, there are still obvious disparities in the structure and quality of basic public services provision due to regional imbalance of socio-economic development (B. L. Li, 2022). This inequality has become an important obstacle to achieving the goal of common prosperity in the new development stage. The reasons for this have mostly been explained in the literature from the perspectives of China’s degree of economic development, fiscal system, and urbanization level (Fu et al., 2014; D. Y. Peng et al., 2021). At the same time, some scholars have also started researching based on government governance and public service provision, mainly focusing on the government’s fiscal system and self-construction. In terms of government fiscal system, Grisorio and Prota (2015) found that fiscal decentralization has prompted local governments to squeeze the space for basic public service expenditures, which has a long-term impact on the quality of public service provision (Maty & Rose, 2021). The fiscal transfer system adopted to alleviate the vertical imbalance of local finances can, to a certain extent, regulate the government’s fiscal capacity, thus increasing the supply of public services (Wang, Yu & Chen, 2023). In terms of government self-construction, it is proposed to optimize the supply of public services by building a service-oriented government (J. J. Zheng et al., 2023), constructing a law-based government (Liu, Zhao & Liu, 2021; Mauro, 1998), and promoting government digital construction (Larsson & Skjølsvik, 2021). Conceptually, basic public service refers to “the service function behavior based on a certain social consensus, led by the government to provide, in line with the level and stage of economic and social development, aimed at ensuring the basic needs of the survival and development of all citizens,” which fully indicates that the development of the equalization of basic public services cannot be achieved without the government’s leadership, especially the capacity building of local government governance (Yu & Li, 2023). Local government not only formulate and implement public service policies, but also promote the formation of a collaborative governance network for public services. Through governance system reform and management innovation, they can promote the order and stability of public service provision (J. H. Wu, 2014). Enhancing local government governance capacity is irreplaceable and essential for growing the scope and depth of basic public service provision and improving its equalization level. This study systematically examines the impact mechanisms of local government governance capacity on the equalization of basic public services, incorporating an analysis of the moderating role of audit supervision. The research not only expands the theoretical dimensions of public service provision studies but, more significantly, provides novel analytical perspectives and policy instruments for addressing regional disparities in public service delivery. Particularly within the context of the Yangtze River Delta integration national strategy, the findings offer direct theoretical support and practical guidance for optimizing government governance systems and innovating regional collaborative governance models. The research holds substantial strategic value for promoting equal access to basic public services within the framework of high-quality development.

In addition, as a crucial component of the national supervisory system, the audit supervises the performance of local governments to regulate their behavior (Mautz & Sharaf, 1961), thereby safeguarding the public interest. Based on the strategy of high-quality development of public services, audit of public financial expenditures are carried out to adjust the scale and structure of financial expenditures, narrow the urban-rural gap, and promote equal access to public services. It has unique authority and professionalism in deepening government governance reform and guaranteeing the provision of public services. Existing literature shows a consensus on the role of audits in enhancing public satisfaction, building a service-oriented government, combating corruption, and improving the efficiency of government public investments (Avis et al., 2018; F. Yang et al., 2023; Zhang, Liu & Cai, 2023). In addition, Chun et al. (2020) argue that audit serve a governance function, where greater intensity in economic responsibility audit leads to higher efficiency in local government governance. However, there is little literature directly connects audit with the equalization of basic public services. Harris (2005) points out that government audit is the key to sound financial management, which can improve the management performance of the relevant public funds, and thus provide more efficient public services to the public. Huang and Zhang (2022) also show that audit can provide continuous whole-process and all-round tracking supervision for high-quality development of public services, timely discover problems and weaknesses in the process of high-quality development of public services, and effective mitigation of risks. Therefore, can audit play its supervisory and control functions in government governance of public affairs, to reinforce the promotion of the equalization of basic public services?

Current research on the equalization of basic public services exhibits three critical disconnects between theory and practice, which constitute both the origin and value of this study. First, while studies on influencing factors of public service equalization are abundant, they demonstrate an evident “institutional bias”—overemphasizing system design (e.g., fiscal decentralization, transfer payments) while neglecting local governments’ agency as policy implementers. This research bias leaves a crucial theoretical question unanswered: why do significant disparities in service equalization persist across regions under similar institutional arrangements? This gap necessitates shifting scholarly attention to local governance capacity as a key variable. Second, existing studies on governance capacity suffer from “conceptual monism.” Although theoretically recognized as a systemic construct, most scholars treat governance capacity as a unidimensional concept, failing to capture its inherent multidimensional nature. This oversimplification obscures an important research gap: different capacity dimensions may exert heterogeneous effects on service equalization—a phenomenon requiring urgent investigation. Third, while audit supervision's importance is widely acknowledged and some scholars have examined its impact on local governments’ service provision, no study has integrated local governance capacity, audit supervision, and regional service equalization into a unified analytical framework. This oversight leaves a vital practical question unresolved: how can audit supervision—an existing institutional mechanism—be leveraged to enhance governance efficacy? Addressing these gaps, this study investigates three interrelated research questions: First, controlling for institutional factors, does local governance capacity significantly influence basic public service equalization, and do different capacity dimensions demonstrate heterogeneous effects? Second, through what mechanisms does vertical audit supervision regulate local government behavior in service equalization provision? Third, how can governance capacity be enhanced to achieve sustainable equalization under China’s new development paradigm? Answers to these questions will not only bridge theoretical gaps but also provide novel policy insights for advancing service equalization in the new era.

In this article, 16 core cities in the YRD are taken as the research object,¹ constructs a sys-GMM dynamic panel model, incorporates the local government governance capacity, audit supervision and the equalization of basic public services into the same research framework. Based on this, exploring the intrinsic logical relationship among them, and then analyzing the feasible paths and countermeasures to improve the equalization level of basic public services by improving government governance capacity.

The possible marginal contributions of this article are as follows: First, incorporating local government governance capacity and audit supervision into the analytical framework of equalization of basic public services, explaining the theoretical level of how local government governance capacity affects the equalization of basic public services and the regulatory role of audit supervision between the two; Second, providing a more comprehensive and scientifically divided measurement of local government governance capacity. Constructing a measurement index system of local government governance capacity from three dimensions of collaborative governance capacity, resource governance capacity, and tool governance capacity, this study systematically depicts the empowering effect and mechanism of local government governance capacity on the equalization of basic public services from different dimensions. Third, enriching the quantitative research results of the equalization of basic public services. From an empirical point of view, we take the YRD region in China as the study area and construct a sys-GMM dynamic panel model to examine the impact of local government governance capacity and audit supervision on the equalization of regional public services, which provides empirical evidence for a deeper understanding of the governance effectiveness of local governments in achieving regional equalization of basic public services.

