Educational systems around the world have undergone major reforms since the 1980s, with largely disappointing results. The objective of this paper is to understand the reasons behind the lackluster results with the purpose of devising ways to address them. Analysis in the paper is based on the understanding that the education sector is characterized by distinct functional imperatives that need to be addressed in policy responses that must involve a wide array of actors to be effective. In this view, education policy is fundamentally about establishing a governance structure to ensure that all the essential functions necessary to achieve the chosen policy goals are performed. Accordingly, the paper proposes a governance framework for education comprising political and operational functions, which it then applies to education policy reforms in the Philippines since the 1970s. The analysis finds that the reforms have focused on financing and decentralization issues while overlooking many other critical governance functions. The lackluster results are unsurprising given that the sector has been beset by many problems unrelated to centralized bureaucratic administration and which have been left unattended. The conclusions regarding the importance of comprehensive governance to emerge from this study are relevant not only for understanding education policy reforms in the Philippines and elsewhere but will also help develop a fuller understanding of the functioning of the education sector in general.
Abstract Why do common-pool problems persist over time in federations? The literature shows that macro institutional, economic, and political incentives facilitate bailouts through intergovernmental transfers and debt management. Little research, however, explores the legislative mechanisms that prevent common-pool problems from being effectively addressed. This article focuses on a most central mechanism: tax lawmaking. We argue that lawmakers, whose careers rest in the hands of provincial constituencies, administer the legislative process to promote bills that protect the federal transfers that finance vertical fiscal imbalances and to amend proposals that seek to change them. Using an expert-coded dataset designed to assess the direction and magnitude of tax policy change, as described by the amendments proposed by legislators to the full set of tax bills proposed to the Argentine Congress since 1983, we document the legislative dynamics underpinning the common-pool problems of decentralized fiscal federal arrangements.
In connection with the expiration, in 2020, of basic regulatory and legal acts coordinating the implementation of the decentralization, it is needed to actualize and determine further directions of reform of the public finance management system. The purpose of the article is to determine efficient methods and directions of further improvement of the financial equalization system in Ukraine in order to form progressive local budget resource model, which by more balanced socio-economic development of municipalities will meet the needs of the population. The article addresses the essence and main components of financial equalization as a tool of budget regulation. The contents of the fiscal imbalance, horizontal and vertical equalization, evolution of methods of removal of fiscal disparities are highlighted. A European approach to overcoming the effects of the unequal distribution of potential sources of the financing of expenditures of bodies of local self-government is characterized. Features and invariance of reform of the public finance management system on the basis of decentralization, renewal of the financial equalization mechanism are considered. As a result of research, the effects (achievements and shortcomings) of the functioning of tools of vertical and horizontal equalization in the budget system of Ukraine implemented as a result of reform of fiscal decentralization, are analyzed. Basic recommendations aimed at further strengthening and establishing a stable local budgets base being a foundation for the whole budget system and a financial basis for local self-government, are proposed, on the strategy of improving the financial equalization mechanism that will provide achieving a balance of the interests of all participants in inter-budgetary relations.
This paper aims to measure the degree of fiscal decentralization in Jordan by estimating the indicators used by the World Bank and the International Monetary Fund. These are the share of local units in public revenues, the share of public spending, and the share of compensation for workers in local units from the total compensation of workers in the public sector. The study uses set of data about public revenues and expenditures of the central government, independent government units, as well as the municipalities’ budgets figures. These data are for the period 2016-2018 and published electronically by the Ministry of Finance and the Ministry of Local Administration in Jordan. The study revealed progress in the field of political and administrative decentralization represented in the establishment of elected councils at the national, regional, and municipal levels and the transfer of a number of powers from central authorities to regional or local bodies. The issuance of a new decentralization law and the amendment of the Municipalities Law in 2015. The results showed that the degree of fiscal decentralization is very low in Jordan, especially when compared to other countries that had implemented decentralization reforms.
