Effect Of Fiscal Decentralization Research Articles

Analyzing Green Growth Efficiency in China and Investigating the Spatial Effects of Fiscal Decentralization: Case Study of Prefecture-Level Cities

Analyzing Green Growth Efficiency in China and Investigating the Spatial Effects of Fiscal Decentralization: Case Study of Prefecture-Level Cities

Fiscal decentralisation and the attenuating effects of inter‐governmental transfers and economic development on corruption in China

AbstractThe consensus in the literature is that fiscal decentralisation is a means to reduce corruption. For China, the attenuating effects of fiscal decentralisation are often enhanced by other factors. This paper argues that prior findings serve to facilitate the design of anti‐corruption measures but they do not address why individuals may engage in corruption. This is especially as individual evidence suggests that engaging in corruption is against professional ethos in China. This paper suggests that intergovernmental transfers and the relative level of economic development of where a public servant is serving influence the decision of whether to engage in corruption. Specifically, intergovernmental transfers and a higher level of local economic development directly affect the resources that a local administration has. In turn, this affects the extent to which one may realise their motivations for a career in the public sector. Empirical estimates for 1998–2013 serve to support the hypothesis.Points for practitioners Fiscal decentralisation mitigates the prevalence of corruption in China in conjunction with other complimentary factors. But engaging in corruption is inconsistent with motivations for a public sector career which include engaging in work for society's greater benefit. Corruption may emerge because public servants feel that they may be unable to achieve their aims for joining the public sector because of local resource constraints. Empirical findings suggest that increased resources to local administrations from intergovernmental transfers and economic development may discourage public servants from deviating from their stated career motivations, that is, engaging in corruption.

The Effect of Municipal Fiscal Decentralization on Subjective Well Being: The Case of Chile

This research hinges upon the relationship between fiscal decentralization and life satisfaction. It contributes to the field by performing an empirical analysis focused on the case of Chile, by merging the national household survey (CASEN) with municipal level information. This analysis is based on a hierarchical empirical model, in which data from both sources are integrated. Our results show a significant positive effect of municipal level fiscal decentralization on individual subjective well-being. Nonetheless, we also show that said result is contingent upon residents’ political representation, which is in line with the hypothesis that citizens’ oversight of local authorities is a necessary condition for the effect of fiscal decentralization to emerge. From the viewpoint of how fiscally decentralized measures should be implemented in practice, above evidence suggests that said process should be accompanied by the strengthening of local residents’ participation in community relevant matters. Further confirmation of this is presented in this research, by showing that residents’ membership in organized groups further increases individual subjective well-being. JEL Classification: H72, H77, C11.

Does Fiscal Decentralization Reduce Poverty? An insight from provincial level analysis in Pakistan

The present study has been designed to check the effect of fiscal decentralization (FD) on the poverty levels in Pakistan. Three measures of FD, namely intergovernmental transfers, provincial government revenues, and expenditure, are used in this study. Furthermore, the effect of FD is checked on the poverty levels separately in four provinces of Pakistan. Poverty levels are measured with the help of the Multidimensional Poverty Index (MPI) and the percentage of poor households with a value under 35 according to the International Wealth Index (IWI). This study has used panel data from 1990 to 2020 for the model in which poverty is measured through IWI value. Data from 2004 to 2020 has been used for the model in which poverty is measured through MPI. Feasible Generalized Least Square (FGLS) has been used to obtain the regression results by avoiding the problem of serial correlation and heteroscedasticity. The study's results highlighted that two measures, namely intergovernmental transfers and provincial government expenditures, have a nonlinear relationship with poverty. An increase in intergovernmental transfers and provincial government expenditures reduces poverty at a decreasing rate at first. Then, an increase in both variables results in the form of a higher level of poverty. Moreover, revenue decentralization at the provincial level increases poverty initially and reduces poverty after a critical point.

The Effect of Crises on Fiscal and Political Re-Centralization

Economic stability plays a crucial role in any fiscal and political decentralization process. In the face of financial and economic shocks, when revenues and expenditures are reduced, countries may decide to gather resources at the central level creating a re-centralization scenario or may take away devolved powers and centralize political institutions. Using data from 75 countries, we examine the effects of the economic crisis on fiscal and political decentralization. We find that several types of crises lead to fiscal re-centralization. However, in the case of domestic borrowing crises, the effect is further revenue decentralization, probably reflecting the central government's willingness to empower sub-national governments to avoid similar crises. In addition, we explore the impact of the economic crisis on political decentralization and find that they are concordant with the fiscal decentralization effects, suggesting an alignment of the impact along political and fiscal dimensions of subnational autonomy. We also explore whether the economic crises trigger more permanent rather than just transitory changes in the level of decentralization, and we generally find more long-lasting effects in the case of fiscal decentralization measured from the expenditure side. This pattern is apparent in the cases of inflation and banking crises and is less precise but still present in the cases of currency and external debt crises. The main results are robust to different specifications, estimation methods, and the measurement of decentralization.

