Sustainability free fulltext fiscal decentralization. Fiscal decentralization and poverty in south africa. Ebel and others published concept of fiscal decentralization and worldwide overview. On the theory and practice of fiscal decentralization. Evidence from oecd countries abstract this paper attempts to identify the effect of fiscal decentralization on public sector efficiency pse. Fiscal decentralization in a for the asia foundation. Decentralization or decentralisation see spelling differences is the process by which the activities of an organization, particularly those regarding planning and decision making, are distributed or delegated away from a central, authoritative location or group. Decentralization is a complex and multifaceted concept that spans fiscal, political, and administrative dimensions. Concept of fiscal decentralization and worldwide overview english abstract.
Here, i examine causes of the decision to increase the fiscal power of subnational governments in latin america. To guarantee a minimum level of public service and basic needs or standard of living for the entire population regardless of their geographical location, the central government often. The oecd fiscal decentralisation database provides comparative information on the following indicators analysed by level of government sector federal or central, including social security, stateregional and local, for oecd member countries between 1965 and 2018. Pdf managing fiscal decentralization download full pdf. Definition of fiscal decentralization fiscal decentralisation is a transfer of responsibility for fiscal policies from the national level to the region, subregion, or local levels it should be assessed according to the degree of autonomy in designing, delivering and financing spending programs deconcentration, delegation, devolution. First, there is a generation gap to switch form manual to electronic. This comes after a halfcentury of fiscal centralization in most. This paper contributes to the existing literature on the determinants of fiscal decentralization by motivating theoretically and exploring in depth the empirical relevance that geography has as. This can be illustrated by considering the use of a head tax. Much of the recent worldwide trend towards devolution has been driven by the belief that fiscal decentralization is likely to have a positive effect on government efficiency and economic growth. In terms of decentralization as a process of change, and according to the level of transfer of responsibilities, it is useful to distinguish between deconcentration, delegation and devolution. One important factor in determining the type of fiscal decentralization is the extent to which subnational entities are given autonomy to determine the allocation of their expenditures. While measuring decentralization is equally complex, the fiscal flows to, from and among different levels of government can be used assess some aspects of fiscal decentralization. First, economic growth is often cited as a major objective of fiscal decentralization bahl and linn 1, bird and wallich 4, oates.
The research utilizes a panel data model and a system generalized method of moments gmm estimator to assess the degree of fiscal decentralization on corruption in 19. Studies of fiscal decentralization in many countries, some of size similar to mexico. This often leads to difficulty in maintaining fiscal discipline. Autonomous regions may be free of any vertical constraint. The views expressed in this publication are those of the authors and do not necessarily reflect the views and policies. Until now, however, there has been little understanding of how decentralization leads to large fiscal deficits and macroeconomic instability. Political, administrative, fiscal and market decentralization can also appear in different forms and combinations across countries, within countries and even within sectors.
Fiscal decentralization and land policies presents the main contributions to a lincoln institute conference that addressed the effects of decentralization on local policies. The pursuit of decentralization is widespread, as both developed and developing countries attempt to challenge central governments. James edwin kee, professor of public policy and public administration the george washington university abstract the last decade has seen a renewed interest in the concept of fiscal decentralization or fiscal federalism. In this way, we obtained a result for the analyzed countries european union member states in the form of determinable levels of fiscal decentralization, whereby cifds indicators alone point to higher or lower levels of fiscal decentralization system compliance with the selected fundamental principles of the eclsg. Decentralization is a concept that is not easy to define, and perhaps even harder to measure treisman, 2002. Fiscal decentralization is the devolution by the central government to local governments. Fiscal decentralization promoted development mostly in communities which transited out from elite capture to embrace free and fair elections.
Pdf determinants of fiscal decentralizationthe recent. This site is like a library, use search box in the widget to get ebook that you. In this case, previously concentrated powers to tax and. The growth dimension of fiscal decentralization is emphasized for two reasons. On the theory and practice of fiscal decentralization wallace e. This paper examines the theory behind fiscal decentralization and suggests. Economic growth, fiscal decentralization, local government expenditure. Concept of fiscal decentralization and worldwide overview. History, impact, challenges and next steps chunli shen cema, central university of finance and economics, beijing, china. Fiscal decentralisation, efficiency, and growth request pdf. Developed countries are reshaping their intergovernmental. The findings suggest that a larger share of decentralized expenditure is associated with a stronger fiscal balance. Click download or read online button to get fiscal decentralization in developing countries book now.
Fiscal decentralization and the efficiency of public service. Theories of decentralization based on political motivations51 2. This was followed by communities that experienced the emergence of elite capture. For the problem of decentralizing government activities, mobility across regions is a critical factor. History, impact, challenges and next steps chunli shen cema, central university of. We employ data envelopment analysis on a panel of 21 oecd countries over the. This paper focuses on the role of local governments in the development of tourism in china by examining 30 chinese provinces from 2000 to 2018. Decentralization financial definition of decentralization. Bird and francois vaillancourt recent years have seen worldwide interest in. The views expressed in this publication are those of the authors and do.
Indonesia suggests that fiscal decentralization enhanced free and. The case study from central european countries fiscal decentralization is in vogue. Zhang and zou examined the relationship between fiscal decentralization and economic growth based on the panel data from 1970 to 1994 for 16 major indian states. Fiscal decentralization in developing countries download. This paper examines how decentralization affects governance, in particular how it might increase political competition, improve public accountability, reduce political instability, and impose incentivecompatible limits on government power, but also threaten fiscal sustainability. In the last two decades there has been a worldwide interest in decentralization of government in all parts of the world.
