The article is aimed at determining the major problems in the financing of education sphere in the current context of the reform of decentralization of power in Ukraine and developing directions for solving them. The main directions and results of educational reform have been analyzed, and the ranking of Ukraine according to the Global Competitiveness Index has been defined. The positive points of the decentralization of education have been noted. The expenditure of the budget of Ukraine have been analyzed and the proportion of expenditure on education has been determined as to the total budget expenditure. Along with this, the main circle of problems of the budget provision for the education sector has been outlined. It has been proposed: to increase the efficiency of allocation of budgetary means at all levels of the budget system; to enhance the possibilities of educational institutions to attract additional financial resources through educational innovation, and to expand the list of paid services provided by such institutions; to decentralize education, taking into account the characteristics of development of regions, their productive potential, the demographic situation, and the interests of the territorial communities.
Fiscal decentralization is seen as part of a reform agenda in developing countries to strengthen regional and local governments. It is believed that it improves the efficiency of public service delivery through preference matching and allocation efficiency. In light of this, this study was conducted to assess the practices of Woreda level fiscal decentralization in Addis Ababa City Government. In doing this study, explanatory mixed method research design was followed. Subjects of the study were government officials working in selected Woredas and sub-cities of Addis Ababa city. In the study, multi-stage sampling technique was used to select representative respondents. To this effect, one hundred ninety-two participants were selected using multi-stage sampling technique. Besides, sub-city and Woreda Finance and Economic Development Bureaus officials were purposely selected to conduct key informant interviews. The data gathering instruments were questionnaire, key informant interviews, and document analysis. The study followed statistical tests to test the research hypotheses. It applied Kruskal Wallis test of significance. The study involved strict respect for informed consent, voluntary participation, and confidentiality. The findings of the statistics tests indicates that respondents' responses concerning autonomy of Woredas in planning and budgeting, revenue generation and retention, expenditure assignments were significantly different. This implies that there is absence of uniformity in the practices of these aspects of fiscal decentralization in the city. On the contrary, the respondents' response concerning the functionalities of institutional and legal frameworks, inter-governmental fiscal relations, challenges, and constraints of fiscal decentralization, were not significantly different. In general, the practice of fiscal decentralization in the city was limited as existing institutional and legal frameworks were in short of clarity and uniformity. Respondents stated that Woreda administrations had weak revenue base, and need clear planning and budgeting, and expenditure assignment autonomy. Based on the findings of the study, the research hence recommended that existing institutional and legal frameworks should be structured in the way that it enables Woreda administrations to generate and utilize sufficient revenues, plan and budget their own activities, have clear autonomy of expenditure assignments. Inter-governmental fiscal relations should also be planned to reduce the vertical imbalances observed at Woreda Administration level.
China economic development has entered a new normal. Consumption plays a more and more important role in promoting economy. Based on the empirical statistics, we adopted the VEC model to analyze the dynamic linkages and influences between public expenditure and consumption. The conclusion is there are different impacts between central and local public expenditure, and in the long run, only the latter has a strongly positive effect on consumption. So trying to coordinate the relationship between central and local finance is of vital importance under the background of economic transition.
It is undeniably that the fiscal autonomy of local government authorities constitutes a critical component of any financial decentralization in both developed and developing countries.It gives local government authorities freedom to impose taxes, generate revenue within their areas, allocate their financial and material resources, determine and authorize their annual budgets without external motivate.The fiscal component of local governments in Tanzania Mainland is mannered by the Constitution of the United Republic of Tanzania, 1977 and The Local Government Finances Act, 1982.Despite such recognition, powers of local government authorities in relation to local government finance are still, limited by central government.These limitations do not only deny local governments requisite powers to adequately raise revenue from their own sources and borrowings but also inhibit their ability to determine and approve such annual budgets.
