Impact Of Fiscal Decentralization Research Articles

Impact of Fiscal Decentralization on Motor Vehicle Taxation in the Slovak Republic

Abstract The article deals with the motor vehicle tax in relation with fiscal decentralization, particularly from 2005 with competence delegated to the self-governing regions in the area of motor vehicle tax. The result of this provision in the field of fiscal decentralization is increasing of differences in the motor vehicle tax burden in self-governing regions of Slovakia. The paper is the result of solving a series of impact studies solved by the authors in this field. Gradually over time from the transfer of competences in setting tax rates on motor vehicles to self-governing regions and usage of the incomes of this tax can realistically assess the development and impact of this element of fiscal decentralization in the Slovak Republic as well as propose a solution of resulting situation. The aim is to eliminate differences in motor vehicle tax burden at regional and interstate level while maintaining the current level of tax revenues of self-governing regions.

Fiscal Decentralization, Satisfaction with Social Services, and Inequality Under the Hukou System

It is generally agreed that decentralized decision-making is conducive to the efficient allocation of resources, but detrimental to the equitable redistribution of income. This paper is intended to investigate the effect of fiscal decentralization on the delivery of three social services in the Chinese context. Using the data from a nationally representative survey, we find that fiscal decentralization in China, in both expenditure and revenue measures, significantly improves individuals’ satisfaction with social services for the sick, for the elderly, and for the poor. However, in contrast to urban local residents, rural dwellers and unregistered city migrants under the household registration (hukou) system benefit substantially less from the decentralized delivery of social services. These findings are robust to alternative model specifications. Our evidence from China not only sheds new light on the debate over the impact of fiscal decentralization on income redistribution, but also contributes to understanding the role of institutions in determining subjective well-being and its unequal distribution among people.

Fiscal decentralization and tax incentives in the developing world

ABSTRACTMany developing countries use tax incentives to attract foreign direct investment, sacrificing immediate revenue from foreign capital, even though the effects of tax incentives on investment, growth, and revenue are empirically dubious. This leads to the puzzle of why states adopt tax incentives. Extant studies of tax incentive adoption overlook the fact that many countries have decentralized fiscal authority, allowing subnational governments to offer tax incentives. Public finance scholars argue that fiscal federalism intensifies tax competition among regions. Hence, drawing on the public finance scholarship, one may ask: Does fiscal decentralization lead to a race to the top among subnational governments and an oversupply of tax incentives in a country? This article argues that fiscal decentralization affects tax incentives in complex ways. When subnational governments are authorized to set tax policies, their politicians have economic and political incentives to engage in tax competition for mobile capital, providing more tax incentives in a country. However, the politicians are less likely to do so if they are held accountable and have to fund most expenditures through own-source tax revenues. An empirical analysis of over 50 developing countries in early 2000s produces robust supporting evidence. This research challenges both the view that fiscal decentralization is always beneficial and the view that horizontal competition invariably produces inefficiently low tax rates. The impact of fiscal decentralization on tax incentives and by implication, revenue mobilization depends on the design of the central–local government relations.

The Impact of Fiscal Decentralization: A Survey

In this paper we offer a comprehensive and updated review of the impact of fiscal decentralization on the economy, society and politics. We start with the examination of two crucial and yet unsolved issues in the literature on decentralization: its proper measurement and the potential endogeneity of fiscal decentralization with many of the variables of interest we are trying to investigate. Then we discuss the main findings in the existing literature on the effects of decentralization on a relevant list of socio-economic variables. The impact of fiscal decentralization reforms on political institutions is also considered. Complete answers to the many questions on the impact of fiscal decentralization are not likely to be certain but overall there are reasons to be optimistic about the overall positive impact of the decentralized systems that have been introduced all over the world in the past several decades. The survey offered in this paper by necessity has to be selective but it presents a balanced view of what is known and what is not yet known opening room for further research and practice on fiscal decentralization.

The Impact of Fiscal Decentralization on the Composition of Public Expenditure: Panel Data Evidence from Italy

Grisorio M. J. and Prota F. The impact of fiscal decentralization on the composition of public expenditure: panel data evidence from Italy, Regional Studies. This paper is an original contribution to the understanding of the relationship between fiscal decentralization and public expenditure composition. It studies the effects of the ongoing decentralization process in Italy on the share of different categories of public spending in total expenditure of the Italian regional administrations over the period 1996–2008. The data used allow one to go beyond the usual distinction between current and capital expenditures and to present a functional classification of public expenditures. Through a panel data analysis, the paper shows that the level of decentralization influences the composition of expenditure.

