Role Of Fiscal Decentralization Research Articles

Achieving ecological sustainability in OECD countries: The role of fiscal decentralization and green energy

The global push for sustainable development has increased interest in understanding the complex interplay between various factors that affect the load capacity factor. The load capacity factor is a metric used to assess the utilization or capacity of a system or resource. It indicates how effectively the system or resource is used at any given time. This study aims to provide an understanding of the potential environmental effects of human activities by examining the effects of fiscal decentralization, renewable energy share, and natural resources on the load capacity factor in OECD countries from 1995 to 2020. The study's findings emphasize the need to promote renewable energy sources, optimize the utilization of natural resources, and empower local authorities in determining energy policy. Furthermore, findings reveal that fiscal decentralization can significantly affect the load capacity factor, particularly at higher levels of decentralization, and that as the level of fiscal decentralization increases, the load capacity factor continues to exert a significant influence. Moreover, economic growth negatively impacts the load capacity factor, indicating that higher levels of economic growth have a greater impact. A comprehensive and effective policy promoting sustainable development, enhancing load capacity, and mitigating environmental risks should be the focus of policymakers in the OECD countries. A greener and more sustainable future can be achieved by aligning fiscal decentralization, renewable energy promotion, and sustainable resource management.

Achieving ecological sustainability in European Union: The role of fiscal decentralization and green innovation

European Union member states are dedicated to bring standards and create climate change mitigation strategies at the center stage of public policy, prioritizing energy sector's transition from non-renewable to renewable sources by the means of innovation. Though there are a plethora of studies on determinants of environmental degradation, the nexus between fiscal decentralization and ecological intensity has been lacking of empirical evidence. To bridge this shortcoming, this study aspires to investigate the direct impact of fiscal decentralization, economic abundance, human capital, energy use and green innovation on environmental degradation and how green innovation moderates the impact of fiscal decentralization on environmental degradation. Using the theoretical setting of environmental Kuznets curve (EKC) phenomenon, this study analyzes the determinants of environmental degradation measured by ecological intensity and carbon intensity respectively across the nine European Union member states over the time span from 1995 to 2018. This study built upon a panel Method of Moments Quantile Regression (MMQR) with fixed effects and the ordinary least squares (OLS) regression with Driscoll-Kraay (DK) standard errors to validate the appropriateness of the EKC hypothesis in the observed sample authenticating the inverted U-shaped pattern between economic abundance and environmental degradation. Insofar as the direct impacts are considered, human capital and green innovation are efficient in abating environmental degradation of the countries under examination whereas energy use and fiscal decentralization aid in to environmental degradation. Regarding the indirect impacts, green innovation negatively moderates the association between fiscal decentralization and both indicators of environmental degradation namely, ecological intensity and carbon intensity. In the light of these findings, it is imperative for European Union member states to authorize the local governments to reduce pollution through innovation in climate change mitigation technologies to reinforce the Sustainable Development Goal (SDG) 12.

The Role of Fiscal Decentralization and Human Resource Quality in The Welfare Of Underdeveloped Regions in Indonesia

This study aims to see the advantage of fiscal decentralization and human development on welfare in 62 underdeveloped districts in Indonesia. The data used is secondary data of 62 underdeveloped districts in Indonesia in 2016-2020 period for panel data regression. The result showed that fiscal decentralization, namely DAU, and life expectation number with 5% error rate are statistically significant have sign in accordance with expectation, then H1a and H2a are accepted. While fiscal decentralization, namely DAK and DBH, with average time of school has no influence on the welfare of underdeveloped regions in Indonesia

The Role of Fiscal Decentralization in Limiting CO2 Emissions in South Africa

The Role of Fiscal Decentralization in Limiting CO2 Emissions in South Africa

The role of fiscal decentralization and natural resources markets in environmental sustainability in OECD

Environmental sustainability is a global priority. Fiscal decentralization and natural resources markets have become essential for combating climate change and ecological degradation. This study looks at how markets for natural resources and fiscal decentralization affected environmental sustainability in OECD nations between 1995 and 2021. It examines how fiscal decentralization (revenue and expenditure) relates to environmental indicators like carbon dioxide (CO2) emissions and ecological footprint. The study also examines how exports and resource abundance mediate in the natural resource markets. Regression analysis(STIRPAT) is carried out while accounting for institutional and economic variables. According to the findings, more significant revenue and expenditure decentralization results in lower CO2 emissions and an ecological footprint, improving environmental sustainability. Furthermore, a healthy market for natural resources strengthens this connection. These results demonstrate how fiscal decentralization and efficient resource management are crucial for fostering environmental sustainability in OECD nations.