Fiscal decentralization demand the regions to improve their creativity in collecting funds for financing local expenditures according to their needs (self-financing). The objective of this paper is to identify problems and challenges in enhancing local own-revenues faced by the local governments. This research used the qualitative method by comparing two case studies on the enhancement of local own-revenues. Both the local governments of A and B face problems in optimizing local ownrevenues. the enhancement of local own-revenues is faced with two main challenges. For undeveloped regions, the challenge is the making of an urban-biased policy and for regions with urban characteristics the challenge is the emergence of urban problems due to high business opportunities in the urban regions. Another challenge faced by every local government is dependency on the sector of local taxes as the sector with large contribution to local own-revenues.
Income and property taxation are among the most prevalent policy instruments to finance local expenditure in countries with a high degree of decentralization. However, little is known about their relative efficiency and redistributive properties. This paper compares both tax instruments within the same framework and investigates their relative attractiveness to finance local expenditure. It further allows for inter-municipal spillovers and rivalry in the consumption of the publicly provided good. The analytical model identifies the different inefficiencies in both tax regimes which include intra- and inter-municipal free-riding. In a numerical illustration, the model is solved for the resulting equilibria. This allows to quantify the gross welfare loss from decentralization and also reveals a decomposition of the welfare loss into its components.
Despite a world awash with liquidity, \n large infrastructure supply gaps exist across developing and \n emerging markets. Infrastructure has been largely \n decentralized to subnational governments in many countries, \n and many policymakers are keenly interested in developing \n subnational bond markets to give subnational governments \n access to private financing for infrastructure. Despite \n this, the transaction costs of bond issuance are still \n prohibitive for many subnational governments to access \n financing. Pooled financing, through regional infrastructure \n funds, municipal funds, or bond banks, has become a \n sought-after solution for helping subnational governments \n access private financing for infrastructure. In the United \n States, municipal bond banks that were established since the \n 1970s have become a cost-effective and stable model for \n expanding subnational financing for many small \n municipalities, while maintaining strong credit ratings with \n virtually no defaults from sub-borrowers. The municipal bond \n banks have been successful in lowering financing costs for \n many small, unrated local governments, with loan sizes as \n low as less than $50,000. This paper examines the policies \n and structures that have made pooled financing successful in \n the United States, including regulatory frameworks, \n governance and managerial systems, the role of project \n appraisal, operations and pricing, and managing the default \n risks of borrowers. The paper also explores broader lessons \n for developing countries that are interested in establishing \n pooled financing for subnational infrastructure.
Jan 1, 2017·Proceedings of the International Conference on Administrative Science, Policy and Governance Studies (ICAS-PGS 2017) and the International Conference on Business Administration and Policy (ICBAP 2017)
Whether fiscal decentralization is good for reducing communal conflict is still debatable. This study examines the linkage between fiscal decentralization and communal conflict in Indonesia, administrative decentralization, and political decentralization is examined as well. Data come from the Village National Census (Podes) 2008-2014 (N=234,717). Results of twolevel logit regression show that fiscal decentralization not significantly associated with reducing communal conflict. The findings suggest that decentralization work for reducing communal conflict through better capacity of local bureaucrats rather than through financing capacity in delivering public services and the enhanced opportunities for channeling citizen participation in direct political participation.
Implementation of regional autonomy as the government's efforts for the welfare society in accordance with the characteristic of each region. Implementation of the fiscal decentralization recurring phenomenon is the phenomenon of flypaper effect. Flypaper effect occurs when the local government responded to the regional expenditure larger than the central government transfer revenue. The purpose of research is to prove the phenomenon of flypaper in East Java Province period 2011-2015. This research uses quantitative analysis with a population of 29 districts and 9 cities in East Java province. Data were analyzed using panel data regression analysis with Eviews statistical test equipment. The result showed that regional revenue positively affects regional expenditure, general allocation fund positively affects regional expenditure, financing budget surplus positively affects regional expenditure, regional revenue positively effect on growth, positive effect on the regional expenditure growth at district/city in East Java Province. The result of the comparison coefficient general allocation of funds and region revenue indicate there has been a flypaper effect on region expenditure districts/cities in East Java Province period [2011][2012][2013][2014][2015]
The chapter examines the critical role of good governanceGovernance and robust financial management in building stable democratic states in the Pacific Islands. It explores the role of ICTs in public financial managementPublic financial management (PFM) as a means to this end and identifies some of the factors that lead to the success or failure of e-government initiatives in this core government activity. The chapter outlines the dominant PFM reform agendas in the Pacific, including those of the World BankWorld Bank and the IMF, which have been endorsed by the Pacific Islands ForumPacific Islands Forum Economic Ministers Meeting, and the role of PFM systems and effective audit systems in combating corruptionCorruption . The need for capacity buildingCapacity building and leadershipLeadership in embedding public financial management reforms are discussed and the chapter concludes with a discussion of some issues emerging from the chapter: the value of centralized versus decentralized systems and the tension between development assistance and sovereignty. The chapter argues that ownership of the public financePublic finance reform agenda by Pacific governments and a commitment to good governance is essential for sustainable PFM reforms in the region and for development.
