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Fiscal Decentralization (fiscal + decentralization)

Distribution by Scientific Domains

Business, Economics, Finance and Accounting	63%
Humanities and Social Sciences	36%

Selected Abstracts

FISCAL DECENTRALIZATION AND THE BUSINESS CYCLE: AN EMPIRICAL STUDY OF SEVEN FEDERATIONS

ECONOMICS & POLITICS, Issue 1 2010
JONATHAN RODDEN
Although fiscal policies of central governments sometimes provide modest insurance against regional income shocks, this paper shows that procyclical fiscal policy among provincial governments can easily overwhelm these stabilizing effects. We examine the cyclicality of budget items among provincial governments in seven federations, showing that own-source taxes are generally highly procyclical, and contrary to common wisdom, revenue sharing and discretionary transfers are either acyclical or procyclical. Constituent governments are thus left alone to smooth their own shocks, and we document the extent to which various restraints on borrowing and saving undermine their ability to do so. The resulting procyclicality of provincial fiscal policy is likely to have important implications in a world where demands for countercyclical fiscal policy are increasing but considerable fiscal responsibilities are being devolved to subnational governments. [source]

THE ECONOMICS OF FISCAL DECENTRALIZATION

JOURNAL OF ECONOMIC SURVEYS, Issue 4 2010
Duc Hong Vo
Abstract There is no complete overview or discussion of the literature of the economics of federalism and fiscal decentralization, even though scholarly interest in the topic has been increasing significantly over recent years. This paper provides a general, brief but comprehensive overview of the main insights from the literature on fiscal federalism and decentralization. In doing so, literature on fiscal federalism and decentralization is grouped into two main approaches: ,first generation approach' and ,an emerging second generation approach'. The discussion generally covers the two notions of fiscal decentralization: ,fiscal autonomy' and ,fiscal importance' of subnational governments as the background of the most recently developed index of fiscal decentralization in Vo. The relevance of this discussion to any further development of a fiscal decentralization index is briefly noted. [source]

Fiscal Decentralization and Provincial-Level Fiscal Disparities in China: A Sino-U.S. Comparative Perspective

PUBLIC ADMINISTRATION REVIEW, Issue 2009
Zhirong Jerry Zhao
Since China's 1994 fiscal reform, increasing concerns have been voiced about fiscal disparities across the country. Can local governments fairly and effectively fulfill basic public services such as primary education, public health, and social welfare? This essay traces the evolution of intergovernmental relations in China since 1978. The fluctuation of provincial level fiscal distribution over time and the underlying factors behind fiscal inequality, as compared to a decentralized American revenue system, are analyzed. The author, Zhirong Jerry Zhao of the University of Minnesota, argues for additional research on alternative measures of local fiscal capacity. [source]

Fiscal Decentralization and Economic Growth: Evidence from Spanish Regions

PUBLIC BUDGETING AND FINANCE, Issue 4 2009
DAVID CANTARERO
The degree of fiscal decentralization in Spain is similar to main federal countries and greater than unitary ones. The demand of public sector decentralization is based on a supposed efficiency gains that is far from being obvious. Using a data set for the Spanish regions, we reject the null hypothesis of a significant relationship between growth in per capita gross domestic product (GDP) and expenditure distribution among fiscal administrations. Nonetheless, we find empirical support for a relationship between revenue decentralization, far less advanced than the expenditure one, and growth. In both cases we do reject the null hypothesis of a nonlinear linkage between fiscal decentralization and growth in per capita GDP. [source]

Financing Decentralized Development in a Low-Income Country: Raising Revenue for Local Government in Uganda

DEVELOPMENT AND CHANGE, Issue 1 2001
Ian Livingstone
Uganda has been engaged for a number of years in an ambitious programme of political and financial decentralization involving significantly expanded expenditure and service delivery responsibilities for local governments in what are now forty-five districts. Fiscal decentralization has involved allocation of block grants from the centre to complement increased local tax revenue-raising efforts by districts and municipalities. This article is concerned with the financial side of decentralization and in particular with an examination of district government efforts to raise revenue with the tax instruments which have been assigned to them. These are found to be deficient in a number of ways and their tax raising potential not to be commensurate with the responsibilities being devolved. Achievement of the decentralization aims laid down, therefore, must depend either on the identification of new or modified methods of raising revenue locally, or increased commitment to transfer of financial resources from the centre, or both. [source]