What drives environmental sustainability? The role of renewable energy, green innovation, and political stability in OECD economies

ABSTRACT One possible way to achieve environmental sustainability is by addressing the issue of rising CO2 emissions, which significantly cause climate change by intensifying the greenhouse gas effect. The Organization for Economic Cooperation and Development (OECD), which substantially contributes to global CO2 emissions, necessitates a paradigm shift towards using clean energy sources and promoting green innovations to ensure environmental sustainability. Thus, this study aims to inspect the role of renewable energy use, green technology innovation, political stability, and fiscal decentralization in attaining environmental sustainability by limiting CO2 emissions for seven OECD economies from 2000 to 2019. This study has employed the ‘Cross-Sectional Augmented Autoregressive Distributed Lag and Augmented Mean Group Estimator’ for robust empirical analysis. The results indicate that renewable energy use, political stability, and fiscal decentralization can mitigate CO2 emissions and ensure environmental sustainability in OECD economies. In contrast, green technology innovation exhibits an insignificant effect on CO2 emissions. Furthermore, the moderation effects of fiscal decentralization and political stability exhibit a negative relationship with CO2 emissions. Notably, this study advises OECD nations to encourage regional cooperation to ensure political stability and devolution of fiscal powers to promote green innovation and renewable energy use to achieve sustainable goals.

The Effect of Fiscal Decentralization, Balanced Budget, Provincial Financial Aid, and Public Investment on Human Development Index with Population as a Moderation Variable in Regency/City Regional Government in North Sumatra Province

This research aims to analyze the influence of Fiscal Decentralization, Balancing Funds, Provincial Financial Assistance, and Public Investment on the Human Development Index partially and simultaneously. This research also analyzes the influence of Fiscal Decentralization, Balancing Funds, Provincial Financial Assistance, and Public Investment on the Human Development Index with Population as a moderating variable. The population of this research is the Regency/City Government in North Sumatra Province, totaling 33 Regency/Cities. Data collection methods were carried out using documentation techniques using secondary data, namely APBD Realization Reports, Population Data, and Human Development Index data for 2017-2021. The sampling technique used was purposive sampling based on specific criteria. Based on these criteria, a total of 145 analysis units were obtained. The data analysis methods used in this research are descriptive statistical analysis methods, classical assumption tests, multiple linear regression analysis, sensitivity test analysis, hypothesis testing, and residual tests using SPSS version 25. This research shows that Fiscal Decentralization, Balancing Funds, Provincial Financial Assistance, and Public Investment affect the Human Development Index. Partially, fiscal decentralization and provincial financial assistance have positively affected the human development index. The Balancing Fund has a negative effect on the Human Development Index, and Public Investment does not affect the Human Development Index. This research also concludes that population is a moderating variable in strengthening and weakening the relationship between Fiscal Decentralization, Balancing Funds, Provincial Financial Assistance, and Public Investment on the Human Development Index. Keywords: fiscal decentralization, balancing funds, provincial financial assistance, public investment, human development index, population.

Spillover effects of fiscal decentralization on access to basic social services in Burkina Faso

AbstractThis paper delves into the spillover effects of fiscal decentralization on access to essential social services within communes in Burkina Faso. It employs a Dynamic Spatial Durbin Model that comprehensively incorporates temporal dynamics, spatial interdependence concerning the dependent variable, and spatial interdependence concerning exogenous variables. The analysis covers 280 municipalities, which represents 80% of the municipalities in Burkina Faso, over the period 2011–2020. The findings substantiate the presence of spillover effects stemming from fiscal decentralization on the availability of fundamental social services. However, the nature of these spatial effects hinges on the particular type of fiscal resources and local public goods under consideration. Notably, both capital expenditures and decentralized cooperation resources yield short‐term and long‐term direct as well as indirect enhancements to the quality of education and accessibility to potable water. On the other hand, self‐generated revenue and operational grants augment water accessibility but bear no impact on educational quality. The outcomes put forth imply that municipal councils should concurrently bolster resource mobilization by fortifying decentralized cooperation and widening the tax base. Simultaneously, the introduction of flexible tax payment mechanisms is advisable.