The remaining research is structured as follows: The second part compiles and combines the existing literature to discuss the mechanism of the role of local government governance capacity in the equalization of basic public services, and the mechanism of the moderating role of audit supervision in it. The third part introduces the research method and data collection of the article. The fourth part presents the results of the empirical analysis. Finally, the article discusses the research conclusions and countermeasures.

Literature Review and Theoretical Framework

The Measurement System of Local Government Governance Capacity

Government governance capacity emphasizes the requirement for the government to change the traditional administrative role positioning, define authority boundaries, and innovate the operational modes in the governance period. It is manifested as a functional combination of internal performance and interaction with the external environment. Its connotation refers to the capacity to formulate and implement democratic and scientific public policies under the participation and supervision of pluralistic social subjects, to satisfy the general public’s public demands, and to support the harmonious stability and sustained and healthy development of the society (Qiu, 2015).

Governance theory and government capacity theory offer an essential theoretical perspective for analyzing the constituent elements of government governance capacity. Firstly, the subject element, governance theory emphasizes that local governance should not be limited to local government, but also involve the market, society and other subjects, and the formation of a network governance model of trust, interaction, and cooperation among multiple actors (W. B. Li & Chen, 2015). The government guides subjects to play their respective advantages to form a pattern of collaborative governance has become a critical component of government governance capacity. Secondly, the resource element, the capacity structure of local government is determined by the process of converting input and output resources (G. Zhang et al., 2016), which is reflected in the governance context as the capacity to obtain, configure, integrate, and utilize the scarce governance resources. Thirdly, the tool element, the government must rely on various forms and levels of tool capacities to respond to changing external environment and organizational goals (Farazmand, 2009). The choice of governance tools should be guided not only by goals, performance, and value, but also by their dynamic adaptability. Therefore, a sound and effective local government governance capacity system should be based on the elements of “subject-resources-tools,” which are characterized by optimizing and reshaping the governance structure, rationally allocating the governance resources, and innovatively using the governance tools, and contain the following three dimensions of the capacity structure.

Firstly, collaborative governance capacity refers to the ability of local governments to guide diverse societal entities in constructing a harmonious and efficient collaborative governance structure that facilitates effective participation in regional public affairs (H. Chen, 2023). This stands as a crucial core of local government governance capacity. Secondly, resource governance capacity denotes the ability of local governments to possess and utilize various public resources effectively to ensure their efficient supply. In the regional governance process, local governments possess the ability to integrate and coordinate the allocation and supply of relevant governance resources to achieve maximal efficiency in the utilization of scarce resources (S. X. Chen & Zhou, 2023). This also entails the government’s attractiveness and capability in allocating financial, human, and environmental resources (Sun, 2024). This is a necessary condition and guarantee for local governments to fulfill their governance functions. Thirdly, tool governance capacity indicates that local governments should accurately understand governance needs, choose appropriate governance tools within the governance scenario (X. G. Hu, 2021), flexibly apply these tools based on their characteristics to address public governance issues and achieve governance objectives (Salamon, 2002). It serves as a significant carrier and means for local governments to carry out governance actions.

In a word, the three subsystems of collaborative governance capacity, resource governance capacity, and tool governance capacity are interdependent and synergistic, leveraging the overall function of the complex system of government governance capability, so that it can maintain efficient operation when dealing with complex governance situations.

The Effect Mechanism of Local Government Governance Capacity on the Equalization Level of Basic Public Services

Comprehensive Government Governance Capacity and Equalization of Basic Public Services

To ensure the most basic livelihood needs of all citizens, the government must fulfil the role of providing basic public services based on political resources and economic development. The COM-B theory proposed by behaviorist Michie et al. (2011) suggested that the occurrence or change of organizational behaviors is determined by three factors: capability, opportunity, and motivation. The focus of equalization of basic public services should be on government capacity building. The governance capacity of government public services is the prerequisite and guarantee for achieving the policy goal of equalizing basic public services (Shi, 2008). Government governance capacity lies in fully leveraging policy guidance advantages, actively guiding various social organizations and market entities to participate in social governance. Formulating a diverse governance model with the government as the main body, with society and the market joining forces, fully utilizing the resource advantages of all parties to improve the supply level of public goods and public services. Utilizing policy tools such as government procurement to enhance the governance effectiveness of social entities and better fulfill their own governance functions to promote the equalization of basic public services (Shao & Wang, 2023). Studies have shown that factors such as local government fiscal self-sufficiency (X. X. Qi, 2015), government regulatory capacity (Liu, Hu et al., 2021), and local government policy-making authority (Gazzeh & Abubakar, 2018) positively impact the level of equalization of basic public services. Therefore, government governance capacity is a key factor influencing the governance behavior of the government in providing basic public services. The improvement of governance capacity means the implementation of government governance concepts, efficient and healthy operation of the governance system, and greater efficiency and quality of government formulation and implementation of policies and response to the general public’s demands. This promotes the clarity of basic public service policy objectives and policy implementation accuracy, and promotes the efficiency and precision of service supply. Accordingly, this article proposes research hypotheses:

H1: The improvement of government governance capacity positively affects the equalization of basic public services.

Collaborative Governance Capacity and Equalization of Basic Public Services

Enhancing the collaborative governance capability has prompted multiple governance entities to provide basic public services that meet people’s needs in a collaborative manner in accordance with their responsibilities and authorities. Therefore, filling the gaps in existing service supply, and promoting the adequacy of equitable supply of basic public services (Yan & Mao, 2022). Equalization of basic public services is a “cross-border issue” encompassing various domains such as education, healthcare, social security, infrastructure, and involving institutional arrangements, resource assurance, innovative supply methods, monitoring, and accountability in diverse public affairs (Cao et al., 2023). Collaboration among different subjects is the key to dealing with these issues (Halpaap et al., 2019; W. Q. Zheng & Liu, 2014). Collaborative governance aims to form a governance structure system of “strong government, strong market, and strong society.” The capacity of local government collaborative governance is reflected in addressing coordination issues among government departments, markets, social organizations, and the public within the governance network. Islam et al. (2021) demonstrates that farmers’ willingness to adopt crop insurance is influenced by factors such as age, farm size, and risk attitudes. This suggests that when formulating public service policies, governments need to accurately identify the characteristics of target groups to enhance the adaptability of policy tools. Scholars like Osborne et al. (2013) also believe that inter-organizational relationships in public service provision are more important than intra-organizational relationships. On the one hand, as the key provider of basic public service, the government has reformed the administrative management system and mechanism to form a multi departmental integrated and coordinated basic public service linkage governance mechanism. On the other hand, through interest negotiation and compensation mechanisms, market and social governance entities are guided to enter the area of basic public service supply through modes such as government purchase services and PPP (Lin & Yao, 2022). With the professional and efficient advantages, they fill the gaps in the supply of basic public service and promote the popularization of services to rural areas, as well as key groups such as left behind families and migrant workers (Troy et al., 2005). Accordingly, this paper proposes research hypotheses:

H1a: The improvement of the government’s collaborative governance ability positively affects the equalization of basic public services.

