Provision Of Local Public Goods Research Articles

Politics versus Preparedness? How Electoral Incentives Affect the Provision of Local Disaster Public Goods in the Philippines

Abstract There is an expectation that elections create responsive policymakers that provide optimal public services. However, does this hold true when it comes to non- particularistic and non-immediate goods like disaster preparedness projects? In this exploratory study, I argue that electoral incentives can discourage the provision of local disaster public goods due to their non-particularistic and non-immediate nature. Using datasets containing electoral data and government ratings of local disaster public goods in Philippine cities and municipalities from 2017 to 2021, I find evidence that local disaster public goods provision is affected by (1) the intensity of local electoral competition and (2) the timing of the elections. Estimates suggest that local disaster public goods decline in quality one year before elections. Furthermore, in municipalities, more intense electoral competition is linked to lower quality provision of these collective goods. The findings illustrate how electoral incentives distort leaders’ policymaking against their constituencies’ long-term, common needs.

Сучасні підходи до бюджетної децентралізації

Introduction. Decentralization in Ukraine, the new stage of which began in 2014, in particular regarding the redistribution of powers and financial resources between the levels of the budget system, played a positive role in ensuring the livelihood of communities under martial law after the start of full-scale Russian aggression. Problem Statement. In domestic scientific opinion, attention is usually paid either to the applied aspects of budgetary (fiscal, financial) decentralization, or to the analysis of classic works of representatives of the first and second generations of fiscal decentralization. At the same time, any practical measures require the study of theoretical foundations, including those that have been developed over decades and those that have developed in recent years. The purpose is to generalize the work of foreign scientists on fiscal decentralization, which cover the first and second generation of theories, as well as relate to currently relevant issues. Methods. General scientific methods of analysis and synthesis, induction and deduction, grouping, generalization, etc. are used. Results. An analysis of the theories of fiscal decentralization of the first and second generation was carried out, in particular in the aspects of increasing accountability and transparency of the government system, balanced (centralized and decentralized) provision of local public goods, the influence of endogenous and exogenous factors on its overall effect, theories of social choice, etc. The issue of fiscal decentralization, which is currently the subject of research by scientists, is considered: the impact on economic growth and human development, the dependence of the positive effect on the quality of the institutional environment, the role in anti-crisis regulation, the ratio of advantages and disadvantages in countries with developed economies, newly industrialized countries and cranes that are developing Conclusions. A certain consensus of scientists has been formed on the positive impact of decentralized systems, implemented worldwide over the last few decades, on socioeconomic development and growth of the economy, especially subject to proper substantiation of relevant reforms. At the same time, the impact on human development is ambiguous and depends on many internal and external factors. A sufficiently high quality of the institutional environment is a prerequisite for the successful course of the fiscal decentralization. In centralized countries, which are characterized by a rather rigid mechanism of economic regulation, fiscal decentralization is not only possible but also causes positive consequences, although they do not always coincide with the results of countries with liberal economies. Fiscal decentralization also justifies itself in emergency situations, which confirms the example of Ukraine after the start of full-scale Russian aggression, when communities have shown the ability to respond quickly to internal and external challenges, including accepted and satisfied the urgent needs of several millions of internally displaced persons.

A global map of amenities: Public goods, ethnic divisions and decentralization

I analyze the effects of ethnic divisions on the provision of public goods in countries throughout the world. Using OpenStreetMap data, I construct a new, global dataset that pinpoints locations of public amenities, such as schools, hospitals, and libraries. I devise two new proxies to address the variability in the completeness of such data. I find that more autonomous subnational regions with a high degree of ethnic fractionalization provide significantly fewer productive public goods. Therefore, decentralization can decrease the provision of local public goods in areas characterized by higher levels of ethnic heterogeneity than those that prevail nationwide.