The role of fiscal decentralization and technological innovations in curbing sulfur dioxide emissions: formulating SDGs policies for China

The role of fiscal decentralization and technological innovations in curbing sulfur dioxide emissions: formulating SDGs policies for China

Editorial: The role of fiscal decentralization in achieving environmental sustainability in developing and emerging economies

Editorial: The role of fiscal decentralization in achieving environmental sustainability in developing and emerging economies

Fiscal decentralization, industrial structure upgrading, and carbon emissions: evidence from China.

The debate over the role of fiscal decentralization and industrial structure upgrading in China's environmental governance has received increasing attention. Based on China's provincial panel data from 2003 to 2019, this paper investigates the impact of fiscal decentralization and industrial structure upgrading on carbon emissions to provide empirical evidence for the above theoretical argument. The results show that fiscal decentralization and industrial structure upgrading are negatively correlated with carbon emissions, while the interaction term for fiscal decentralization with industrial structure upgrading presents a facilitating effect on carbon emissions. Besides, fiscal decentralization, industrial structure upgrading, and the interaction term have significant regional heterogeneity on carbon emissions. When fiscal decentralization and industrial structure upgrading are taken as threshold variables, the effects of industrial structure upgrading and fiscal decentralization are significantly nonlinear. Moreover, environmental regulation, transportation infrastructure, and carbon emissions are positively correlated. There exists an inverted U-shaped relationship between carbon emissions and economic growth, which proves environmental Kuznets curve theorem. However, FDI and urbanization have no significant effect on carbon emissions. According to the above conclusions, it is necessary to strengthen the positive interaction between fiscal decentralization and industrial structure upgrading in mitigating carbon emissions, promoting the green and low-carbon transformation of China's economy, thus realizing the goals of "carbon peak" and "carbon neutrality."

Political decentralization and corruption: Exploring the conditional role of parties

AbstractThis study investigates how national levels of corruption are influenced by the interaction of two factors in political decentralization: the presence of local elections and the organizational structure of national parties. Previous studies have focused primarily on the role of fiscal decentralization on corruption and have mostly ignored the institutions of political decentralization. Using new data in a series of expansive models across multiple countries and years, we find that corruption will be lower when local governments are more accountable to and more transparent toward their constituents. This beneficial arrangement is most likely to occur when local elections are combined with nonintegrated political parties, meaning that party institutions themselves are decentralized from national control. Such an institutional arrangement maximizes local accountability by putting the decision to nominate and elect local leaders in the hands of those best in a position to evaluate their honesty—local electors.

Fiscal decentralization and interregional Capital misallocation: evidence from China

Misallocation of factors of production has been recently viewed as a promising explanation accounting for the large difference in total factor productivity (TFP) across countries. This article differs from previous studies by concentrating on interregional capital misallocation and by focusing on the role of fiscal decentralization in shaping misallocation. Using a city level panel data set, we measure intra-provincial and inter-city capital misallocation in China over 2003–2018. The empirical results based on provincial level panel data suggest that fiscal decentralization can lower inter-city capital misallocation while revenue decentralization performs better than expenditure decentralization. We further find that this positive effect is more significant and much larger when it is the market rather than government intervention that is driving the flow of capital. The results are robust to subsample regressions, IV estimations, spatial autoregressions and alternative measurement of interregional misallocation.

The role of energy prices and non-linear fiscal decentralization in limiting carbon emissions: Tracking environmental sustainability

Since the role of fiscal decentralization cannot be overlooked in tracking sustainable development goals targets of a clean environment and climate mitigation, it is inevitable to understand the comprehensive picture of its link with environmental quality. Unlike past studies, this study investigates the combined influence of energy prices and non-linear fiscal decentralization on carbon emissions in the presence of institutional quality and gross domestic product in the model. It employed advanced econometric panel techniques on data from 1990 to 2018 for the top seven fiscally decentralized Organisation for Economic Co-operation and Development (OECD) nations, including Spain, Belgium, Austria, Switzerland, Germany, Australia, and Canada. The main outcomes are as follows: first, a cointegrating equilibrium link is existent among the study variables. Second, the linear term of fiscal decentralization promotes carbon emissions, while the non-linear term mitigates it. It verified the inverted U-shaped curve between fiscal decentralization and carbon emissions. Third, increasing energy prices for non-renewable energy decrease carbon emission due to a substitution effect. Among other explanatory variables, improvement in the quality of institutions decreases carbon emissions, while the gross domestic product increases it. These findings suggest strengthening fiscal decentralization, lowering non-renewable energy prices, and improving institutional quality to check the deteriorating environmental quality in the study sample and other worldwide regions.