Foreign direct investment and the dark side of decentralization

ECONOMIC POLICY, Issue 49 2007
Sebastian G. Kessing
SUMMARY Fiscal decentralization VERTICAL, HORIZONTAL, AND FDI Both in the developed and developing world, decentralization of fiscal policy is frequently argued to foster investment, because allowing investors to choose between competing locations should make it difficult for each jurisdiction to tax the investment's returns. We point out that this ,horizontal' dimension of decentralization cannot eliminate ex post incentives to tax investments once they are irreversibly located in a jurisdiction, and that the negative ex ante investment effects of such ,hold up' problems are actually stronger when decentralization inevitably leads to multiple levels of taxation power in each location. Empirically, we detect significant negative effects on FDI of the ,vertical' dimension of decentralization, measured by the number of government layers, in a data set containing many countries and many suitable control variables. Indicators of overall fiscal decentralization do not appear to affect the investment climate negatively per se, but our theoretical arguments and empirical results suggest that policymakers should consider very carefully the form and degree of government decentralization if they aim at improving the investment climate. , Sebastian G. Kessing, Kai A. Konrad and Christos Kotsogiannis [source]

Policy Legitimacy and Institutional Design: Comparative Lessons for theEuropean Union

JCMS: JOURNAL OF COMMON MARKET STUDIES, Issue 1 2000
David McKay
Research on the democratic deficit in the European Union (EU) tends to focus on general questions of institutional design rather than the link between institutions and specific policy responsibilities. This article argues that, following EMU, a high degree of fiscal centralization is not tenable given theabsence of EU-wide citizen support for a greatly enhanced central role and European political parties operating in a genuine European legislature. Given this, it is appropriate to examine fiscal relations in existing federations to discover which, if any, approximates to the likely post-EMU pattern in the EU. The experience of five federations , Australia, Canada the US, Germany and Switzerland suggests that most can be learnt from the Swiss model which is characterized by a high degree of vertical fiscal autonomy, and state (cantonal) interpenetration of national decision-making. The article concludes that, while Switzerland cannot serve as a model for the EU, the Swiss experience does show that a modern industrial state can successfully operate in the context of a high degree of fiscal decentralization. [source]

THE ECONOMICS OF FISCAL DECENTRALIZATION

The decentralization of primary health care delivery in Chile

PUBLIC ADMINISTRATION & DEVELOPMENT, Issue 3 2001
Article first published online: 30 MAY 200, Jasmine Gideon
The article argues that during the 1980s the process of decentralization in Chile under the military government of General Pinochet shifted the delivery of primary health care to the municipal level. Despite the return to more democratic forms of government in 1990 the overall structure of local-level service delivery has remained largely unchanged. The municipalities have retained responsibility for service delivery but resources remain centrally determined. In an attempt to enhance accessibility, choice and the responsiveness of the system to individual and local need, reform has been made to the financial transfer mechanisms and a new model of primary health care delivery has recently been introduced. However, problems of resourcing and implementation limit the effectiveness of some of the changes that have accompanied decentralization. Problems have resulted in primary health care delivery because administrative decentralization has not been accompanied by fiscal decentralization, nor effective political decentralization. Copyright © 2001 John Wiley & Sons, Ltd. [source]

Fiscal Decentralization and Economic Growth: Evidence from Spanish Regions

China's Local Political Budget Cycles

AMERICAN JOURNAL OF POLITICAL SCIENCE, Issue 3 2009
Gang Guo
This article examines the political budget cycles in Chinese counties. The shift to a more performance-based cadre evaluation and mobility system during the reform era has created an incentive structure for local leaders to increase government spending at strategically important time points during their tenure to enhance the prospect of official promotion. Such expenditures help local leaders to impress their superiors with economic and political achievements, especially those visible and quantifiable large-scale development projects. At the same time, economic and fiscal decentralization increased the capacity of local leaders to influence government budget expenditures as the need rises. The hypothesized curvilinear relationship between a leader's time in office and increased spending was tested using a comprehensive data set of all Chinese counties from 1997 through 2002. The panel data analysis shows that growth in local government spending per capita is the fastest during a leader's third and fourth years in office. [source]