Objectives: This study is aimed at analyzing various facets of Fiscal Federalism and its impact on the growth of states in India. Methods/Analysis: The Study proposes a model to test the impact of autonomy and hard budget constraints, two important features of decentralization, on the economies of the states. The model has been analyzed using the Fixed Effects Least Squares method for panel data using EViews. Findings: The results point out quite a few aspects of the impact of fiscal federalism on Indian states. The paper concludes by giving possible reasons for the negative relation between autonomy with growth and the positive relation between central grants with growth. The fact that the OwnTax ratio is negatively related to the GSDP growth rate shows that the level of autonomy of a state is negatively related to the growth of the state. The study also revealed a high dependence of the states on the grants and tax sharing mechanisms for growth. It was found that the central intervention in the states’ economy was positively related to their growth, which points to soft budget constraints on the states which depend highly on the central government to finance their spending. The overall level of decentralization was also found to be quite poor, though the relationship is not very economically significant. Applications/Improvement: The Study highlights that trade-off between the autonomy and budget constraint aspects of fiscal federalism needs to be a major concern and work area for policy makers in India.Keywords: Economic Growth, Fiscal Federalism, Tax
(ProQuest: ... denotes formulae omitted.)IntroductionThe existing literature have concluded that foreign resources have played significant role in raising the pace of economic development in developing countries. Most of the developing countries have been facing shortage of resources failing to meet the rising demand of capital over time. In order to overcome this problem these countries have been receiving heavy doses of external resources in the form of loans and grants from developed countries and international financial institutions World Bank, IMF and Asian Development Bank. The developing countries depend on foreign aid due to the desire of achieving rapid pace of economic development in the shortest period of time. Furthermore, for bridging their saving investment gap and export import gap these countries are forced to receive foreign aid from foreign sources. On the other side, developed countries provide loans and foreign assistance to developing countries keeping in view that developing countries cannot borrow from commercial sources due to their limited debt servicing capacity.Oates (1972) stressed that decentralization is one of the important factors which helps the donor countries in transferring resources because the government officials of recipient countries can make correct and appropriate decisions regarding the development projects as decentralization helps in bringing government and people closer. There are two serious problems which may come up in this regard. Firstly, it is very difficult to know about the real needs of the society. Secondly, allocation of the resources under political pressure to meet these requirements is not an easy task.The resource allocation in developing countries remained controversial due to the political pressure and conditions attached to foreign aid. The need for decentralization, comes up because of the existence of gap between spending needs and availability of revenue. There are three levels of government working in Pakistan and the allocation and distribution between them remained under debate. There exists a well-defined process through which resources are redistributed to provincial government by the federal government through National Finance Commission (NFC).The introduction of new formula in 2009 for the share of all provinces in the dividable pool has altered significantly. In the 1990 the Punjab's share was 57.87 according to NFC award based on the population, while there was an insignificant decline observed in 2006. There is decline in the share of Punjab recorded from 57.37 percent in 2006 to 51.74 percent in 2009. The share of Sindh has gone up from 23.71 percent in 2006 to 24.55 percent in 2009. The share of KPK has gone up from 13.82 percent in 2006 to 14.62 percent in 2009. The Baluchistan's share has increased to 9.09 percent on the basis of the revised formula.Several studies have analyzed the effect of foreign aid, fiscal decentralization on economic growth but there is no consensus among the researchers regarding the role of decentralization in economic growth.Easterly (2003) concluded that corrupt institutions having weak policies had adverse impact on foreign aid in achieving its desired objectives. Morrissey (2006) stressed that private investment has appeared to be inversely related to imports and directly related to foreign aid. Aurangzeb (2010) failed to find the evidence related to the impact of foreign aid on economic growth in Pakistan. Javid (2011) concluded that foreign aid may have positive effect on economic growth in Pakistan only in the presence of sound economic policies. The present study is highly important as the results of this study would help the policy makers to formulate and implement better policies consistent with the economic and political conditions prevailing in Pakistan.The rest of the study is organized as follows. Section-II presents theoretical framework. Model specification and interpretation of results are presented in Section-III. …