The Role of Fiscal Decentralization in Municipal Budgets: Case of the Czech Republic

Abstract Immovable property tax is one of the key elements of fiscal decentralization in the Czech Republic. It is the only tax that is directed to municipal budgets in the full amount. It is also the only tax the total receipts of which can be influenced by municipalities by means of corrective features. Although the significance of immovable property tax in the process of fiscal decentralization is undeniable, its role in municipal budgets is much discussed. The goal of the article is to evaluate the role of immovable property tax in budgets of Czech municipalities through its impact on the resulting balance of financial management of a particular municipality. The role of immovable property tax is assessed against its importance for the municipal budget. The data concerning financial management of municipalities, the amount of receipts of immovable property tax and the possibilities of utilization of the local coefficient in the year 2019 are analyzed in detail. The results identified by the analysis are compared with the situation in 2012 and it may be stated that although the role of immovable property tax in municipal budgets has decreased if compared with the year 2012, it still represents a significant income of Czech municipalities. At the same time, the current economic situation suggests that the importance of immovable property tax will increase in the years to come.

Does financial risk and fiscal decentralization curb resources curse hypothesis in China? Analyzing the role of globalization

On the role of natural resources, extensive studies are available, especially in a country's financial development. However, earlier studies ignored the role of fiscal decentralization and improvement in financial risk index in interaction with natural resources rent. Therefore, this study attempts to investigate whether fiscal decentralization and improvement in financial risk index curb the resources curse hypothesis for China or not. For this purpose, quarterly data from 2005Q1-2016Q4 is employed using advanced time series econometric approaches that deal with multiple structural breaks. This study uses an updated indicator that covers the efficiency, depth, and accessibility of financial institutions and markets for financial development. The findings confirm China's resource curse hypothesis; however, increasing fiscal decentralization and financial risk index improvement avoid the resource curse hypothesis. Moreover, globalization, gross domestic product, fiscal decentralization, and financial risk index improvement positively affect financial development. The policy implications focus on increasing fiscal decentralization to effectively utilize natural resources and improve the financial risk index to avoid the resource curse hypothesis.

Decentralization of Education: The Affective Role of Fiscal Decentralization in Pakistani Education System(s)

Fiscal decentralization is the devolution of financial decisions to the lowest level of administration. Financial decisions include revenue generation and expenditures on public services.This study qualitatively explored fiscal decentralization as a factor affecting decentralization of education in Pakistan. Data were collected from educational leaders (six DEOs and six high school principals) and six political leaders through interviews. The KP Local Government Act 2013 and the 18thAmendment to the Constitution of Pakistan were also used as the datasources. The participants reported inefficiency of the centralized fiscal system. All the participants associated hopes for positive and effective reforms through the aforementioned federal and provincial level legislation because they changed the way resources were distributed among social services departments district-wise. However, they showed great concerns over only ten percent revenue generation powers given to the provinces because that might lead to low fiscal powers of district governments. The study revealed that the process of fiscal decentralization in the province is very slow and henceveryslow progress in the decentralization of education was observed. The low fiscal powersaffect educationalexpenditures as the local governments either have low or no capacity to handle budgetary matters of the public school locally. The prevailing processof decentralization in education is mainly political and administrative as the provincial governments still approve the budgets for education. The study concludes with the recommendations that fiscal decentralization need to be focused and schools be given the opportunity to get funds from the local governments and the community. The local leaders mightbe trained and empowered to make fiscal decisions in the best interest of the institution(s).

ФІСКАЛЬНА ДЕЦЕНТРАЛІЗАЦІЯ ЯК ІНСТРУМЕНТ МІНІМІЗАЦІЇ ПОДАТКОВИХ РОЗРИВІВ В ЕКОНОМІЦІ

Current trends in the functioning of the official and shadow sectors indicate the low effectiveness of the existing tools of state regulation of the economy and its inability to ensure long-term economic growth. One of the reasons is tax evasion, which leads to the formation of tax gaps in the economy. Their formation has a negative impact on economic development, reduces the country's budget potential, limits opportunities for funding programs. The paper substantiates that along with the regulation of tax rates, increasing the efficiency of financial monitoring procedures, assessing the probability of implementing tax evasion schemes, an important tool for minimizing tax gaps is the implementation of fiscal decentralization policy. The article analyzes the current trends in the implementation of reform of fiscal decentralization in Ukraine. The dynamics, features and advantages of the formation of united territorial communities are analyzed. It is concluded that the number of formed united territorial communities in Ukraine has been gradually decreasing since 2017. The main features of fiscal decentralization include the expansion of cooperation between individual territorial associations in the field of their economic and social development, growth of their financial potential by combining financial and investment opportunities, implementation of joint measures to regulate economic processes. The role of fiscal decentralization in the implementation of tax gap management policy is substantiated. A comparative analysis of the dynamics of changes in the main indicators of local budget revenues before and after implementation of decentralization reform in Ukraine is carried out. It is concluded that the volume of tax revenues to the state budget will be gradually reduced starting in 2015. This correlates with the beginning of the implementation of the financial decentralization reform in Ukraine. The study concludes that the implementation of decentralization reform in the country as one of the most effective tools to increase the tax potential of the territory, reduce the volume of shadow financial transactions and manage tax gaps.