Fiscal Decentralization and Disparity of Access to Primary Education in Indonesia

In education, one crusial issue of development is the disparity of primary education access. Using 440 regions database from 2005-2009, this study is aim to analize the impact of fiscal decentralization in reducing the enrolement of primary education in Indonesia. Three factors were included, i.e fiscal decentralization, socioeconomic factors and regional characteristics. The result of panel data estimation using fixed-effect approach on this study is that DAK for Education, DAK Non Education, and PAD have significant impact in reducing education acess disparity along with poverty and regional characteristic such as Java-non Java regions. For education level, another variable was also found significant including education of the society and regional characteristic such as proliferated-non proliferated regions. In general there is a facts and proves that fiscal decentralization improve education access equality, but several effort need to done to optimalize the equalization of primary education access in Indonesia.

The Impact of Fiscal Decentralization on Local Economic Development in East Java

The Impact of Fiscal Decentralization on Local Economic Development in East Java

Province-Managing-County Reform and Public Education Spending: A Quasi-Natural Experiment of Fiscal Decentralization in China

Since the 1990s, China has pushed forward the province-managing-county (PMC) reform in some provinces as an experiment of fiscal decentralization. The reform provides a good opportunity to examine the impact of fiscal decentralization on fiscal behaviors of local governments in China. Using a dataset of 108 counties in Henan Province during 1999-2008, we use a difference-in-differences approach to investigate how the PMC reform affects local public education spending. The results show that counties given additional fiscal autonomy tend to spend a lower share of their annual expenditures on public education than other counties do. The findings suggest that fiscal decentralization makes local governments more responsive to their performance incentives but not necessarily to the long-term benefits of local residents.

The impact of fiscal decentralization on economics performance in high-income OECD nations: an institutional approach

This paper examines the impact of public sector decentralization on per capita income. Controlling for differences in institutional arrangements among countries, panel data regressions on a sample of observations from 20 high-income OECD nations spanning the years 1972 to 2005 indicate that decentralization is positively related to income. The empirical analysis shows that institutions consistent with economic freedom enhance the positive income effects of decentralization. Thus, the impact of public sector decentralization is dependent upon a nation’s institutional environment.

The impact of fiscal decentralization on infant mortality rates: Evidence from OECD countries

This study re-examines the hypothesis that shifts towards more decentralization would be accompanied by improvements in population health on a panel of 20 OECD countries over a thirty year period (1970–2001). Decentralization is proxied using a conventional indicator of revenue decentralization and a new measure of fiscal decentralization that reflects better than previous measures the existence of autonomy in the decision-making authority of lower tiers of government, a crucial issue in the decentralization process. The results show a considerable and positive effect of fiscal decentralization on infant mortality only if a substantial degree of autonomy in the sources of revenue is devolved to local governments. The proportion of health care expenditure on GDP and, in particular, education, were found to have a larger contribution to the reduction of infant mortality in the sample of OECD countries analysed over the period of study.

The Consequences of Fiscal Decentralization on Poverty and Income Equality

Many countries around the world are currently pursuing policies for poverty reduction and the improvement of income distribution, and most of them are also implementing fiscal decentralization reforms. Although, separately, fiscal decentralization, poverty, and the distribution of income have been the subjects of extensive theoretical and empirical research, to date we have little understanding of what may be the impact of fiscal decentralization on poverty and inequality. We set out to shed some light on those relationships. We describe the possible channels through which fiscal decentralization might affect poverty and income inequalities and carry out an empirical analysis using panel data for a large number of countries. We find that fiscal decentralization may have significant effects on poverty and inequality. In particular, fiscal decentralization appears to lead to increases in the poverty measures we use, but it also appears to reduce income inequality if the general government represents a significant share of the economy (20% or more).

DAMPAK KEBIJAKAN DESENTRALISASI FISKAL TERHADAP TRANSFORMASI EKONOMI DI PROVINSI JAWA BARAT

The objectives of this research are : (1) to analyze structural economic transformation in West Java Province, (2) to analyze linkage inter sector on economic transformation process inter farm, industry and other sectors, (3) to analyze impact of fiscal decentralization to economic growth and structure economic transformation in West Java Province. In order to answer the above, a simultaneous equity model was established, consisting of 32 structural equities and 15 identity equities. Furthermore, this research used data pooling where data were analyzed with descriptive analysis, econometrics model, as well as predictions using a variety of policy scenario alternatives. Model was then estimated by 2SLS method with SYSLIN procedures, while prediction simulation was performed by using SIMNLIN procedures. In its development era, West Java province have done transformation of economy. During this economy structure transformation process, the decrease on agricultural sector contribution was automatically increase contribution on industry, but it was not increase contribution on other sector. The increase on local taxes receipt gave positive impact on output growth, and it gave economy structure transformation. The increase personel current expenditure gave positive impact on agriculture output growth and economic ratio. The increase development expenditure for agriculture gave positive impact on output growth agriculture and economic ratio, but it gave negative impact on total output growth. The increase expenditure for infrastructure gave positive impact on output growth, ang it gave economy structure transformation.

