Abstract
In recent years, financial sustainability (FS) of public policies has become a key concept in all governmental levels due to the need for ensuring public services delivery for future generations. Prior research has been focused on the financial sustainability in local governments (LGs) although its findings suggested the need to analyze this magnitude in other levels of government because political decisions could be different in each type of public entity. So, FS has also become very relevant in the Regional Government (RGs) context because their public policies affect not only at the regional level but also the local one. Therefore, from a comparative approach, this paper seeks to identify socio-demographic factors which could influence on the financial sustainability, in the Spanish context for both LGs vs. RGS in order to establish public policies to make sustainable public goods and services. Findings demonstrate that differences in influential factors between these two levels of public administration exist: factors such as population size and foreign population could have an effect on the financial sustainability of both governmental levels while the unemployment rate, dependent population, and population density affect differently on LGs and RGs.
Highlights
International Organizations have mentioned that the financial and economic crisis have undercut the capacity of governments to keep providing public services at any level of government
These results are consistent with the recent reports about the achievement of the financial objectives in local governments (LGs) and regional governments (RGs) proposed by the central government in Spain [28]
Considering the theoretical framework based on the two major theories: The Stakeholders Theory and the Institutional Theory and focusing on the potential socio-demographic factors that affect the financial sustainability of both governmental levels, LGs and RGs, our results identified the population size and the foreign population as risk factors
Summary
International Organizations have mentioned that the financial and economic crisis have undercut the capacity of governments to keep providing public services at any level of government. The unsustainable tendency of all the governmental levels to spend more than they collect has created significant imbalances in the economic growth among the levels of governments and regions [1,2,3,4,5,6] Under this background, the concept of sustainability covers three dimensions (environmental, social and economic) [7], the financial sustainability becomes a key dimension in the management of governmental organizations in many parts of the world [8,9,10,11,12]. The financial sustainability analysis in each level of government could help to support an efficient process of making appropriate decisions and improving their quality and encourage the economic growth necessary for the well-being of future generations [15,16] In this context, International Organizations (EU, IMF, IFAC, CICA, NAO) and citizens have increased the demand for higher-quality public sector financial information, as premises of the Stakeholders Theory explain. The pressure on all levels of governments has increased to monitor public finances with the aim at reaching the major challenge of re-establishing the sustainable equilibrium between income and expenditures [9,17,18,19,20], making sense the Stakeholders and Institutional Theory
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