Resource Governance Capacity and Equalization of Basic Public Services

Through enhancing the resource governance capacity, the government can coordinate, allocate, and optimize the integration of its fiscal and human resources and balance the investment of resources in various basic public service projects to encourage a balanced supply of basic public services. Regarding fiscal governance, increased fiscal governance capacity means the scale of government revenues is expanded. By coordinating the allocation of fiscal funds to resolve the contradiction between revenues and expenditures, balancing the structure of fiscal expenditure, focusing on the livelihood services, and ensuring the effective investment of funds in key areas. Balanced transfer payments are an important way to achieve fiscal parity among local governments and for equalization of basic public services through fiscal equality (Egger et al., 2010). At the same time, the significant threshold effect of transfer payments means that after local fiscal expenditures reach a certain level, transfer payments can improve the level of local basic public services (Zhu & Bao, 2019). In terms of human governance, local government governance behavior is often an external manifestation of the motivation of government officials (X. H. Qian et al., 2011). Under the traditional incentive mechanism for political promotion targeting economic growth, government behavior preferences will lead to the accumulation of resource elements in the production sector, leaning toward using fiscal funds for performance projects, with a not strong willingness to invest in basic public services that improve local quality of life (Liu, Yang & Liu, 2021). In addition, some public officials are willing to bend and break rules, engage in corruption, and shirk responsibilities to cope with challenges and meet performance expectations (Pasha et al., 2023). When the professionalism and responsibility awareness of government officials are improved, they can correct the motivation of public service, so that they can exercise the service provision function with professional governance methods. In this article, we propose research hypotheses:

H1b: The improvement of the government’s resource governance ability positively affects the equalization of basic public services.

Tool Governance Capacity and Equalization of Basic Public Services

Improving the innovation and application capacity of government governance tools can assist in the good operation of governance mechanism. Ensuring the implementation of mechanisms aimed at advancing the equalization of basic public services through the implemented regulations and the enhanced the supply and demand matching, so as to promote the accessibility of the equalization of basic public services supply. Regarding institutional governance, government departments and their staffs are regulated in their official behavior through institutional debugging and innovation to ensure that administrative power operates within the rule of law (D. G. Li & Chen, 2015). Consequently, they perform their functions based on the equal supply system to promote the standardization of basic public services supply. Regarding technological governance, relying on big data can continuously improve technical methods. Data sharing can crack the cross-border collaboration problem and reach a multi-body collaborative supply (J. K. Han & Wang, 2022). At the same time, digital technology is embedded in government governance to build a smart government operation system (Brambor et al., 2020), thereby improving the efficiency of basic public service supply. For example, using big data technology to analyze and judge data information, accurately identifying the public demand for basic public services (Lytras & Visvizi, 2018); using the Internet to develop the online services mode, promoting the sinking of public service resources to rural areas, so that citizens can access these services without time and space constraints. Accordingly, we propose the research hypotheses:

H1c: The improvement of the government’s tool governance ability positively affects the equalization of basic public services.

The Moderating Role of Audit Supervision

Since the new era, the audit management system reform has emphasized the need to build a unified, authoritative, efficient, and comprehensively covered, audit supervision system, and to strengthen the supervision of the power operation, in order to regulate and constrain the local government behavior. Establishing a supervisory mechanism is a crucial way to ensure local government undertakes their public fiduciary responsibility. Therefore, governmental auditing originates from public entrusted responsibilities and is an indispensable component of government governance. The functions of audit have gradually expanded, which is significantly meaningful for enhancing government governance capabilities and achieving optimal government governance (Weingast, 2009). Audit has the function of external supervision, which is the activity of audit institutions to verify the government, its departments and other public institutions, including the legality and authenticity of fiscal income and expenditure, the effectiveness and economy of utilizing public resources and the actual performance of duties. The construction of public services requires a sound financial support system, a standardized governmental division of labor and accountability mechanism, and a fair and reasonable resource allocation system. However, at this stage, China still has serious deficiencies in all these aspects, resulting in a low level of public service equalization (Yi, 2021). Audit supervises and controls the operation of the government governance system through the “immune system” functions of prevention, revelation, and resistance (J. Y. Liu, 2015), thereby ensuring and promoting the government’s comprehensive and effective fulfilment of public entrusted responsibilities, and providing basic public services with higher efficiency and quality.

On the one hand, audit supervision plays a moderating role by identifying and revealing problems. Audit mainly focuses on economic supervision, verifying whether the management and use of government fiscal funds comply with regulations, meet expected goals, and are economical, efficient, and effective (F. Han, 2019). It also exposes issues such as illegal and irregular government revenue and expenditure, ensures investment expenditures for public services, and improves investment levels in short-board areas of public services (H. L. Wu & Zhang, 2023). In addition, performance audit is an important means to promote the realization of the goal of public service equalization. Through performance audit and tracking audit of public service policies (Deng, 2017), it examines and evaluates the actual effects of the construction and operation of public projects, identifies and provides feedback on the implementation of people's livelihood policies or decision-making deployments, as well as existing problems and implementation effects, providing decision-making information support for improving policy formulation and decision-making deployments, revealing management loopholes in government governance (Y. Z. Hu, 2019; Sen, 2005). Thereby we can curb waste of public resources such as “performance engineering” and “image engineering,” optimize public resources layout, and promote the mechanism of coordinating and sharing basic public service resources.

