Measuring decentralization and the local public sector. Old regime polities typically suffered from fiscal fragmentation and absolutist rule. Decentralization index1 this index measures decentralization the assignment of fiscal, political, and administrative responsibilities to lower levels of government2 for 49 countries at fiveyear intervals from 1960 to 1995. Fiscal and political decentralization and government quality 3 to adapt policies to better satisfy citizen preferences oates, 1972. Financial responsibility is a core component of decentralisation. Both calibration and structural estimation techniques are advancing this portion of the literature. Decentralization is a complex phenomenon involving many geographic entities, societal actors and social sectors. Distribution of conditional transfers contents acknowledgements 3 1. For the problem of decentralizing government activities, mobility across regions is a critical factor. Fiscal and political decentralizationfiscal and political. Second, the last decade has seen an increasing emphasis on political forces in debates over fiscal decentralization. The way public finances are organised in a country forms the basis for how local authorities run their activities in cities, towns and villages. With the german government having evaluated its own decentralization.
The views expressed in this publication are those of the authors and do not necessarily reflect the views and policies of. Pdf fiscal decentralisation and fiscal outcomes researchgate. The rwanda fiscal decentralization strategy fds has been developed to guide the implementation of the government of rwandas fiscal and financial decentralization policy ffdp and is to be read and understood in collaboration with the decentralization policy dp and the rwanda decentralization. By the start of world war i, however, many such countries had centralized institutions and limited government. The views and opinions expressed in this booklet are those of the author and do not necessarily represent the views of unesco or of the iiep. Kumul haus, port moresby, papua new guinea p o box 566, waigani, ncd, papua new guinea tel.
No 214 fiscal decentralisation in the netherlands history. The course is also aimed at individuals who work for national, regional or local governments, or donor and development organisations. This paper explores the impact of fiscal decentralization on the efficiency of public service delivery. Fiscal decentralization and fiscal policy performance. Fiscal centralization, limited government, and public revenues in europe, 165019 mark dincecco old regime polities typically suffered from fiscal fragmentation and absolutist rule. An important component of the reform is to increase the fiscal. Fiscal decentralization in indonesia emphasis on expenditure side. The data are used to rank countries on political, fiscal and administrative dimensions of decentralization and localization. Fiscal centralization, limited government, and public revenues in europe, 165019 mark dincecco 26 june 2008 abstract. The conclusion is that decentralization in emerging and developing countries could generate benefits in the period 20002014. Introduction sdc has been implementing projects in support to decentralisation and local governance for about 15 years.
Otto abstract mineral sector reform efforts have been initiated in many nations during the past decade. Our central interest in this paper is to examine how fiscal decentralisation is articulated to address the leading social disparities in south africa. Of course decentralization also has important challenges, which also need to be mentioned. Corruption is less and good governance is generally better. Pdf in recent years, the concern that the behaviour of subnational governments may hinder the achievement of national budgetary targets has been.
The estimated results indicate that there exist significant spatial spillover effects among regional. Needs, sources, and utilization volume authoreditor. Description fiscal decentralization database is a panel of data on indices of fiscal decentralization every ten years from 1975, 1985, and 1995 for about 100 countries. Professionals responsible for the design and implementation of fiscal decentralisation processes, public sector reform programmes, public service delivery or financial management. Pdf decentralization and local government performance. This is the case of davoodi and zou 1997, who conclude that fiscal. Oates the traditional theory of public finance has made a strong case for a major role for fiscal decentralization. Principles of decentralization thomas courchene, jorge martinezvazquez, charles e. Fiscal decentralization and options for donor harmonisation. Fiscal centralization, limited government, and public.
Fiscal decentralization and the efficiency of public service. Decentralization, not federalism, key to ph progress. Abstract tanzania is currently implementing a local government reform aimed at improving public service delivery. There are important costs associated with decentralization. This fiscal decentralisation paper forms part of a series of introductory guides on key topics in. Fiscal decentralization and regional financial efficiency.