INTRODUCTION: Fiscal federalism and fiscal decentralization are distinct policy options in public services in general and healthcare in particular, with possibly opposed effects on equity, effectiveness, and efficiency. However, the pertinent discourse often reflects confusion between the concepts or conflation thereof. METHODS: This paper performs a narrative review of theoretical literature on decentralization. The study offers clear definitions of the concepts of fiscal federalism and fiscal decentralization and provides an overview of the potential implications of each policy for healthcare systems. RESULTS: The interpretation of the literature identified three different dimensions of decentralization: political, administrative, economic. Economic decentralization can be further implemented through two different policy options: fiscal federalism and fiscal decentralization. Fiscal federalism is the transfer of spending authority of a centrally pooled public health budget to local governments or authorities. Countries like the UK, Cuba, Denmark, and Brazil mostly rely on fiscal federalism mechanisms for healthcare financing. Fiscal decentralization consists of transferring both pooling and spending responsibilities from the central government to local authorities. Contrarily to fiscal federalism, the implementation of fiscal decentralization requires as a precondition the fragmentation of the national pool into many local pools. The restructuring of the pooling system may limit the cross-subsidization effect between high- and low-income groups and areas that a central pool guarantees; thus, severely affecting local equality and equity. With the limited availability of local public resources in poorer regions, the quality of services drops, increasing the disparity gap between areas. Evidence from Italy, Spain, China, and Ivory Coast -countries with a strong fiscal decentralization element in their healthcare services- suggests that fiscal decentralization has positive effects on the infant mortality rate. However, it decreases healthcare resources as well as access to services, fostering spatial inequities. CONCLUSION: If public resources are and remain adequate, allocation follows equitable criteria, and local communities are involved in the decision-making debate, fiscal federalism -rather than fiscal decentralization- appear to be an adequate policy option to improve the healthcare services and population's health nationwide and achieve health sector economic decentralization. HIPPOKRATIA 2020, 24(3): 107-113.
Richard Bluhm, Andreas Fuchs, Austin Strange, Axel Dreher · 6 authors
This paper studies the causal effect of transport infrastructure on the spatial distribution of economic activity within subnational regions across a large number of developing countries. To do so, we introduce a new global dataset of geolocated Chinese grant- and loan-financed development projects from 2000 to 2014 and combine it with measures of spatial concentration based on remotely sensed data. We find that Chinese-financed transportation projects decentralize economic activity within regions, as measured by a spatial Gini coefficient , by 2.2 percentage points. The treatment effects are particularly strong in regions that are less developed, more urbanized, and located closer to cities.
Fiscal decentralization is a policy made by the government to reduce fiscal dependence on the central government and create financial independence in the region. The independence of regional finance itself can be reflected through the high percentage of PAD revenue to total regional revenues. Where the existence of regional financial independence is expected to help implement regional development that can affect economic growth in the region. The purpose of this study was to determine the relationship of the level of regional financial independence to economic growth of districts/cities in East Nusa Tenggara Province in 2012-2017. The results of study uses secondary data analysis tools to approach the data panel Fixed Effect Model (FEM). The results of this study indicate that the local revenue had significant positive effect on economic growth, equalization funds had no significant positive effect on economic growth.
The aim research (1) to know local financial performance with ratio of fiscal decentralization degree, local financial independent, effectiveness of PAD, local finance efficiencey and growth PAD regencies/municipalities in South Borneo province 2013-2017, (2) to know business sector which contributed in PDRB. Technical analysis data is descriptif analysis. The result research showed : by average fiscal decentralization degree ratio 9 regencies still very less and 4 regencies/cities less, 7 regencies low, average local financial independence 4 regencies still very low, 7 regencies low and 2 municipalities enough independence, average effectivene PAD ratio almost all of regencies/municipalities very effective except Banjarmasin municipality are effective, average local financial efficiency ratio 9 regencies/municipalities less effecient and 2 regencies enough efficient, while Banjarbaru municipalities inefficient, growth PAD ratio is positive. Keywords: fiscal decentralization degree ratio, local financial independence ratio, effectiveness of PAD ratio, local financial efficiency ratio, PAD growth ratio.