On the other hand, audit supervision plays a moderating role by correcting behavioral biases. Correcting and amending the problems found in the process of equalizing the development of basic public services is not only the responsibility given to the auditing authority by the law, but also a reflection of the value of audit supervision in serving the high-quality development of public services. Audit, as an important means of government governance, provides new benchmarks for self-examination and systematic change in the public service provision system. Through a certain degree of punishment measures to hold accountable behaviors that infringe on public interests, establishing the deterrent power of the audit on the relevant actors, timely addressing corrupt behaviors such as abuse of public power, corruption, bribery, and misappropriation of public funds (Bo et al., 2020; Reichborn-Kjennerud, 2013), and uses anti-corruption as an explicit entry point to governance reforms (Mostafa et al., 2020). Therefore, the sense of responsibility of government officials will be enhanced, and fiscal expenditures for public services are not diverted or misappropriated. At the same time, audit institutions conduct follow-up investigations to form a virtuous cycle of “feedback improvement,” supervise the government to identify causes and seek solutions, correct institutional obstacles, mechanism distortions, and institutional defects in governance, and improve and transform the system of the basic public service supply (H. Z. Peng et al., 2020). Accordingly, we propose the research hypothesis:

H2a: Audit supervision has a positive moderating effect on the relationship between government governance capacity and the equalization of basic public services through its revealing function.

H2b: Audit supervision has a positive moderating effect on the relationship between government governance capacity and the equalization of basic public services through its rectifying function.

In summary, this article constructs an analytical framework of government governance capacity—audit supervision—equalization of basic public services (Figure 1). Government governance capacity and its sub-dimensions directly affect the equalization of basic public services, audit supervision moderates the relationship between them.

Figure 1.

Analytical framework.

Materials and Methods

Model Building

Due to the dynamic and endogenous nature of public service equalization indicators, this paper adopts the Generalized Method of Moments (GMM) for dynamic panel systems proposed by Arellano and Bover (1995), and Blundell and Bond (1998) to overcome the endogeneity problem, which is used to explore the impact of government governance capacity on the equalization of basic public services. Referencing the conceptual framework established by Zhan and Wang (2022) and C. Chen et al. (2023), the model incorporates the understanding that the results of the system GMM indicate the possible existence of multilevel autocorrelation in the dependent variable. Considering that the previous period’s development of basic public services at the regional level may impact the current development level of basic public services (Zhou & Huang, 2022), this study introduces the first lag of the dependent variable to construct a dynamic panel regression model. The advantage of the dynamic panel model lies in using the lagged period of the endogenous variable as an instrumental variable for the current endogenous variable. Once validity testing is successful, no additional instrumental variables are required (H. P. Zhang & Chen, 2017). The model is set up as follows:

y_{it} = α_{0} + α_{1} y_{i, t - 1} + α_{2} go v_{it} + α_{3} x_{it} + ε_{it}

(1)

where, $y_{it}$ is the equalization of basic public service; i denotes each city and t denotes the year; $go v_{it}$ represents government governance capacity for city i in year t, which may be measured by the overall government governance capacity, the collaborative governance capacity, the resource governance capacity, and the tool governance capacity; $y_{i, t - 1}$ is the first-lagged item of basic public services equalization; $x_{it}$ is the control variables, specifically including economic development level, population density, industrial structure, regional openness level; $ε_{it}$ is the random perturbation term.

To further explore whether audit supervision has a moderating effect on the influence of local government governance capacity on the equalization of basic public services, the interaction term between audit and government governance capacity is further introduced into the dynamic panel model to establish a moderating effect model:

y_{it} = α_{0} + α_{1} y_{i, t - 1} + α_{2} go v_{it} + α_{3} audi t_{it} + α_{4} go v_{it} \times audi t_{it} + α_{5} x_{it} + ε_{it}

(2)

where, $audi t_{it}$ denotes the revealing and rectifying function of audit supervision, $go v_{it}$ includes the government governance capacity and its three dimensions, $go v_{it} \times audi t_{it}$ denotes the interaction term between government governance capacity and audit functions respectively. Other variables have the same meanings as previously mentioned.

Measure of the Variables

Dependent Variable

This article’s dependent variable is the equalization level of basic public services, focusing on the three most essential fields of basic education, healthcare, and social security. Drawing on the research methods of Qiao and Chen (2019) and considering the availability of municipal data, a total of 10 secondary indicators, such as Teacher-student ratio in primary school, were chosen to develop an indicator system for equalization of basic public services (see Table 1). At the same time, referring to previous studies (Xiong et al., 2018; M. Zhang & Zhang, 2023), the entropy weight method is a way to determine the weights of indicators by using the information provided by the entropy value of the indicators. The principle it follows is that the smaller the degree of variation of the indicator, the less information the indicator reflects, and the lower weight the indicator should be assigned. Therefore, the entropy weight method is further used to empower the index system of equalization of basic public services.

Table 1.

The Evaluation Index System for Equalization of Basic Public Services.

Secondary indicators	Tertiary indicators	Attribute	Weight
Basic education	Teacher-student ratio in primary school	Positive	.093
	Teacher-student ratio in secondary school	Positive	.093
	Number of primary schools per 10,000 persons	Positive	.099
	Number of secondary schools per 10,000 persons	Positive	.122
Healthcare	Number of medical institutions per 10,000 persons	Positive	.124
	Number of physicians per 10,000 persons	Positive	.090
	Number of beds in medical institutions per 10,000 persons	Positive	.091
Social security	Pension insurance coverage	Positive	.085
	Medical insurance coverage	Positive	.086
	Unemployment insurance coverage	Positive	.117

Independent Variable

This article’s independent variable is local government governance capacity. However, there is limited systematic research on the governance capacity of local governments in the academic community, and a unified standard has not yet been established. Combining the connotation and attributes of governmental governance capacity, referring to existing measurement studies on governmental governance capacity (H. Chen, 2023; J. Li et al., 2020; Liu, Chu, Jiang, 2021), we construct a local government governance capacity measurement index system with 14 indicators in 3 dimensions, namely, collaborative governance capacity, resource governance capacity and tool governance capacity (see Table 2). Collaborative governance capacity is defined as the government’s ability to establish cross-departmental, interregional, and multi-stakeholder collaborative networks, encompassing three key dimensions: interagency coordination, government-business cooperation, and government-society interaction. In the Yangtze River Delta context, this capacity manifests specifically through cross-jurisdictional coordination, digital collaboration, and market-based cooperation. It is measured through five indicators across three components: government performance, private sector participation, and civil society engagement, collectively assessing the government’s role in leading and facilitating collaborative governance. Resource governance capacity refers to the government’s capability to dynamically allocate fiscal, human, and data resources, with particular emphasis on resource transformation efficiency. Within the Yangtze River Delta region, this capacity is operationalized through six indicators measuring two critical dimensions: local officials’ competency and fiscal management capability, which collectively evaluate the government’s effectiveness in coordinating and deploying governance resources. Instrumental governance capacity represents the government’s innovative application of both institutional and digital tools, focusing on the precision of policy instrument adaptation. The Yangtze River Delta’s innovative practices in this domain include institutional innovations and digital governance tools. This capacity is assessed through two primary dimensions: legal system development and digital government construction, which measure the government’s ability to innovate and effectively utilize governance instruments. This article calculates the local government governance capacity adopting the entropy weight method.