This book documents mexicos decentralization experience as well as conceptualizing its main trends, policies, and options, and brings them into the light of international comparison. Fiscal decentralization is an approach that calls for disbursing the control of finances to various points within a network or operation rather than having all financial control residing at a single point within the network. A number of quantitative and qualitative measures have been used in attempts to reliably measure the level of political, administrative, andespeciallyfiscal decentralization across countries. It is intended primarily for policymakers, in this case meaning civil servants and their. Communities that continued to remain under either elite capture or free and fair elections did the worst. This present fiscal decentralization strategy fds is intended to address these specific challenges whilst keeping focussed on the specific objectives of the fiscal and financial decentralization policy. The impact of fiscal decentralization on accountability. Political decentralization aims to give citizens or their elected representatives more power in public decisionmaking. The conference, fiscal decentralization and land policies, was held in cambridge, massachusetts, in june 2007.
Thus, the design and pace of fiscal decentralization need. The results of empirical research show that fiscal decentralization in china provides local governments with incentives for the development of high pollution industries and of large stateowned enterprises, which do not help the sustainable development. Lecture fiscal decentralization free download as powerpoint presentation. Fiscal decentralization and fiscal policy performance. Commonly accepted objectives for fiscal decentralization include those of an efficient allocation of resources via a responsive and accountable government, an equitable. The rwanda fiscal decentralization strategy fds has been developed to guide the implementation of the government of rwandas fiscal and financial decentralization policy ffdp and is to be read and understood in collaboration with the decentralization policy dp and the rwanda decentralization strategic framework as amended to date. The study finds that fiscal decentralization has made a significant contribution to economic growth, which is consistent with fiscal decentralization hypothesis. The data used covers the period from 2005 to 2011 for the eight metropolitan municipalities. This paper explores the impact of fiscal decentralization on fiscal policy performance in a large sample of advanced and developing economies. Oates the point of departure for my contribution to this symposium is the striking contrast in the extent of fiscal centralization of the industrialized and the developing countries.
Measuring decentralization and the local public sector. Pdf concept of fiscal decentralization and worldwide overview. Fiscal decentralization can also obstruct the redistribution role of the central government. In a unitary state, the head tax does not distort economic decisions. Fiscal centralization, limited government, and public. Complete answers on the impact of fiscal decentralization are not. It provides an overview of fiscal decentralization for undp officers involved in policy debates on restructuring intergovernmental fiscal. Fiscal decentralization, fiscal incentives, and propoor outcomes. This trend could be as influential for good governance and for improving. Fiscal decentralization also implies that local governments will be assigned functional. Mar 26, 2020 fiscal decentralization is an approach that calls for disbursing the control of finances to various points within a network or operation rather than having all financial control residing at a single point within the network. Adbs vision is an asia and pacific region free of poverty. Theory as reform james edwin kee, professor of public policy and public administration the george washington university abstract the last decade has seen a renewed interest in the concept of fiscal decentralization or fiscal federalism.
Achievements and challenges of fiscal decentralization. Annals of economics and finance 1, 151 2012 fiscal decentralization in china. Lecture fiscal decentralization decentralization fiscal. Download pdf managing fiscal decentralization book full free. Socalled soft budget constraints allow these subnational governments to expand expenditures without facing the full cost. Fiscal decentralization may indeed have a direct impact on economic growth but the theoretical underpinnings for this relationship remain largely undeveloped. The main issues of concern regarding fiscal decentralization and economic growth are tax. This comes after a halfcentury of fiscal centralization in most developed and developing nations. In this way, we obtained a result for the analyzed countries european union member states in the form of determinable levels of fiscal decentralization, whereby cifds indicators alone point to higher or lower levels of fiscal decentralization system compliance with.
Fiscal decentralization involves shifting some responsibilities for expenditures andor revenues to lower levels of government. Both in the industrialized and in the developing world nations are turning to devolution to improve the perfomance of their public sectors oates, 1999. Fiscal decentralization and economic growth sciencedirect. Fiscal decentralization george washington university. Fiscal decentralization and public sector efficiency. A fair summary of the empirical search for a direct relationship between fiscal decentralization and economic growth. By the start of world war i, however, many such countries had centralized institutions and limited government. The enactment of the right of children for free and compulsory. Establishing a new theoretical framework to explain decentralization.
Fiscal decentralization and propoor outcomes in viet nam 22. Fiscal decentralization and federalism in latin america. The above quote drawn from a recent undp document underscores the need to develop a better understanding of the concept. Oates the traditional theory of public finance has made a strong case for a major role for fiscal decentralization. Until now, however, there has been little understanding of how decentralization leads to. Principles to ensure the free flow of goods, services, people, firms, and. Why decentralize expenditure and revenue responsibilities. With political liberalization and the free election of mayors in the.
A detailed analysis of the strengths, weaknesses, opportunities, threats and. In fact, fiscal decentralization has many proponents, in particular as a strategy to improve service delivery at local level. Fiscal decentralisation overseas development institute. This case is based on an improved allocation of resources in the public sector. Managing fiscal decentralization available for download and read online in other formats. Fiscal decentralization and the challenge of hard budget.
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