The Effect of Fiscal Decentralization on Economic Convergence amongst Regions in Java Island (Spatial Econometric Approach)

Convergence mechanism is needed in order to reduce regional inequality. This study aimed to examine the existence of economic convergence and analyze the effect of fiscal decentralization on economic convergence with spatial econometric approach. Local own-source revenue, balance funds, personnel expenditure and capital expenditure as proxies for fiscal decentralization indicator. Using dynamic convergence analysis, the existence of beta absolute and conditional convergence are confirmed in this study. From the estimation result, local own-source revenue, balance funds, personnel expenditure have significant role on per capita income growth, while capital expenditure has not been effective in supporting growth. If fiscal decentralization indicators are added and spatial aspects are considered in the model, it will cause an increase in the convergence rate. Improving the quality of spending is the main key to accelerating convergence.

The Impact of FDI on Labor Productivity in China: Evidence from Panel Data 2003-2020——A Study on Fiscal Decentralization as a moderating variable

Based on the panel data of China’s 30 provinces, autonomous regions, and municipalities (hereinafter referred to as provinces) from 2003 to 2020, this paper empirically analyzes the impact of foreign direct investment (hereinafter referred to as FDI) on labor productivity by constructing a fixed-effects model, and further constructs a model to test the moderating effect of fiscal decentralization on the above two variables. The study shows that: 1) China's FDI has a positive promotion effect on labor productivity. 2) Taking 2008 as the boundary, the effect of China's FDI on labor productivity has significant stage heterogeneity. 3) Fiscal revenue decentralization and fiscal expenditure decentralization both positively regulate the relationship between FDI and labor productivity. Therefore, the Chinese government (as well as the governments of other developing economies around the world) needs to consciously introduce high-quality FDI that is suitable for the country's current development situation and to give local governments the right to select and introduce FDI that is suitable for local development to realize high-quality economic development.

Spatial spillover effects of manufacturing agglomeration on China's total factor carbon productivity: evidence from the regulatory role of fiscal decentralization.

Based on the theory of new economic geography, this paper used panel data from 284 cities in China from 2006 to 2019 to determine the effects of spatial spillover and heterogeneity of manufacturing agglomeration (MA) on urban total factor carbon productivity (TFCP) and the regulatory effect of fiscal decentralization on the outcome. The results showed that (1) MA shifted from the eastern region of China to the central and western regions, with the center of gravity moving towards the south. The spatial pattern of urban TFCP displayed the solidifying characteristics of "low-level agglomeration and high-level dispersion," with technological progress being the primary driver. (2) The MA had a significant U-shaped effect on the TFCP of local and nearby cities, promoting the improvement of urban TFCP through Jacobs' and Porter's externalities but not MAR externalities. (3) Regarding regional differences, MA had a significant U-shaped impact on urban TFCP in the eastern and central regions. At different levels of manufacturing development, there was an inverted U-shaped relationship in both manufacturing and non-manufacturing metropolitan areas. For varying degrees of manufacturing industry agglomeration, increasing the level of MA improved urban TFCP in low agglomeration areas, but inhibited it in high agglomeration areas. (4) The implementation of fiscal decentralization nationwide and in the eastern and central regions significantly weakened the impact of MA on TFCP. Furthermore, fiscal decentralization significantly enhanced the influence of MA on TFCP in cities exhibiting high levels of economic development, advanced industrial structure and strict environmental regulations. Therefore, based on the unique developmental characteristics of the manufacturing industry in various cities, fiscal policies ought to be tailored to local circumstances to support key areas. This strategy should facilitate the high-quality development of manufacturing industry and low-carbon development of cities.

The effects of fiscal decentralisation on local finances after the territorial reform of local government in 2015 in Albania.

The effects of fiscal decentralisation on local finances after the territorial reform of local government in 2015 in Albania.

The effects of fiscal decentralisation on local finances after the territorial reform of local government in 2015 in Albania

The effects of fiscal decentralisation on local finances after the territorial reform of local government in 2015 in Albania

재정분권이 공공부문 성과에 미치는 영향 분석

This study empirically analyzes the impact of fiscal decentralization on public sector performance, focusing on national competitiveness and government efficiency. It also explores whether the effects of fiscal decentralization on public sector performance differ based on the income level of countries. This study uses a panel dataset of 25 OECD member countries, covering the period from 2001-2020. The results show that fiscal decentralization improves national competitiveness and government efficiency. Moreover, the impact of revenue decentralization on public sector performance is larger than expenditure decentralization. Finally, the impact of fiscal decentralization on national competitiveness and government efficiency varies depending on the national income level. It is also found that the impact of fiscal decentralization on public sector performance is insignificant among 13 countries with a GDP per capita of less than $40,000.