Table 2.

The Evaluation Index System for Government Governance Capacity.

Secondary indicators	Tertiary indicators	Indicator content	Attribute	Weight
Collaborative governance capacity	Government performance	Relative size of government	Positive	.065
	Government performance	Administrative efficiency	Negative	.052
	Social organization participation	Number of employees in social organizations	Positive	.077
	Enterprise participation	Number of industrial enterprises	Positive	.057
	Enterprise participation	Number of foreign-invested enterprises	Positive	.081
Resource governance capacity	Quality of cadres	Mayors’ years of education	Positive	.125
	Quality of cadres	Mayors’ professional match	Positive	.068
	Fiscal regulation	Fiscal revenue capacity	Positive	.08
		Fiscal expenditure capacity	Positive	.091
		Fiscal revenue growth capacity	Positive	.053
		Fiscal balance capacity	Negative	.048
Tool governance capacity	Rule of law construction	Degree of anti-corruption	Negative	.058
	Rule of law construction	Number of new local regulations and normative documents	Positive	.081
	Level of digital government	Political microblogging influence	Positive	.064

Moderator Variable

We draw on the research of Jiang and Wang (2023) to measure audit supervision from the functions of audit revealing and rectifying. Among them, the revealing function of the audit is represented by the logarithmic value of the number of major issues discovered during the audit. The larger value means the greater strength of the problem revealed by the audit. The logarithmic value of the amount of the penalties dealt with by the audit is used to express the audit rectification. The larger value means the more corrective role of the audit.

Control Variable

This article selects the following indicators as control variables to control the impact of other variables on the equalization of basic public services: (1) Economic development level, which is determined as per capital GDP; (2) Population density, which is expressed as the number of people per square km; (3) Industrial structure, which is determined as the ratio of the tertiary industry’s output value to the GDP; (4) Regional openness level, which is measured by the ratio of the total amount of imports and exports to the GDP.

this paper selects the following indicators as control variables to control the impact of other variables on the equalization of basic public services:(1) Economic development level, measured by GDP per capita. Rodríguez-Pose and Ezcurra (2010) empirically demonstrated a significant positive correlation between regional economic development levels and public service provision quality. The logarithmic transformation better captures this nonlinear relationship, a methodological approach validated by Chernick (2020) in public service research. (2)Population density, measured as population per square km. Albouy’s (2012) analysis established an association between population density and per capita public service costs, with measurement methods referencing Boarnet’s (2011) spatial econometric approach. (3) Industrial structure, measured as the proportion of tertiary sector output in GDP. Variable selection draws on Feld’s and Schnellenbach (2017) cross-national study which found that higher service sector shares correlate with increased local government welfare expenditures. (4) Regional openness, measured as the ratio of total import-export volume to GDP. Following Keen’s and Mansour (2013) findings, a one standard deviation increase in trade dependence leads to a strategic 3.8% adjustment in local government fiscal expenditure structures.

Data Sources and Descriptive Statistics of Variables

The relevant statistical indicators involved in this article cover 16 core cities in the YRD from 2011 to 2021. The China Urban Statistical Yearbook, the Statistical Yearbook of the YRD region, the China Audit Yearbook, government websites, court bulletins, and the influence reports of government microblogs in cities across the country released by the People’s Daily Online Public Opinion Data Center are the primary sources of the data. To reduce sample fluctuations and reduce regression results bias, natural logarithms were used for the control and moderating variables. The descriptive statistical results of the variables are obtained based on the above variable settings (see Table 3).

Table 3.

Descriptive Statistics of Variables.

Variables	Obs.	Mean	SD	Min.	Max.
Equalization of basic public services	176	.413	.091	.133	.645
Government governance capacity	176	.411	.085	.215	.699
Collaborative governance capacity	176	.328	.105	.117	.811
Resource governance capacity	176	.434	.128	.071	.871
Tool governance capacity	176	.418	.159	.011	.865
Audit revelation	176	14.166	1.867	8.266	17.248
Audit rectification	176	12.650	1.540	8.491	15.768
Economic development level	176	2.525	.428	1.561	3.395
Population density	176	6.861	.471	6.211	8.275
Industrial structure	176	−.719	.147	−.967	−.309
Regional openness level	176	−.808	.612	−2.007	.600

Results

Baseline Regression Analysis

The sys-GMM model is reasonable. The estimation results show that: First, through the autocorrelation test of disturbance terms, it is proven that there is no serial correlation of the in the disturbance terms. The p-values of AR (1) are all less than .1, and the p-values of AR (2) are all greater than .1, indicating the existence of first-order autocorrelation but no second-order autocorrelation in the difference of disturbance terms. Second, the instrumental variables are proved to be valid through the over-identification test of instrumental variables. The p-values of Hansen’s test are all greater than .1, making it difficult to reject the null hypothesis that all instruments are effective, hence indicating the rational and effective selection of instruments. Third, the lagged terms of equalization levels of basic public services pass the test at a significance level, indicating the rationality of using the lagged one-period equalization level of basic public services as an explanatory variable.

From the regression results in Table 4, the equalization level of basic public services in the lagged period has passed the positive significance test at the 1% level. This indicates that the equalization of basic public services in the previous period positively affect the equalization level of this period, and enhancing equalization of basic public services is a continuous accumulation process. According to the estimation results of model (1), the regression coefficient of local government governance capacity is .23, which is significant at the 1% level, showing that government governance capacity has a considerable positive impact on equalization level of basic public services. H1 is the validated research hypothesis. Additionally, in terms of control variables, the level of economic development and the level of regional openness play a significant role in promoting the equalization of basic public services.

Table 4.

Overall and Sub-Dimensional Effects of Government Governance Capacity on the Equalization of Basic Public Services.