Fiscal decentralisation and inclusive growth oecd fiscal federalism studies fiscal federalism 2016 making decentralisation work contents executive summary chapter 1. Fiscal decentralization pdf format this document was created in adobe acrobat. A birds eye view of fiscal decentralisation chapter 2. I declare that testing the boundaries of zimbabwes fiscal decentralisation for urban councils is my own work. Local revenue mostly supported by transfer from central government. Fiscal decentralization, fifeenyears of efforts to public spending, and promote flscal decentralization in china have economic growth in china tfailed to promote economic grhinchinasprovinces ths finding is surprising in the tao zhang light of arguments that fiscal hengfu zou decentralzation usually promotes provincial or local economic growth. The country has made important first steps in the decentralization process, but as yet. Fiscal administration, eighth edition, shows you how public budgets operate and gives you the opportunity to crunch the numbers. If you do not have the proper viewer, you can download a free acrobat reader from the adobe site. In a unitary state, the head tax does not distort economic decisions.
Zambian government expenditure relative to gdp world bank data 9 table 14. Today, around 23 of sdcs country programmes include a support to local governance andor decentralisation. Fiscal decentralisation in kenya and south africa 77 1 introduction decentralisation is the dispersion of power and responsibilities from a central government to regional or locally managed units. In this case, fiscal decentralization is likely to follow, with administrative decentralization occurring last. Fiscal decentralisation and fiscal discipline this section analyses the relationship between fiscal decentralisation to the subnational level and fiscal outcomes for general government. Thus, the design and pace of fiscal decentralization need. Testing the boundaries of zimbabwes fiscal decentralisation. On the theory and practice of fiscal decentralization. Anecdotal evidence and case studies provide some insights, but additional policy experimentation and more systematic research are needed to understand more broadly the realities of and prospects for fiscal decentralization in developing countries. Federalism is a structuring principle which is appropriate for organizing selfgoverning communities into a union, said mendoza.
All citations, references and borrowed ideas have been duly acknowledged. Nov 18, 20 the paper fiscal decentralization and macroeconomic management by anwar shah published in 2006 aims to discuss a central question. Decentralization, not federalism, is the remedy for such problem. Christine kearney december 30,1999 decentralization index. Fiscal decentralization and economic growth 2 effects of fiscal decentralization are different in developed and in developing countries. None of the present work has been submitted previously for any degree or examination in any other university. July 2005 understanding fiscal decentralisation in south africa. Fiscal decentralization and corruption in emerging and. Agglomerationeffects, dutch municipalities, dutch provinces. The allocation of policy competences, a key characteristic of the ue, is the object of section 6. Effectiveness of decentralization in ghana james a. Fiscal decentralisation, efficiency, and growth request pdf.
On the theory and practice of fiscal decentralization wallace e. This trend could be as influential for good governance and for improving. It traces the evolution of fiscal decentralization as a significant and consequential global reform that has made subnational governments key public sector actors in a majority of countries. In this case, previously concentrated powers to tax and generate revenues are dispersed to other levels of government, e. This sequence of reforms leads to a higher degree of autonomy for governors and mayors. Fiscal decentralization in a for the asia foundation. Universitiesnational bureau committee for economic research volume publisher. The findings suggest that a larger share of decentralized expenditure is associated with a stronger fiscal balance. Such information would lead the way to better conceptual development and more effective public policy. While national governments have the responsibility to design and supervise a. A study of local government taxation in tanzania oddhelge fjeldstad and joseph semboja published in forum for development studies, vol. Fiscal decentralization and the challenge of hard budget. Poverty is understood in its multidimensional sense, and decentralisation refers to devolution including political, administrative and fiscal. Fiscal balance, the gst, and decentralization an opportunity for reform fraser institute digital publication october 2006 1 components of fiscal cash transfers in 200506, the federal government.
Government privatizes or deregulates private functions. Fiscal decentralization and macroeconomic management. The undp role in decentralization and local governance vi foreword undp and the german federal ministry for economic cooperation and development bmz collaborated on a critical assessment of undp support to decentralization and local governance. The designations employed and the presentation of material. Fiscal decentralization and the challenge of hard budget constraints edited by jonathan rodden, gunnar s. The regional and local units act as agents for the central government and execute certain functions on its behalf. At the same time, keep in mind that these plans might change e. It comprises nine dimensions designed to capture decentralizations functional complexity. With the obama administration budget information and data from the u. The views expressed in this publication are those of the authors and do not necessarily reflect the views and policies. The ar ray of socio economic issues is wide and it includes grow th and development, reducing poverty and. Fiscal decentralisation, democratic institutions and inflation 209 literature on fiscal decentralisation mostly uses price stability as a proxy for macroeconomic stability. Fiscal decentralisation, the devolution of taxing and spending powers to lower levels of government, has become important to governance in.