Race to Top or Race to Bottom Approach: Disaggregated Effect of Fiscal Decentralization and Its Implications for Consumption-Based Carbon Emissions

Race to Top or Race to Bottom Approach: Disaggregated Effect of Fiscal Decentralization and Its Implications for Consumption-Based Carbon Emissions

The impact of fiscal decentralization on health outcome in Vietnam: a focus on the role of public service delivery and corruption

ABSTRACT This study examines the applicability of fiscal decentralization theory, originally developed in Western countries, to Vietnam at the provincial level. The aim is to explore the indirect impact of public service delivery on the relationship between fiscal decentralization and health outcomes, with corruption as a moderator. The study employs the conditional process analysis. The findings reveal that the multi-dimensional nature of fiscal decentralization results in different statistically significant effects on health outcomes. While fiscal autonomy does not guarantee an impact on health outcomes, revenue-fiscal decentralization positively improves health outcomes. These effects are intensified by more significant control over corruption, suggesting that limiting corruption is crucial to ensuring the benefits of fiscal decentralization. Moreover, our study shows that public service delivery does not mediate the effect of fiscal decentralization on health outcomes. Overall, our findings suggest that applying Western theories of fiscal decentralization to the context of Vietnam is challenging. The research recommends reforming the fiscal transfer mechanism and strengthening control over corruption in public services.

The Theoretical Impact of Fiscal Decentralisation on National Income Inequality: Does Quality of Governance Matter?

There are long arguments among scholars about whether fiscal decentralisation increases or reduces national income inequality. The optimistic scholars indicate that the efficiency-enhancing effects of fiscal decentralisation to reduce income inequality are more likely to occur in high-economic-level regions since they have inter-jurisdictional competition, accountability, and revenue mobilisation. While the pessimistic view emphasised that fiscal decentralisation might increase income inequality because of low governance quality, which offsets the potential efficiency gains of decentralisation. The finding of this paper is that fiscal decentralisation cannot be optimistic or pessimistic, but after screening the empirical studies, it is based on three trends: the structure and design of fiscal decentralisation, the level of economic development, and the level of governance as a mediator.

Exploring the effectiveness of fiscal decentralization in environmental expenditure based on the CO2 ecological footprint in urban China

Under the fiscal decentralization of government environmental management, this paper investigates the relationship between local environmental protection expenditure (LEPE) and CO2 ecological footprint (CEF). Unlike conventional emissions-based greenhouse gas metrics, this research calculates per capita CEF for 253 Chinese cities, considering both carbon emissions and absorption. The dynamic spatial Durbin model demonstrates that LEPE not only reduces a city’s own CEF but also exerts a long-term influence on neighboring cities, signifying competitive dynamics among local governments in LEPE. This decentraliztion of environmental budget authority may yield adverse outcomes. Further analysis reveals an inverted U-shaped relationship between CEF and LEPE intensity, partly mirroring the environmental Kuznets curve. Different developmental stages should consider economic levels when allocating resources to environmental budgets. The low-carbon pilot policy strengthens LEPE, with varying effects across Chinese urban agglomerations, remaining consistent post-environmental protection tax introduction. These findings hold critical reference value for local policymakers aiming to collaboratively adjust market-oriented environmental policies.

Revenue sharing, fiscal incentives, and economic growth: Evidence from China

AbstractThis study revisited the impact of fiscal decentralization on China's economic growth, focusing on the role of the revenue‐sharing system in providing local fiscal incentives. Using city‐level data from 2003 to 2016, we construct the revenue retention rate at the sub‐provincial level to test the impacts of fiscal incentives on economic growth. The results show that the sub‐provincial revenue retention rate is significantly and positively associated with the local economic growth rate. Further, we find that a higher revenue retention rate encourages sub‐provincial governments to spend more on infrastructure, borrow more debt, distort land price, and relax environmental regulatory standards. Our findings indicate that the positive economic effect of fiscal decentralization is accompanied by a social cost and increased financial risk.

Fiscal Decentralization and Green Development Efficiency: Evidence From the New Capital “Nusantara” Buffer Zone

This paper aims to analyze the effect of fiscal decentralization on green development efficiency. This paper uses efficiency analysis: Slack Based Model to measure an efficiency score and dynamic panel regression: Generalized Method of Moments to maintain a correlation between fiscal decentralization and efficiency score. This study uses the environmental quality index and regional budget expenditure as analytical fiscal variables. The results show that the original regional income positively affects the efficiency of green development. Meanwhile, provincial spending and population have negatively affected green development efficiency. The influence is due to behavior where in the short term, the region that has just been built will have an impact on reducing the efficiency level, then gradually increasing efficiency driven by the presence of local indigenous income. The uncited form of spending from local governments sometimes only focuses on the orientation of economic growth and physical achievement to slightly ignore the environmental aspect.