Public spending and economies of scale in partial fiscal decentralized governments: The case of Chile

This article evaluates economies of scale in local public spending in Chile, emphasizing the country's geographical features and high fiscal heterogeneity. We leverage balanced panel data for ten years and 307 municipalities in order to estimate the population level at which a reduction in the average cost of local public goods provision occurs and to differentiate between levels of market potential. We follow a theoretical model of cost efficiency that considers spatial interactions and spillover effects among neighboring jurisdictions. Our findings suggest that Chilean municipalities reach an optimum population level at around 700,000 inhabitants, which is high considering that only two cities qualify. When differentiating for levels of economies of scale according to levels of market potential, municipalities with a low potential reach their optimum at around 28,000 inhabitants, those with a medium potential reach it at approximately 124,000, and those with a high potential reach it at approximately 680,000.

Evidence on economies of scale in local public service provision: A meta‐analysis

AbstractThe standard theory of optimal jurisdictional size hinges on the existence of economies of scale in the provision of local public goods and services. However, despite its relevance for forced local amalgamation programs and related policies, the empirical evidence on the existence of such economies of scale remains elusive. The main goal of this paper is to produce an updated and comprehensive quantitative review of the existence of economies of scale in the provision of local public goods using a meta‐analysis approach to systematize the wide range of empirical approaches and modeling frameworks found in the previous literature. Our analysis confirms the presence of moderately increasing to constant returns to scale in the provision of local services with no reduction in the average costs of production in the delivery of most local public services beyond a certain, modest jurisdictional size, which many studies have estimated at 10,000 residents. Also, the potential for economies of scale differs at least across three traditional services: education, water and sanitation, and garbage collection, being highest for education and lowest for garbage collection. Our analysis also offers guidelines for future empirical research in this area. Physical output and production cost data should be used, together with translog specifications for the modeling of cost functions. Last, we find evidence that the determinants of output cost elasticity include bidirectional publication bias and population density but do not include the presence or absence of modern “lean” production technologies or the (perceived) capital intensity of the sector, contrary to conventional wisdom. These findings have significant policy implications for countries considering jurisdictional consolidation programs.

Skill Versus Voice in Local Development

AbstractWhere the state is weak, traditional authorities control the local provision of public goods. These leaders come from an older, less educated generation and often rule in an authoritarian and exclusionary fashion. This means the skills of community members may not be leveraged in policymaking. We experimentally evaluate two solutions to this problem in Sierra Leone: one encourages delegation to higher-skill individuals, and a second fosters broader inclusion in decision making. In a real-world infrastructure grants competition, a public nudge to delegate led to better outcomes than the default of chiefly control, whereas attempts to boost participation were largely ineffective.

Historical Inequality at the Grassroots: Local Public Goods in an Indian District, 1905–2011

How do historical inequalities influence modern public goods provision? This paper analyses a new panel dataset of local public goods provision in a single North Indian district with observations at the village-decade level going back to 1905 and detailed information on colonial land tenure institutions and demographics. The presence of large colonial landowners is positively associated with rural public goods provision when the landlord was resident in the early 20th century and has a null effect when the landlord was an absentee. Villages inhabited or owned by upper castes had an advantage in the colonial and immediate post-independence eras, but not afterward. The results suggest that within unequal societies, economic and status inequalities can have positive effects on public goods provision when they link elites to extralocal decision-makers.

Spatiotemporal Analysis of Technical Efficiency in the Provision of Local Public Goods: The Case of Chilean Mining Municipalities

Spatiotemporal Analysis of Technical Efficiency in the Provision of Local Public Goods: The Case of Chilean Mining Municipalities

Pay for the Privilege: Does a Global Club Good Opportunity Ruin Local Public Good Provision?

Pay for the Privilege: Does a Global Club Good Opportunity Ruin Local Public Good Provision?

