Public policy and fiscal federalism: Its impact on political stability in Nigeria

Abstract

This paper examines fiscal federalism and its impact on political stability in Nigeria. Fiscal federalism as enunciated by economic analysis focuses on efficiency and welfare maximization in determining optimal authority. In practice, however, the construction of optimal jurisdictional authority is political and intervening exigencies have played major roles in shaping inter-governmental fiscal relations in Nigeria. In essence, the controversy is mainly caused by the whole process of revenue allocation that entails the reshuffling of the economic powers of the units of government. Evidently each unit or state advocates the use of the principle that would favour it most at the expense of other states. The paper reveals that the collection and sharing of revenue is over concentrated at the centre to the detriment of the state and local governments. Key words: Political economy, revenue sharing, political development, resource allocation.