Recently, fiscal decentralization, which involves the devolution of government fiscal responsibilities to lower levels of government, has been discussed in many developed and developing countries. In particular, the effect of fiscal decentralization on economic growth is a key issue in recent theoretical and empirical studies in public finance. The empirical evidences produce mixed results. In this study, the effect of fiscal decentralization on economic growth in a sample of several provinces will be explored. A province study offers several advantages: a bigger sample of data is available for province than for Indonesia; and panel data estimation is able to adjust the cultural, historical, and institutional differences and also to capture the local heterogeneities. By adopting a production-function-based estimation framework, the empirical estimation is done on a sample of cross section data that comprises of 26 province governments and the time series yearly data from 1992 to 2002. The Generalized Least Square method is used to test these data. The results indicate that: first, the fiscal decentralization variables (expenditure indicator) show the positive and significant coefficients, while, the revenue indicator shows the negative relationship with economic growth. Hence, several policy implications can be derived; i.e, the local government should be able: to increase their non taxes revenues; to create conducive conditions for capital inflows; and to develop a clear framework for fiscal decentralization assignment such as income redistribution and borrowingJEL classification: E60; E62; H62; H63; 04Keywords: province government financing; fiscal decentralization;localautonomy;fiscal policy; economic growth; cross-province data;
Spatial interaction among local governments in fiscal setting decisions is receiving increasingly attention in the applied public economics literature. Spatial interaction models rely on the presence of an externality from local budget making, that is external effects originate from inter-jurisdictional resource flows due to tax competition for a mobile base, or from local public expenditure spillovers into neighboring jurisdictions. Similarly, the intergovernmental grants competition exists when there is a rivalry among local governments to get them from central government. This paper attempted to identify how great the fiscal competition among local governments in Indonesia. Using spatial statistics, we concluded that the fiscal competition among municipalities was greater compared to the pre fiscal decentralization period. It seems that the local tax setting and expenditures decisions in particular municipality can be attributed to the mimicking behavior to neighbor regions. Also, we found that the fiscal competition among municipalities could be attributed negatively to the fiscal disparity. Those imply that in the regional autonomy era the local governments tend to increase their local own revenue intensively and demand for intergovernmental grants in order to finance their expenditures. In the long run, they could lead to the high cost economy, worsening fiscal dependency, and inefficiency of local government expenditures. Those findings above suggest that the distribution of intergovernmental transfers among regions should consider the local tax effort and the services minimum standard plays an important role to achieve the efficiency of local government expenditures.
This paper examines the effects of fiscal decentralization on the education sector for a sample of 62 countries. The results suggest that different sources of fiscal decentralization have distinct effects on education expenditure and quality. While subnational governments that are financed through own-tax revenues are more likely to increase the funds allocated to education, they also seem less concerned with maintaining teaching quality. This study provides evidence that decentralized structures cater better to local social needs. Fiscal decentralization is, therefore, an important policy instrument for achieving social goals.
The fiscal incentives literature emphasizes how the design of transfer systems has a significant implication on the behavior of local governments within decentralized systems. The empirical findings on the relationship between intergovernmental transfers and the incentives they create for local revenue generation are inconclusive and differ from country to country. Given the lack of data on local public finances, this type of study rarely involves developing countries. Using a unique and rich socio-economic and public finance data covering a large set of Moroccan municipalities over the period 2005 to 2009, this paper contributes to the new generation of fiscal federalism literature by assessing the fiscal incentive effects of two types of transfers: general purpose transfers (unconditional) defined by a formula and specific purpose transfers (conditional) allocated on an ad-hoc basis. After correcting for the endogeneity problem, our findings support the existence of a significant incentive effect of unconditional transfers and a less robust effect of conditional transfers. Suggesting that transfers from the central government complement local own revenues by encouraging Moroccan municipalities to collect more revenues.