Analysing the impact of fiscal decentralization on health outcomes: empirical evidence from Spain

The aim of this article is to explore the impact of decentralization on health care outcomes in Spain. We develop a model and use it to investigate empirically the hypothesis that shifts towards greater decentralization would be accompanied by improvements in population health in Spain between 1992 and 2003 by using infant mortality and life expectancy as dependent variables. The empirical analysis suggests that income, decentralization and health care resources in Spain did have an important influence on infant mortality and life expectancy.

Fiscal decentralization and fiscal equalization within regions: the case of Russia

The impact of fiscal decentralization on equalization between regions has received significant attention but there has been much less research of the impact of decentralization on equalization within regions. Theory suggests that the tradeoff between local fiscal autonomy and equalization ought to be most pronounced at the sub-region level where rural-urban disparities in the level of development are substantial. This paper is an empirical analysis of the impact of fiscal decentralization on equalization within one Russian region, Leningrad (State). We show that the regional government uses a mixture of fiscal instruments to strike a balance between giving more budgetary autonomy to local governments and eliminating the disparities among them. We also develop a method for studying this tradeoff between decentralization and equalization when only limited data are available. Finally, we argue and demonstrate that without a detailed understanding of the institutional arrangement for intergovernmental fiscal relations, one cannot evaluate the equalization or decentralization implications.

Fiscal decentralization, collusion and government size in China's transitional economy

This paper examines the public sector in China's transitional economy, with the aim of testing the validity of a variety of hypotheses, namely the Brennan and Buchanan (1980, The Power to Tax: Analytical Foundations of a Fiscal Constitution, CUP, Cambridge); Oates–Wallis (1985, American Economic Review, 75(4) 748–57) version of the decentralization hypothesis and the Brennan and Buchanan collusion hypothesis, on the impact of fiscal decentralization at the provincial level. Pooled cross-section (province) and time-series data are employed with the period under consideration being 1986–1998. An error components technique is also used for the empirical testing. The empirical results provide evidence to support both the Oates–Wallis hypothesis and the collusion hypothesis that an increase in fiscal decentralization leads to a higher level of provincial government expenditure. The study also finds that the central and provincial governments are provided with an incentive to form collusive agreements through extra-budgetary funds.

The Interregional Impact of Fiscal Decentralization in Indonesia: Inter Regional Social Accounting Matrix Model

Undang-undang 22/0 dan 25/99 telab merubah pola hubungan pusat-daerah di Indoensia dari pola sentralistik menjadi desentralisis yang efektif berlaku sejak bulan Januari 2001. Lebih jauh pemerintah juga mengeluarkan Peraturan Pemerintah (PP) yang mengatur lebih detail tentang kewajiban dan kewenangan daerah, hutang daerah dan hal lainnya, selain beberapa sektor penting seperti sistem peradilan, agama, keamanan dan hal lain yang masih dibawah tanggung jawab dan kewenangan pemerintah pusat.Konsekuensi langsung dari perubahan ini adalah pemerintah harus mengatur pemerataan dan sustainabilitas anggaran antar daerah. Mengingat karakteristik antar daerah sangat bervariasi dalam hal kandungan sumber daya alam, dan sumber daya manusia, dan juga selepas krisis yang menerpa Indonesia, maka permasalahan yang dihadapi pemerintah pusat dalam menjalankan proses desentralisasi ini, menjadi tidak ringan.Satu hal yang jelas, implementasi proses desentralisasi ini, akan mengurangi penerimaan pemerintah pusat secara langsung sementara agenda peningkatan kesejahteraan, penurunan kesenjangan dan upaya peningkatan pertumbuhan lintas wilayah, sudah didepan mata.

Fiscal Decentralization and Economic Growth

This paper reviews the current knowledge on an issue of increasing policy interest: what impact fiscal decentralization has on economic growth. Fiscal decentralization may indeed have a direct impact on economic growth but the theoretical underpinnings for this relationship remain largely undeveloped. The absence of an adequate theoretical framework has undermined the validity of the empirical work on this subject. A fair summary of the empirical search for a direct relationship between fiscal decentralization and economic growth is that it remains an open question. Much less attention has been devoted in the literature to the indirect channels through which fiscal decentralization may affect economic growth, through the impact of fiscal decentralization on economic efficiency, the regional distribution of resources, and macroeconomic stability. This paper explorers the nature of these links and concludes with some thoughts and policy advice.