This can be illustrated by considering the use of a head tax. Fiscal decentralization and land policies presents the main contributions to a lincoln institute conference that addressed the effects of decentralization on local policies. The challenge of fiscal decentralization in transition countries. Other countries indicator china developing transition oecd countries economies countries subnational share of 48 16. A survey of current methodologies faigy abdelhak, jihyun chung, jingqiang du, and valerie stevens march 2012 1. However, fiscal decentralization may also exert a negative impact on the efficiency of government. Integrating lagging and leading areas in the middle east and north africa february 14, 2020 in africa subsaharan. If you want to go far, go with many february 19, 2020 in mena. Fiscal decentralisation in developing countries essons for.
The paper concludes with some observations on how to think about designing more appropriate and effective fiscal decentralization in developing countries. Davoodi and zou 5, and zhang and zou 17 have taken a. He has previously taught at harvard university and has worked at the fiscal affairs department of the. Measuring fiscal decentralization as the share of subnational expenditure in total government expenditures, they estimate the effect of fiscal decentralization on income inequality conditional on the size of government with findings. Fiscal decentralisation covers two interrelated issues.
Pdf on jan 1, 2018, roy bahl and others published fiscal decentralization and local finance in developing countries find, read and cite all the research you need on researchgate. The country has made important first steps in the decentralization process, but as yet. Fiscal decentralization and regional economic growth. This book draws on experiences in developing countries to bridge the gap between the conventional textbook treatment of fiscal decentralization and the actual practice of subnational government finance. Development from below studies in fiscal federalism and statelocal. Global perspectives on the obstacles to fiscal devolution cheltenham, uk and northampton ma, usa. Impact of fiscal decentralization on economic growth in.
Fiscal decentralization in developing countries is the latest volume in the distinguished cambridge series trade and development. Impact of fiscal decentralization on economic growth in the districts of nepal k. Measuring decentralization and the local public sector. View fiscal decentralization research papers on academia. Pa at ns rethinking decentralization in developing. Trade and development isbn 0 521 64143 8 hardbound 1. The aim is to focus on expenditure and revenue decentralization giving importance to the effects of subnational revenue mobilization on this. We find that developed countries are on average more decentralized than developing countries and that asia, europe and north america are among the most. However, the success of fiscal decentralization as a development strategy is decidedly. Development from below studies in fiscal federalism and statelocal finance series roy bahl, richard m. Fiscal decentralization and economic growth sciencedirect.
Fiscal decentralization in a for the asia foundation. 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. Macroeconomic management and fiscal decentralization. Fiscal decentralization and growth 247 economy is given by dyrdt 1 s 1ytt au u u1yarabragravrayr.
Using data for 80 countries, huther and shah 1996 also found a positive correlation between fiscal decentralization and economic growth. To explain this variation, i propose a sequential theory of decentralization that has three main characteristics. Cooperation and development oecd countries, 19722005. Wider working paper 2016172 fiscal decentralization. Central governments around the world are decentraliz decentralization can greatly affect economic develop ing fiscal, political, and administrative responsibilities. Fiscal decentralisation in developing countries chr. Included are the types of indicators included as well as some guidance on how to use and how not to use the indicators as well as where to find the information. Fiscal decentralization in developing countries the web site. A broader view of fiscal decentralization in developing. But in nearly all countries where governments have attempted to decentralize, they have faced. Fiscal decentralization and local finance in developing countries. Local elections, state capture, and development in nigeria january 30, 2020 in fiscal decentralization.
There are a number of pros and cons associated with fiscal decentralization. Fiscal decentralization and intergovernmental finance reform as an international development strategy jamie boex june 2009 abstract decentralization and intergovernmental finance have been a common element in international development efforts for many years. A number of countries have just started the process and are presently creating new units andor transferring responsibilities and revenues to them. New development of fiscal decentralization in china.
Pdf fiscal decentralisation in developing countries. Fiscal decentralisation in developing countries essons for bangladesh there is an ongoing debate in bangladesh in civil society and among policymakers, whether the country should move from a highly centralised unitary state to a more devolved entity. The conference, fiscal decentralization and land policies, was held. Decentralization in government developing countries.
About the asian development bank fiscal decentralization. Fiscal decentralization and economic growth in the united. Fiscal decentralization in developing countries edited by richard m. Fiscal decentralization and public sector efficiency. Fiscal decentralization involves shifting some responsibilities for expenditures andor revenues to lower levels of government. The virtues and reality of decentralizing governance in developing countries have been the subject of vigorous debate since that time, and the fiscal aspect of decentralization has certainly been one aspect of that debate. As economic and political pressures for fiscal decentralization escalate and forces driving democratization develop, many countries will feel increasing pressure to decentralize. The world bank has had programs in support of decentralization in 74 countries during 19862001. Fiscal decentralization and corruption in emerging and. Fiscal decentralization indicators this note contains the documentation on the database of fiscal decentralization indicators that are derived from imfs government finance statistics gfs.