Fiscal federalism and national unity urban institute. Decentralisation reforms hold many promises including local level democratisation and improved service delivery for the poor. Fiscal federalism, subsidiarity, history of dutch public finance, oates, tiebout. Fiscal decentralisation, efficiency, and growth article in environment and planning a 419 may 2007 with 382 reads how we measure reads. Fiscal decentralization index world bank documents.
Lse europe in question discussion paper series fiscal. Fiscal decentralization and mining taxation professor james m. Educational decentralization and school governance in south africa. Concept paper on decentralisation and local governance 2 1. This publication analyzes the impact of fiscal decentralization and the resultant issues and challenges that countries face in practice. Chapter 2 defines both poverty and decentralisation. The analytical literature on fiscal federalism, right from the seminal paper by charles tiebout 1959 has emphasised the gains from fiscal decentralisation. About the asian development bank fiscal decentralization. Quality of government, fiscal decentralization, political decentralization. Fiscal decentralisation in uganda draft strategy paper 204 5 1 introduction 1. A ensure the preparations for the new tasks are on track, despite the lack of clarity about the exact budget.
This paper explores the impact of fiscal decentralization on fiscal policy performance in a large sample of advanced and developing economies. The country has made important first steps in the decentralization. Decentralization resulting difficulties in a coherent implementation in hq across clusters and in rosrds due to their constitutional status has wide freedom of action and it is a potential challenge consistent. At the other extreme, if administrative decentralization takes place first and is followed by fiscal decentralization. Current structure of fiscal federalism in nigeriaa legacy of military rule 4. First we will look at the main features of fiscal decentralisation in south africa and assess its impact on the major components of social expenditure. Fiscal decentralisation kenneth davey introduction fiscal decentralisation comprises the financial aspects of devolution to regional and local government. Educational decentralization and school governance in. It is intended primarily for policymakers, in this case meaning civil servants and their.
Select multiple pdf files and merge them in seconds. This can be illustrated by considering the use of a head tax. Demand for more decentralisation of government derives from a combination of people wanting to get more involved in the process of government and dissatisfaction with the results of centralised economic planning. Fiscal decentralisation in nepal kalpana ghimire fiscal decentralization refers to the allocation of authority, responsibility and resources creating harmony among different levels of the government in which expenditure assignment depends on subsidiarity principle. Fiscal decentralization and federalism data catalog. If sub national governments and private organizations are to carry out decentralised functions effectively, they must.
Fiscal decentralization 2425 within such models are determined by the data. Fiscal decentralisation overseas development institute. Fiscal decentralisation in developing countries chr. About the asian development bank fiscal decentralization in asia.
Pdf implementation rules for fiscal decentralization. Fiscal decentralisation and local finance fundsforngos. This joins dreher 12 who notes that fiscal decentralization is consistent with improvement in a number of key indicators of governance mainly in lowincome. A brief tour through the history of nigerian federalism reveals sharp turning points in federal and regional fiscal relations. A survey of current methodologies faigy abdelhak, jihyun chung, jingqiang du, and valerie stevens march 2012 1.
The impact of fiscal decentralisation on income inequality in indonesia is worthy of observation. Ebel abstract an important characteristic of many countries is that they exhibit, to greater or lesser degrees, some asymmetry in the way in which different regions are treated by their intergovernmental fiscal. This pdf is a selection from an outofprint volume from the national bureau of economic research volume title. It is to this end that the decentralization policy framework with the theme accelerating decentralization.
Theoretical considerations theoretical priors can be highlighted as regards the sign of the effect of different dimensions of fiscal decentralisation on the main fiscal aggregates of the general government, according. Conditions for success lessons from central and eastern europe and the commonwealth of independent states. It uses a stochastic frontier method to estimate timevarying efficiency coefficients. Understanding the context of fiscal decentralisation. This paper intends to provide insights into the impact of decentralisation on poverty. Fiscal decentralization forms the backbone of myanmars efforts to strengthen public services, encourage development across the country, and secure peace and stability. Using data for 80 countries, huther and shah 1996 also found a positive correlation between fiscal decentralization.