Nadiya Dubrovina, Erika Neubauerová, Michal Fabuš, Оксана Тулай
Nowadays the problems of optimal taxation and tax distribution are closely connected with growth of decentralization and democracy in the world, especially in EU and other countries, such as USA, Canada, etc. Many economists and analysts studied the problems of co-operation between central and local administration in the realization of the state programmes and efficiency of public services on different levels (central, regional or local). Due to the theoretical and empirical evidence it was clear that some functions of public administration on the central level are not carried out efficiently and some competences of public administration can be transferred to the local levels. Thus, the problems of competences and public finance distribution between central level (state) and other levels (regional or local) are the main aspects to discuss in the theories of fiscal federalism and fiscal decentralization. In the theory of fiscal federalism the problem of taxes allocation between different levels of government is considered to be one of important tools for realization of stabilization and allocation functions of public finance. It should be noted that one of the theoretical and research problems is how to evaluate the measure for financial decentralization. There are different approaches to this problem in modern research such as qualitative (for example, grouping countries based on some qualitative criteria or experts’ evaluation of reforms focuse on financial decentralization) or quantitative ( a set of different ratios, geometric mean of different indicators, aggregated index, etc.). The purpose of the research is to obtain the aggregated indicators for evaluation of public finance distribution on central and local levels and to analyze the balance between these indicators for EU countries. For our research we used the idea of aggregated indicator to evaluate the measure of dependence upon central government expenditure and measure of local autonomy development. Due to the methodology for calculation of aggregated index proposed by Helwig the value of the aggregated index is varied from 0 to 1, or from minimal possible level to maximum possible level of the generalized characteristics described by the original set of indicators. Thus, if measure of public finance dependence upon central government Int_C is more closed to 1, then central government plays a greater role in expenditure for public finance. If measure of local autonomy Int_L is more closed to 1, then local government has more opportunities in their revenue and expenditure. It should be noted that for the balanced position of the country on the plot the values of the Int_C and Int_L should be equal to or lie on 45 degree line. If the bundles lie upper 45 degree line it means that level of local autonomy is more expressed, and vice versa, if the bundles lie lower 45 degree line it means that level of local autonomy is less expressed. The aggregated indices Int_C and Int_L were calculated for EU countries during the period of 2002–2017 and it makes possible to evaluate the features of national fiscal policy in balance between distribution of funds for central and local levels.
National economic growth is an aggregation of regional economic growth. Growth is also the main measure of development success. The existence of fiscal decentralization provides flexibility to local governments in regulating their regions and making policies that can support the potentials in their regions. This study aims to analyze and provide empirical evidence about the determinants of economic growth in 38 regencies/cities in East Java Province in 2010 to 2016 including Locally-generated Revenues (PAD), General Allocation Funds (DAU), Special Allocation Funds (DAK), Revenue Sharing Funds (DBH), Indirect Expenditures, Direct Expenditure, and Remaining Over Budget Financing (SiLPA). From the results of the Fixed Effect model, it was found that the PAD, DAU, DBH and Direct Expenditure had a positive significant effect on economic growth, while the DAK and Indirect Spending variable had no significant effect on economic growth. SiLPA also had no significant effect on economic growth. The last, simultaneously, PAD, DAU, DAK, DBH, Direct Expenditure, Indirect Expenditure and SiLPA had a significant effect on economic growth.
The article probes into factors that determine processes of decentralization in managing the general education system. The study entails a review of pertinent literature and an analysis of the distribution of powers among entities managing the general education system based on the European countries' experience. The study concludes that the education management system in the most EU-countries is decentralized or gradually being decentralized and de-concentrated on the basis of the subsidiarity principle. The results of our research give the possibility to affirm that the successful implementation of the decentralization reform requires the following two conditions: political support for proposed changes and the ability of those charged with carrying out the reform. An analysis of literature confirms that decentralization as a process is also a function of factors other than political will and capacity. These factors include trust (the extent of decentralization depends on the central government’s trust in the local government, and vice versa), financial troubles, path dances, international developments, etc. An analysis of the distribution of decision making powers in areas of financing and human resources demonstrates that there is a trend towards decentralization, albeit inconsistent due to obstacles on the level of centralized management. The article maintains that there has to be an adequate balance between centralization, which is necessary for the implementation of general national educational objectives, and decentralization, which allows teachers, schoolchildren, parents and the representatives of local communities to participate in education management.