	The dependent variable: Equalization of basic public services
Dimensional variable	(1)	(2)	(3)	(4)
First-lagged equalization of basic public services	.567*** (.111)	.668*** (.147)	.383*** (.129)	.673*** (.106)
Government governance capacity	.230*** (.083)
Collaborative governance capacity		.069 (.170)
Resource governance capacity			.252*** (.053)
Tool governance capacity				.095*** (.035)
Economic development level	.063*** (.021)	.005 (.028)	.094** (.039)	.074** (.035)
Population density	.011 (.058)	−.020 (.047)	−.009 (.049)	.083 (.052)
Industrial structure	−.107 (.080)	.083 (.090)	−.090 (.124)	−.288* (.161)
Regional openness level	.042*** (.016)	.028 (.021)	.041* (.024)	−.023 (.028)
Constant	−.180 (.384)	.336 (.317)	−.053 (.400)	−.881 (.553)
Observations	160	160	160	160
AR (1)	.003	.007	.008	.001
AR (2)	.968	.763	.855	.852
Hansen test	.948	.899	.996	.978

Note. Robust standard errors are given in parentheses. Numbers in the lines of AR (1) and AR (2) are p-values.

, **, *** denotes a significance level of 10%, 5%, and 5%, respectively.

Sub-Dimensional Heterogeneity Analysis

As shown in Table 4 (2–4), this study further explores the heterogeneous effect of various dimensions of local government governance capacity on the equalization of basic public services. The regression coefficients of resource governance capacity and tool governance capacity of local governments are .252 and .095, respectively, both significantly positive at the 1% level, indicating that both resource governance capacity and tool governance capacity can significantly enhance the equalization level of basic public services. Research hypotheses H1b and H1c are confirmed.

However, Table 4 (2) shows that the regression coefficient of collaborative governance capacity is .069, but it did not pass the significance test. This indicates that collaborative governance capacity has a certain positive impact on the equal supply of basic public services, but the effect is not significant.

Robustness Tests

To ensure the robustness of the regression results, this study employed the following methods to test the robustness of the baseline model: (1) Trimming. In order to eliminate the influence of extreme values on the estimation results, a trimming process was applied to the top and bottom 1% of all variables before reevaluation. (2) Re-measurement of the dependent variables. To avoid the from a single measurement method, principal component analysis was used instead of entropy weight method to reevaluate the equalization of basic public services before regression analysis. (3) Shortening the sample period. Since the concept of government governance capacity was officially proposed in 2013, the sample period was adjusted to 2013 to 2021 for re-estimation. The regression results, as shown in Table 5, indicate that the regression coefficients and significance levels of the lagged equalization level of basic public services and government governance capacity remain highly consistent with the baseline regression results, demonstrating good robustness of the research conclusions.

Table 5.

Estimation Results of Robustness Tests.

	(1)	(2)	(3)
Variable	Winsorization	Dependent variable remeasurement	Shorten sample period
First-lagged equalization of basic public services	.523*** (.151)	.669*** (.153)	.974*** (.110)
Government governance capacity	.195** (.091)	.597** (.273)	.220*** (.063)
Economic development level	.117* (.068)	.335** (.150)	−.018 (.030)
Population density	.013 (.109)	−.385** (.188)	−.128*** (.026)
Industrial structure	−.111 (.214)	.565 (.429)	.407*** (.116)
Regional openness level	.057* (.034)	.005 (.079)	−.004 (.024)
Constant	−.641 (1.046)	2.503* (1.479)	1.129*** (.259)
Observations	160	160	128
AR (1)	.003	.005	.008
AR (2)	.956	.974	.859
Hansen test	.950	.811	.928

Note. Robust standard errors are given in parentheses. Numbers in the lines of AR (1) and AR (2) are p-values.

, **, *** denotes a significance level of 10%, 5%, and 5%, respectively.

Analysis of Moderating Effects

Introducing the interaction term between government governance capacity and auditing, this study analyses the function of auditing in the relationship between government governance capacity and the equalization level of basic public services. Table 6 shows the regression results. The first-lagged equalization level of basic public services, the government governance capacity and its resource governance capacity and tool governance capacity dimensions passed the significance test, and the theoretical analysis and research hypotheses of the previous section were once again verified.

Table 6.

Moderating Effects of Audit Supervision.

	The dependent variable: Equalization of basic public services
Variable	(1)	(2)	(3)	(4)	(5)	(6)	(7)	(8)
First-lagged equalization of basic public services	.625*** (.098)	.580*** (.121)	.358* (.205)	.399*** (.146)	.389*** (.146)	.867*** (.191)	.631*** (.103)	.496*** (.125)
Government governance capacity	.256*** (.095)				.222** (.104)
Collaborative governance capacity		−.005 (.006)				.077 (.256)
Resource governance capacity			.202* (.113)				.161** (.078)
Tool governance capacity				.094* (.054)				.131*** (.036)
Audit revelation	−.004 (.003)	.028 (.123)	.002 (.003)	.007 (.008)
Government governance capacity × audit revelation	.084** (.040)
Collaborative governance capacity × audit revelation		.040 (.049)
Resource governance capacity × audit revelation			.099** (.048)
Tool governance capacity × audit revelation				.149** (.059)
Audit rectification					.006 (.005)	.013*** (.005)	−.006 (.008)	.007 (.005)
Government governance capacity × audit rectification					.244*** (.053)
Collaborative governance capacity × audit rectification						.194*** (.060)
Resource governance capacity × audit rectification							.099*** (.035)
Tool governance capacity × audit rectification								.121*** (.027)
Control variable	Control	Control	Control	Control	Control	Control	Control	Control
Observations	160	160	160	160	160	160	160	160
AR (1)	.001	.006	.057	.005	.012	.012	.008	.009
AR (2)	.863	.690	.983	.302	.650	.204	.762	.459
Hansen test	.935	.841	.925	.907	.988	.852	.985	.993

Note. Robust standard errors are given in parentheses. Numbers in the lines of AR (1) and AR (2) are p-values.

, **, *** denotes a significance level of 10%, 5%, and 5%, respectively.

The estimated moderating effects of the audit revealing function of model (2) are manifested in columns (1–4) in Table 6. The regression coefficient between government governance capacity and audit interaction is .084, which is significant at the 5% level. The interaction coefficients between resource governance capacity, tool governance capacity, and audit were .099 and .149, respectively, all passing the significance test, whereas the interaction coefficients for collaborative governance capacity and audit did not.

Columns (5–8) in Table 6 show the estimation of the moderating effect of the audit rectification function of model (2). The interaction term between government governance capacity and audit has a regression coefficient of .244, and it is significant at the 1% level. All the interaction terms of collaborative governance capacity, resource governance capacity, and tool governance capacity with audit pass the significance test at the 1% level with coefficients of .194, .099, and .121, respectively.