Fiscal decentralization forms the backbone of myanmars efforts to strengthen public services, encourage development across the country, and secure peace and stability. A sampling of definitions page 1 joint undpgovernment of germany evaluation working paper of the undp role in decentralization and local governance october 1999 1. Our findings suggest that government organization matters for local. Fiscal decentralization and intergovernmental fiscal. Pdf fiscal decentralization in developing countries. The extensive literature about the theory and practice is surveyed and longstanding problems and new questions are addressed. An empirical analysis of russian regions for 20052012 shows that excessive expenditure decentralization within the region, which is not accompanied by the respective level of revenue decentralization, is significantly and negatively related to regional economic growth. Fiscal decentralisation comprises the financial aspects of devolution to regional and local. The article addresses the theoretical and empirical relation between fiscal decentralization and economic growth.
Income inequality, fiscal decentralization and transfer. Fiscal decentralization in developing and transition economies. A number of developed and developing countries have undertaken comprehensive reforms of their intergovernmental fiscal systems over the past two decades. Finally, in a few countries decentralization is still at the stage of the. Rethinking decentralization in developing countries world bank. A large group has only adopted legal texts that engage the central government to proceed towards a more decentralized system. Papers presented at a senior policy seminar on intergovernmental fiscal relations in china, held in dalian, china, sept. First, in the presence of economies of scale, decentralization may lead to higher costs see e. During the past two decades, many developing countries have implemented decentralisation reforms.
The impact of local decentralization on economic growth. Indeed, it is important to clarify the concept of fiscal decentralization, as well as its various components. Counties we analyze the impact of fiscal decentralization on u. Devkota1 phd local bodies fiscal commission, nepal abstract this paper focuses on the evolving pattern of fiscal decentralization and its impact on the growth of per capita gdp of the districts in nepal. Bird is professor of economics, university of toronto and a consultant to the world bank.
Oates the point of departure for my contribution to this symposium is the striking contrast in the extent of fiscal centralization of the industrialized and the developing countries. Fiscal decentralization and intergovernmental finance. Introduction decentralization is a concept that is not easy to define, and perhaps even harder to measure treisman, 2002. The oecd fiscal decentralisation database provides comparative information on the following indicators analysed by level of government sector federal or central, including social security, stateregional and local, for oecd member countries between 1965 and 2018. This study focuses on the relationship between fiscal decentralization and icrg index of corruption risk in both categories of emerging and developing countries, using a sample of 38 countries for the period 20002014. Fiscal decentralization and intergovernmental fiscal relations. Central governments around the world are decentral izing fiscal. But the primary measures for local tives can be designed to improve outcomes. Fiscal decentralisation, the devolution of taxing and spending powers to lower levels of government, has become important to governance in many countries. This impact may be attributed to a number of potential advantages of the provision of public goods by central governments. For the problem of decentralizing government activities, mobility across regions is a critical factor. Pdf on jan 1, 2000, paul smoke and others published fiscal decentralization in developing countries. A key issue in decentralization is the world development vol.
Guidance for subnational government pefa assessments. Fiscal decentralization and local finance in developing. Distribution of conditional transfers contents acknowledgements 3 1. Since oecd countries are substantially more spending than revenue decentralized, this is consistent. Localization has been pursued through varying combinations of political, administrative and fiscal decentralization initiatives. Proponents of the measure typically note that responsible parties at the local level are in a better position to asses how to use the available capital to best effect, often purchasing necessary supplies from local vendors, a move that helps to stimulate the local economy and encourage. Library of congress cataloginginpublication data macroeconomic management and fiscal decentralization edited by jayanta roy. Fiscal decentralisation overseas development institute. It uses the primary sources of data regarding economic activity of general, central, and subnational governments to evaluate the economic dimension of decentralization between 2005 and 20. One important factor in determining the type of fiscal decentralization is the extent to which subnational entities are given autonomy to determine the allocation of their expenditures. This brief examines fiscal decentralisation experiences in developing countries and explores factors affecting the reform process that could inform future policy and research on fiscal. The views expressed in this publication are those of the authors and do not necessarily reflect the views and policies of. Fiscal decentralization in developing and transition economies progress, problems, and the promise by anwar shah1 world bank washington, dc usa world bank policy research working paper 3282, april 2004 the policy research working paper series disseminates the findings of work in progress to encourage the exchange of ideas about development issues.