Abstract
From a public finance point of view, achieving sustainable development hinges on two critical factors: the subnational implementation of public policies and the efficient allocation of resources across regions through vertical intergovernmental transfers. We introduce a framework that links these two mechanisms for analyzing the impact of reallocating federal transfers in the presence of regional heterogeneity from development indicators, budget sizes, expenditure returns, and long-term structural factors. Our study focuses on the case of Mexico and its 32 states. Using an agent-based computational model, we estimate the development gaps that will remain by the year 2030, and characterize their sensitivity to changes in the states’ budget sizes. Then, we estimate the optimal distribution of federal transfers to minimize these gaps. Crucially, these distributions depend on the specific development objectives set by the national government, and by various interdependencies between the heterogeneous qualities of the states. This work sheds new light on the complex problem of budgeting for the Sustainable Development Goals at the subnational level, and it is especially relevant for the study of fiscal decentralization from the expenditure point of view.
Highlights
IntroductionThe United Nations 2030 Agenda for Sustainable Development (aka Sustainable DevelopmentGoals or SDGs) was conceived through the lens of national-level data
The United Nations 2030 Agenda for Sustainable Development was conceived through the lens of national-level data
Our results indicate that the SDGs are not entirely viable, so we, subsequently, analyze whether convergence time can be reduced either by increasing the size of the state budgets or by modifying the nature of federal transfers
Summary
The United Nations 2030 Agenda for Sustainable Development (aka Sustainable DevelopmentGoals or SDGs) was conceived through the lens of national-level data. Around the world, many public policies associated with the SDGs are implemented at the subnational level, especially during the last two decades of the 20th century since many government programs have undergone a decentralization process (Forman et al, 2020; Ivanyna and Shah, 2014) For this reason, it is crucial to build databases with information at the regional/state/municipal/city level and to create analytical tools to support regional development decision-making and fiscal feder-. In addition to the pressing need of generating new data, sustainable development faces important operational challenges such as establishing budgetary priorities in a high-dimensional policy space (perhaps with hundreds of policy issues), accounting for the complex network of interactions between all policy issues, and dealing with inefficiencies in the use of public resources All these features call for the creation of innovative analytical frameworks.. Our simulations indicate that significant reductions in convergence times can be achieved when an ‘optimal fiscal transfer’ is used to allocate the federal transfers across subnational central governments (SCGs)
Sign-in/Register to view highlights & summary Talk to us
Join us for a 30 min session where you can share your feedback and ask us any queries you have
Schedule a callDisclaimer: All third-party content on this website/platform is and will remain the property of their respective owners and is provided on "as is" basis without any warranties, express or implied. Use of third-party content does not indicate any affiliation, sponsorship with or endorsement by them. Any references to third-party content is to identify the corresponding services and shall be considered fair use under The CopyrightLaw.