Discussion and Conclusions

Discussion

China has conducted extensive research on the equalization of basic public services. However, few studies have systematically examined the impact of multidimensional local government governance capacity and audit supervision on the level of basic public service equalization. In order to solve the problems mentioned in the introduction, this article links local government governance capacity, audit supervision and equalization of basic public services, takes the level of equalization of basic public services as the main research variable, proposes a theoretical model influencing its generation. And through detailed empirical analysis, the impact effects of different dimensions of local government governance capacity and the moderating effects of audit supervision are verified, enriching the current research on the equalization of basic public services.

Firstly, government governance capacity has a significant effect on the level of basic public service equalization, which confirms Hypothesis 1. Government governance capacity positively affects the equalization of basic public services. Government governance capacity is an important means of enhancing the level of public service supply in regions, consistent with existing research conclusions (Y. Li & Teng, 2021). There is a positive correlation between the two, which confirms the conclusion that the decline in government governance capacity will significantly decrease the quality of public service supply (Krueger, 1974). This conclusion also precisely indicates that local governments gradually focus on the construction of governance capacity in basic public service equalization, appropriately adjusting the inadequacy of the implementation of public service supply policies, and promoting the equalization of regional public service supply, which is conducive to the realization of basic public service equalization. The existing research on the evaluation of the level of equalization of basic public services has focused on the role of local government governance. This study contributes by examining the significant impact of local government governance capabilities on the equalization of basic public services. At the same time, the level of equalization of basic public services is the result of the comprehensive interaction of various factors, and this study also reveals the significant role of the level of economic development and regional openness as control variables. Based on the research findings (Ningrum et al., 2023), local governments will decide the participation of target activities according to their own governance capacity, development level, and interpretation of the target. The current development bottleneck faced by the equalization of basic public services in the YRD region is largely due to the deviation in local government governance capabilities, which still remain at a relatively low level overall. This leads to the uneven allocation of public service resources, with high-quality public service resources often concentrated in core cities (X. J. Zhang & Wang, 2024). Therefore, there is a need to prioritize the enhancement of local government governance capabilities. By focusing on improving local government governance capabilities and strengthening intergovernmental cooperative governance mechanisms in the YRD region, the realization of government governance goals can be promoted. This is an important channel to enhance the level of public service provision and achieve regional equalization of basic public services.

Secondly, the governance capacity of local governments in terms of resources and tools plays a significant role in enhancing the equalization level of basic public services. However, collaborative governance capacity has a certain positive effect on the equalization of basic public services, but it is not significant. This suggests that enhancing resource governance capacity and tool governance capacity is conducive to improving the level of basic public service equalization, and the empirical analysis confirms H1b and H1c. One of the important reasons for the imbalance of basic public services is that the government does not have sufficient knowledge of the public service needs of the region, which leads to the mismatch of public resources and waste of resources in the region (Ren & Ma, 2023), while J. Zhang and Li (2023) found that the digital construction of government can improve the equalization of basic public services by optimizing the allocation of public resources. With the comprehensive promotion of the rule of law and digital construction of local governments, the ability of local governments to innovate and use governance tools is increasing, leading to improved coordination and allocation efficiency of resources. As a result, the government can more effectively identify and respond to citizens’ demand for basic public services and improve the equitable provision of these public services. Meanwhile, we find that collaborative governance capacity is not significant in this study, which is inconsistent with hypothesis H1a. The reason may be that the concept and mechanism of collaborative governance in which the local government absorbs the participation of other subjects in the region is not sound enough, and the functions of market and social subjects have not been fully realized (Tang et al., 2021). Therefore, collaborative governance capacity remains at a relatively low level, which partially hinders its role in promoting the supply of basic public services. This finding not only examines the impact of local government governance capabilities in different dimensions on the equalization of basic public services but also reveals that collaborative governance capabilities are a weak link in the development of public service governance by local governments in the YRD region, enriching the research results related to government governance capabilities.

Finally, audit supervision plays a moderating role in the impact of local government governance capacity on the equalization of basic public services. This suggests that in areas with higher audit quality, the greater the impact of government governance capacity on the level of equalization of basic public services. The reason is that effective audit supervision creates favorable conditions for government departments to provide high-quality supply of governance capacity. On the one hand, in regions with improved audit supervision, the governance efficiency of local governments is higher, meaning that government departments can provide more governance output under constant input conditions (Xie & Han, 2016); on the other hand, the diversification of supervision means of the auditing authority improves the efficiency of government departments in using public resources, curbing corrupt behaviors (Saito & Mcintosh, 2010). The improvement in governance capacity effectively ensures that the government participates in the construction of equalized basic public services with high-quality governance capacity. The revealing function of audits plays a significant positive regulatory role between government governance capacity and the equalization of basic public services, indicating that the greater the disclosure of irregular and illegal activities of public power by audit authorities, the more pronounced the enhancement of local government governance capacity. The above empirical results are consistent with the empirical test results of Y. H. Wang and Wang (2017). However, further examination of the interaction between different dimensions of government governance capacity and audit revealing function on the equalization of basic public services reveals that the interaction between collaborative governance capacity and audit is not significant. The reason for this lies in the current stage where only government units responsible for public service projects are included in the audit scope, while comprehensive and in-depth audit work has not been carried out on entities such as enterprises and social organizations involved in the projects (Lu, 2022). Therefore, the role of the audit to reveal the government’s illegal and irregular behavior fails to have a significant effect on other subjects, and collaborative governance capacity has not been significantly enhanced. The corrective function of audits also has a significant positive adjustment effect between government governance capacity and equalization of basic public services. The interaction between different dimensions of government governance capacity and the corrective function of audits also has a positive and significant impact on the equalization of basic public services. This indicates that the more fully the audit corrective function is exerted, the greater the promotional effect of local government governance capacity on the level of equalization of basic public services. Therefore, in order to achieve the equalization of basic public services, audit authorities should reveal, handle punishments, and improve mechanisms by identifying and rectifying the weaknesses and pain points in government governance in promoting the equalization of basic public services, propose rectification suggestions according to the requirements of the development of the equalization of basic public services, supervise the implementation of various policies and measures of basic public services to improve the resource allocation efficiency of government governance capacity in the supply of basic public services, thereby effectively promoting the equalization level of basic public services.