Fiscal Decentralization and Economic Growth in Nigeria: New Evidences

The debate regarding the role of fiscal decentralization in promoting economic growth and by extension, improving the wellbeing of the people, has been at the front burner in macroeconomic policy discuss. Studies have attempted to establish the direct interaction for most countries and regions, but not many conclusions have converged, hence necessitating this study. This study, therefore, re-examined the effect of decentralization on economic growth in Nigeria. Using fiscal decentralization data, (which included expenditures for national, subnational and local government) and other control variables, sourced from mainly secondary sources (World Development Indicators [WDI] and Central Bank of Nigeria’s [CBN] Statistical Bulletin various years) and employing basic OLS technique and Error Correction Mechanism (ECM), the results showed, amongst other issues, that fiscal decentralisation may not directly impact on economic growth, but the effects can be transmitted through efficient economic management process, which may be a product of effectively-managed fiscal decentralization processes. The study, therefore, recommended, amongst other things, that efficient systems should be promoted in the decentralization process to enhance economic growth. Viable human capital/infrastructure base should be built to drive as well as enhance productive fiscal decentralization, through strategic policies finetuning, and finally, check inflation and corruption, amongst other ills, if growth must be actualized and sustained.

Does fiscal decentralization and eco-innovation promote renewable energy consumption? Analyzing the role of political risk

The role of fiscal decentralization is important not only for the promotion of cleaner energy sources but also for a sustainable environment and the achievement of the Paris Climate Agreement (COP21) in 2015 in general. Therefore, this study attempts to incorporate fiscal decentralization as a new determinant of renewable and non-renewable energy consumption along with political risk index, eco-innovation, and renewable energy research and development (R&D) for seven (Organization for Economic Cooperation and Development) OECD countries from 1990 to 2018. For empirical analysis, the test proposed in Banerjee and Carrion-I-Silvestre (2017) is employed for cointegration, while cross-section augmented autoregressive-distributed lag (CS-ARDL) is used for the short-run and long-run analysis, and to check robustness, a common correlated effect mean group (CCEMG) test is applied. The results confirm that fiscal decentralization and eco-innovation promote renewable energy consumption and lower non-renewable energy use. Moreover, the improvement of the political risk index and the rise of R&D in renewable energy increase renewable and decrease non-renewable energy consumption. For policy implications, this study recommends that transferring the power to the local governments will further improve energy efficiency and switch these countries' energy mix towards more sustainable sources of energy. This shall also help to reduce the use of non-renewable energy consumption, i.e., fossil fuels in the total energy mix.

Determinants of Public‐Sector Efficiency: Decentralization and Fiscal Rules

SUMMARYThis paper investigates the determinants of public‐sector efficiency, in particular the role of fiscal decentralization and fiscal rules. For 23 European countries over the period from 1995 to 2015, we construct a measure of public‐sector performance consisting of nine distinct indices for each area of public policy, such as administration, health education, economic performance, security and infrastructure.We use several efficiency techniques, e.g., free disposal hull and order‐m, and investigate input‐and output‐oriented efficiency in the public sector. We analyse in depth the impact of fiscal decentralization and fiscal rules on public‐sector efficiency. We conclude that, whereas decentralization fosters efficiency, fiscal rules have no effect. Moreover, fiscal rules, when combined with decentralization, may harm efficiency, which is consistent with the ratchet effect.

DOES FISCAL DECENTRALIZATION AFFECT INFRASTRUCTURE QUALITY? AN EXAMINATION OF U.S. STATES

A transportation network is vital to an economy. However, the U.S. highway infrastructure suffers from insufficient maintenance creating inefficiencies such as increased travel times and increase in accidents. The means to fund the infrastructure and their maintenance is a point of debate. In this paper, we examine the role of political institutions and decision‐making on the quality of highway infrastructure by focusing on the role of fiscal decentralization. Using generalized linear model estimation on state data from 1992 to 2012, we find evidence that fiscal decentralization improves infrastructure quality. These results are robust to the choice of control variables and method of estimation. (JEL D73, H42, H72)

In government we trust: The role of fiscal decentralization

This paper looks whether fiscal decentralization is associated with trust of citizens in government related institutions. We expect a positive relationship based on the argument of governments' improved responsiveness to preferences of citizens that is perceived to result from more decentralized fiscal systems. Survey data from up to 42 countries over the period 1994–2007 confirm this positive relationship. It is robust to controlling for unobserved country heterogeneity and a wide array of other explanatory variables that are associated with trust in government related institutions. Moreover, we do not find that the positive association with fiscal decentralization extends to other, non-government related institutions.