Central governments canalize to decentralized organization for compensate public demands faster, high quality and efficiency in globalization process. Local governments take effectively charge in distribution of income, education, health, housing on local basis which are parts of public policy and increasing the welfare level of the citizens of their municipality with their own facilities. The most important mission is incumbent to municipalities which is local governments’ type, in decentralized organization. Municipalities have two types incoming source; one of them from central governments sources the other one is internal revenue. This study aims to give information about municipalities which are at the forefront among local governments and property tax which is one of income sources municipalities. In this sense, law no. 5393 which was accepted on the 3rd of July, 2007 was studied in the frame of property tax and information about the phases of municipalities from the foundation up to now and their financial structure was given. Keywords: property tax, local government, decentralization, budget.
Giving local government to arrange regional receipt to purchase expenses bugget is part of Regional Otonomy. Not only depend on Central Government, Government genuine Receipt is one regional receipt that shows how stronger local goverment finance can handled all the expenditure. Metro as a local government in Indonesia, has the increase in regional otonomy espescialy in finance. The higher decentralization is a indicatoin that indicate higher ability on local government to fulfill all expenditure. It can be shown on share of Government Genuine Receipt and Tax and non Tax Share compare Total Regional Receipt and Total Regional Expenditure. Higher fiscal Desentralization needed by Metro to get higher Regional otonomy. Government Genuine Receipt and Tax and non Tax must be increased to get higher regional receipt and increasing share in Total Regional Receipt and higher share to offord the Total Regional Expenditure.
This article analyses aspects of public financial decentralization in Romania, enlightening major problems in public money allocation at county’s administrative level. Actual public finance law and state budget law allow inefficiency and inequity in local public money spending. This happens, in our point of view, because of many rules, criteria and computations missing economic fundamentals and which skip state’s principal objective: to insure citizens’ welfare by providing public goods and services. Our research finds which Romanian counties have difficulties to satisfy local public needs, by confronting financial decentralization level, economic development and public expenditures.
Fiscal decentralization and intergovernmental fiscal relations reform have become nearly ubiquitous in developing countries. Performance, however, has often been disappointing in terms of both policy formulation and outcomes. The dynamics underlying these results have been poorly researched. Available literature focuses heavily on policy and institutional design concerns framed by public finance, fiscal federalism, and public management principles. The literature tends to explain unsatisfactory outcomes largely as a result of some combination of flawed design and management of intergovernmental fiscal systems, insufficient capacity, and lack of political will. These factors are important, but there is room to broaden the analysis in at least two potentially valuable ways. First, much can be learned by more robustly examining how national and local political and bureaucratic forces shape the policy space, providing opportunities for and placing constraints on effective and sustainable reform. Second, the analysis would benefit from moving beyond design to considering how to implement reform more strategically.
Under the combined pressure of increased urbanization, fiscal adjustments and decentralization, central governments were pushed towards accepting the idea of local government accessing the private finance sources for their public infrastructure and service development investments. While the importance of borrowing increases for local developments, the main challenge many small municipalities have to face is the difficulty to access private financing sources. One obstacle is related to the creditworthiness of the municipal debtor or bond issuer. Sub-national governments can overcome the problem of creditworthiness through the use of credit enhancement mechanisms or techniques. The present paper is the first to discuss the situation of credit enhancements for Romanian municipal bond financing, its consequences and the path that might be followed for their further development. The absence of appropriate credit enhancements can be considered among the factors that contributed to the underdevelopment of the Romanian municipal bond market segment mainly between 2011 and 2014. In order to improve the municipal bond market profile, Romanian local governments should not ignore credit enhancements for any future bond issue and a combination of internal credit enhancements and bond pooling, as external credit enhancements seem to provide a feasible solution.