Political Dynasties and Local Economic Development in Pakistan (Article)


 
 
 
 
 Political dynasties are entrenched in Pakistan’s political system. Dynastic legislatures constitute more than 50 percent of elected politicians in Pakistan. However, until recently, no scientific study was conducted to evaluate the economic performance of dynastic parliamentarians. This study explores the effect of political dynasties on local economic development at the constituency level across Pakistan. More specifically, the objective is to examine whether constituencies with dynastic persistence are significantly different from the rest in terms of economic activities and public good provisioning. To measure political dynasties, data on elected politicians who won 2002, 2008, & 2013 general elections are utilised to extract information about a politician’s family background. This information is then matched with the constituency level indicators of economic development and public goods. The findings show that dynastic legislature underperforms relative to non-dynast in terms of local economic development and public good provision. Constituencies with non-dynast winners have improved water and sanitation facilities, better infrastructure, and significantly higher access to public services such as electricity, gas, and telephone. The study recommends that limiting the role of parliamentarians in discretionary funds and development spending, and empowering the local government system would minimise the performance differences across constituencies.
 
 
 
 

Electoral outcomes and local public goods provision with ex post interregional transfer

Electoral outcomes and local public goods provision with ex post interregional transfer

Financing governance beyond the state: Informal revenue generation in south-central Somalia

Abstract Individuals in low-income countries often contribute significantly to financing local public goods through informal taxation. However, there is limited understanding of how informal revenue generation relates to formal tax and governing institutions. We explore the relationship between informal revenue generation, public finance, and the state in the Gedo region in south-central Somalia, relying on original data from surveys with 2,300 households and 117 community leaders. Our evidence shows that informal revenue generation by non-armed actors in Gedo is prevalent, with informal payments deeply embedded within clan-based and Islamic institutions and rooted in a long history of decentralized political authority and self-reliance in the region. We argue that in such a context, rather than explaining how or why things ‘work’ outside of the state, it may be more relevant and valuable to consider decentralized non-state public authority as the default referent, with a need only to explain the puzzle of pockets of state effectiveness. Governance largely operates outside the state, with citizens playing a pivotal role in directly financing local governance institutions and public goods provision. These findings have important implications for our understanding of statehood and public finance in contexts of weak formal institutions.

The impact of precolonial political centralisation on local development: Ghana’s paradox

ABSTRACT I investigate the impact of precolonial political centralisation (PPC) on local development in Ghana. Accounting for the potential endogeneity associated with the emergence of political centralisation, I find that PPC has a strong negative impact on local development. Further, PPC does not significantly correlate with the provision of local public goods. These results are robust to a battery of sensitivity checks and a wealth of controls at a fine unit. Two mechanisms plausibly explain these findings. First, I show that past colonial public investments, which still significantly determine contemporary development outcomes in Ghana, disfavoured politically centralised regions. Second, I argue that in centralised areas colonial rule might have empowered despotic local patrons who served the interest of the colonial state at the expense of local development.

Historical social contracts and their legacy: a disaggregated analysis of the medieval republics

We study the comparative political economy within the territories ruled by the medieval republics in Northern Italy. Building on the historical evidence, we conceptualize the emergence of more inclusive vs. extractive institutions in these sovereign polities as driven by the interests of local rulers and their need to build state capacity. We provide novel insights on the role of geography and historical contingencies in the development of public governance, individual attitudes, and social-inclusion, which mutually supported each other and persisted over time. We measure the origin, territorial evolution, and disappearance of all the sovereign polities that ruled over the Italian peninsula during the period of 1000-1800 AD. The empirical analysis connects contemporary socio-economic outcomes across spatially disaggregated northern Italian localities, at the municipality level, to local political history. We distinguish between so-called “communal” and “maritime republics” and show that the intensity and stability of exposure to the different types of republican rule in pre-industrial times continues to shape local public good provision and individual fiscal compliance, and has left a tangible imprint on today’s population diversity.