Conclusions and Policy Implications

This article applies the entropy weight method to measure the local government governance capacity and the equalization of basic public services using the panel data of core cities in the YRD from 2011 to 2021. We incorporate government governance capacity, audit supervision, and the equalization of basic public services into a unified analytical framework, and empirically research by using the sys-GMM of the dynamic panel model to reach the following conclusions. ① The equalization level of basic public services is positively affected by local government governance capacity, and this conclusion is robust. ② The driving influence of government governance capacity on the equalization of basic public services is multidimensional heterogeneity. Resource governance capacity and tool governance capacity have significantly influence on the level of basic public services, whereas the impact of collaborative governance capacity is not yet significant. ③ The full utilization of audit revelation and rectification functions can effectively enhance the promoting effect of government governance capacity on the equalization of basic public services. However, the audit revelation fails to played an obvious supporting role in the government’s collaborative governance capacity. This study, rooted in the Chinese context, has made beneficial explorations on the prerequisites for achieving equalization of basic public services. Its findings have an important reference value for cracking the current realistic dilemma of the equalization of basic public services in the YRD region as well as for promoting the integration of regional development. On one hand, delving deeply into the government’s comprehensive governance capacity and the role of governance capacity in various dimensions on the equalization level of basic public services has enlightening significance for local governments to strengthen the governance effectiveness of basic public services, achieve efficient utilization of financial and public service resources, enhance the efficiency of basic public service supply, and promote the equal development of basic public services in the YRD region; on the other hand, investigating the interaction between audit supervision and local government governance capacity on the equalization of basic public services, understanding the utility of audit supervision by local governments, further integrating audit supervision with government governance capacity and public services, and effectively enhancing the construction of audit services for government governance capacity and the equalization of basic public services are of important reference value. Therefore, in order to promote the modernization of the governance of local governments and to realize the development of the equalization of basic public services in the YRD region, this study proposes the following policy recommendations:

Effectively leveraging the local government governance capacity to promote the equalization of basic public services. It is imperative to emphasize the irreplaceable advantages of local governments in expanding the basic public services supply and safeguarding the public well-being, deepen public service reform, endow governments at all levels with reasonably equal rights and responsibilities for providing public service, effectively enhance the enthusiasm and initiative of governance, and ensure the high efficiency of providing basic public service. Meanwhile, the government need to establish inter-governmental and inter-departmental cooperative relationships and trust mechanisms, form government governance synergy, and bring into play the scale effect and regional synergy of public service provision.

Continuously strive to enhance the resource governance and tool governance capacities of local governments. Empirical researches show that the development of basic public services is significantly affected by resource governance capacity and tool governance capacity. On the one hand, matching resources and action capabilities based on the governance content undertaken by local governments can avoid wasting limited administrative resources, improve resource utilization efficiency, and ultimately improve governance effectiveness. On the other hand, it is important to innovate the use of government governance tools to encourage the intelligent provision of basic public services. This includes making full use of digital technology for data analysis to enhance the scientific and forward-looking nature of government governance decision-making, and improving the institutional mechanism for basic public services supply, to enhance the precision and standardization of the provision.

Build a government-centered platform for multi-dimensional collaborative governance. At present, the local governments in the YRD lack the collaborative governance capacity, making it difficult to exert the promoting effect on basic public services. As a result, the government, as the main part of meta governance, while promoting its own transformation and fully unleashing its governance functions, should foster an environment that is favorable to the role of market, society and other entities, delegate part of the public governance power to them, and provide them with a good institutional foundation and legal guarantee, fully stimulate the vitality and creativity of diverse social entities. Grassroots cadres should enhance public identification through moral exemplification and shared vision building (Zhang, Shi et al., 2023), which serves as a crucial foundation for mobilizing multiple stakeholders to participate in collaborative public service provision. The cooperative supply network of local basic public services will achieve coordinated operation through building an effective governance community and promoting the integration and advancement of multiple subjects.

Effectively leverage the governance function of audit supervision to ensure an equal supply of basic public services. An authoritative and efficient audit supervision system should be established, increase audit efforts on using public resources and implementing public policies, strengthen audit disclosure and correction functions, to enhance the quality and efficiency of government governance, and guarantee the legitimate and efficient operation of basic public service supply system mechanisms. In addition, in the context of multiple actors jointly participating in public affairs governance, the scope of audit review objects in the actual implementation process should be expanded, including enterprises, social organizations, and other entities responsible for public projects. Thereby continuously enhancing the capacity of audit to discover, analyze problems, and correct behavioral deviations, and better playing the supervisory and control role in the entire process of public project implementation.

Limitations

This study still has several limitations that warrant further investigation, and these limitations also point to promising directions for future research. First, regarding theoretical construction, although this study systematically examines the three-dimensional structure of local government governance capacity, the current measurement framework still requires refinement due to the inherently multidimensional and dynamic nature of this concept. For instance, deeper governance elements such as interdepartmental coordination efficiency and government-society interaction quality have not been fully captured, which may to some extent affect the precision of our research findings. Second, in terms of mechanism analysis, constrained by the availability of municipal-level audit data, our examination of audit supervision’s moderating effects primarily focuses on explicit dimensions such as audit penalty amounts, while insufficient attention has been paid to implicit mechanisms like how audits facilitate interagency collaboration and optimize governance processes. Notably, the current data cannot adequately reflect the time-lag effects between audit result implementation and governance capacity improvement—a measurement gap that may lead to biased understanding of audit governance effectiveness. Furthermore, in research design, while the panel data model employed in this study can capture overall relationships between variables, it only partially identifies the dynamic interplay between local government capacity building and audit supervision system evolution. Under the ongoing audit management system reforms in the new era, this interaction may demonstrate new phase-specific characteristics that require verification through longer-term time-series data or case-tracking studies.

These limitations suggest at least three directions for future research: (1) developing more robust governance capacity measurement tools, particularly by incorporating qualitative indicators of government behavioral processes; (2) constructing an integrated analytical framework for audit supervision and governance to strengthen empirical examination of the “closed-loop management” effects in audit rectification; and (3) employing mixed-methods research to achieve a more comprehensive understanding of governance capacity improvement mechanisms through triangulation of quantitative and qualitative analyses.

Footnotes

ORCID iDs

Shirui Dong

Yaying Xu

Funding

The authors disclosed receipt of the following financial support for the research, authorship, and/or publication of this article: This research was supported by the National Social Science Foundation of China (No.24AGL008).

Declaration of Conflicting Interests

The authors declared no potential conflicts of interest with respect to the research, authorship, and/or publication of this article.

Notes

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