A Replication of “Trade Shocks and the Provision of Local Public Goods” (American Economic Journal: Economic Policy, 2017)

Feler and Senses assess the impact of trade shocks on local government finances in the United States. They find that increased import competition from China reduces housing prices and business activity in affected regions, which subsequently diminishes property and sales tax collections and the provision of local public goods. We replicate the authors’ published results and find that they are generally robust to alternative sample construction procedures and the removal of analytical weights. We also extend the authors’ methodology to evaluate the impact of trade shocks on local capital outlays, borrowing, and cash reserves. We find that the reduction in local expenditures resulting from Chinese trade exposure is driven in large part by decreased spending on fixed assets and that local governments facing greater import competition experience larger declines in cash and financial investments.

Federal Tax Deductions and the Provision of Local Public Goods

Federal Tax Deductions and the Provision of Local Public Goods

A Global Map of Amenities: Public Goods, Ethnic Divisions and Decentralization

I analyze the effects of ethnic divisions on the provision of public goods. Using OpenStreetMap data, I construct a new global dataset of locations of public amenities, such as schools, hospital and libraries. I allow for the possibility that the data may be systematically incomplete using two new proxies for mapping completeness. I provide strong evidence that more autonomous subnational regions with a high degree of ethnic fractionalization provide significantly fewer productive public goods. Therefore, my findings indicate that decentralization can lead to a failure in the provision of local public goods when it increases ethnical fractionalization among the policy makers responsible for collectively supplying public goods.

Crossing Frozen Ground: Tiebout, local public goods, place amenities, and rural-to-rural migration in the Arctic

We estimate the effect of place amenities on rural-to-rural migration decisions for Iñupiat people living in remote Arctic Alaska communities. Using US Census microdata, we test Tiebout's (1956) hypothesis that “people vote with their feet” by examining how migration responds to local public good provision in Arctic places. We find that local public goods are an important determinant of rural-to-rural migration for people living in remote Arctic communities. Better educational opportunities, availability of housing, and modern water and sewer systems serve as important pull factors in rural-to-rural migration decisions. The study uniquely contributes findings for Indigenous people living in remote Arctic regions to the literature on amenity migration.

INCOME DISTRIBUTION OF RURAL HOUSEHOLDS IN MEXICO

Despite the efforts to reduce poverty in rural municipalities income inequality persists in Mexico. This study presents an analysis on rural household income distribution in the country, since it is argued that conditional federal transfers fail on improving income distribution among rural households. The hypothesis stated that, because of local public goods are also part of individual budget constraints, it is rational to think that an expansion in the provision of local public goods will increase total income and, if such public goods are financed with conditional grants that target low-income groups, it is expected that income inequality may decrease. Thus, the objective was to classify rural municipalities in order to observe which among them have benefited from federal grants and those that did not, finding the reasons why assuming grants are accepted as an instrument contributing to reduce poverty and income inequality in recent years. Each group was analysed as a cluster to observe the effect of federal transfers on rural household income distribution. Main results showed that municipalities with rural low income-inequality and better economic development indicators improve income distribution when obtaining unconditional grants. This means that, in such cases, those transfers designed to reduce poverty also reduce rural income inequality. But that was not the case for the high income-inequality groups, where conditional grants did not have any effect on inequality and, in some cases, inequality increased. For the rural high income-inequality group, unconditional grants showed not to have a positive effect on reducing inequality. The clustering and regression analyses revealed large heterogeneity in the rural areas in terms of income and economic development.

How electoral competition shapes local public goods provision in South Africa

ABSTRACT This article aims to explain stark local-level inequalities in public goods access in South Africa and put forth a new framework as to how local electoral competitiveness and accountability influence public service delivery. Drawing on quantitative and qualitative data, the article shows that local electoral competitiveness (or ruling party dominance) drives variation in accountability and public goods provision at the local level. In competitive municipalities, South Africa's robust fully decentralized democracy and independent media, along with institutionalized accountability mechanisms, allow citizens, dissenting ruling party members, and opposition figures to exert positive pressures on public goods delivery. By contrast, in municipalities dominated by the ruling party, accountability mechanisms are less likely to be effectively utilized and local governments face less pressure to deliver some of the goods that citizens need most—water, sanitation, and refuse removal.