The article presents partial results of a comparative research that aims to discuss federalism as a form of organization of the State and its repercussions for the organization and financing of basic education in Argentina and Brazil. Documentary analysis methodology was used and special attention was given to the legal documents that organize and regulate the federative relations in education and in the financing of education in both countries. As the main findings are the fact that the supply and financing of basic education are decentralized, under the marked responsibility of the subnational ones, although there are mechanisms of action of the national one in the financing of education, either by repairing resources or acting in a complementary way.
In this article, we lay out the results of an analysis of the role of property tax regime in the local finance of Kosovo and highlight the current advantages and weaknesses. Design/Methodology/Approach: We do this by carrying out an analysis of the legislation in force, which regulates financial issues at the central and local levels, the functioning of property tax, and other financial implications for municipalities. In doing this we review the level of dependence of municipalities on central government, grants and their share, as well as other issues which have an impact on fiscal decentralization. We also analyse tax system and its evolution, the participation of tax categories and municipality tax in central and local budgets and give specific accentuation to property taxation, role in the taxation system and local finances. Moreover, we present the institutional structures and their competencies, relationship between central and local institutions. Findings: The current situation and system in place leaves much to be desired and property taxes may have more potential as a revenue source for municipalities. Practical Implications: This article shows the importance for municipalities to find a means to self-finance through their own sources. Originality/Value: We define needs for strengthening the Own Source Revenues (OSR), taking strong and coordinated steps to improve the management and collection of OSRs in general and property tax in particular.
We exploit the public good attributes of information and communication technologies (ICTs) and theoretically analyze an aggregate economy of two smart cities in which ICTs are provided in either a decentralized or a centralized manner. We first determine the efficient ICT levels that maximize the aggregate surplus from the provision of ICTs in the two cities. Second, we compute the optimal level of ICT provision in the two cities in a decentralized regime in which spending on the ICTs is financed by a uniform tax on the city residents. Third, we ascertain the optimal level of ICT provision in the two cities in a centralized regime subject to equal provision of ICTs and cost sharing. Fourth, we show that if the two cities have the same preference for ICTs then centralization is preferable to decentralization as long as there is a spillover from the provision of ICTs. Finally, we show that if the two cities have dissimilar preferences for ICTs then centralization is preferable to decentralization as long as the spillover exceeds a certain threshold.
A mainstream motivation for decentralized government is to enable public service investments to better align with political preferences that may differ by geographical region. This paper examines how political preferences determine local government provision of hospital services. We find that local governments in areas more supportive of public insurance expansion responded to such state action by increasing expenditures on hospitals, whereas those in areas that voted against such expansions used the savings to reduce property taxes. This finding suggests that local government financial responses indeed align with political preferences.
Cinzia Di Novi, Massimiliano Piacenza, Silvana Robone, Gilberto Turati
Recent theories on fiscal decentralization support the view that sub-national governments who finance a larger share of their spending with taxes raised locally by themselves are more accountable towards their citizens. Whilst evidence on improvements in spending efficiency is relatively common, little is known about the effects on inequalities amongst the population. In this paper we exploit a reform aimed at increasing regional tax autonomy in Italy to provide quasi-experimental evidence on the impact of fiscal decentralization on health disparities between- and within-regions. Our findings, robust to a number of robustness checks, support the view that fiscal decentralization does not impact on between-regional inequalities but can help to reduce inequalities within regions. However, this last effect depends on the degree of economic development: richer regions are better than poorer ones in containing inequalities.
The aim of this study is to focus on fiscal decentralization and regional financial autonomy in Slovakia. The public administration reform and fiscal decentralization process in Slovakia ought to increase the autonomy of the multi-level governance and to decrease its dependency on state budgeting and other transfers. We argue that regional territorial governance is greatly dependent on financial incentives from central state financing, which limits the expected effect of decentralization and regional fiscal autonomy. By collecting quantitative data on state transfers and revenues to regional governments we demonstrate the limits of spatial, financial and decision-making autonomy within particular regions. The selected time frame 2005-2016 reflects all stages, reforms and changes in the fiscal decentralization of the second level governance in Slovakia.
Local government units (LGUs) in the Philippines are authorized to borrow or incur debts to finance development, but with certain limitations provided by the Local Government Code of 1991. The main controlling statutory requirement is for provinces, cities, municipalities, and villages not to exceed 20% of their annual regular income going into debt servicing. The range of purposes for which local governments are allowed to borrow are tied up with their expenditure responsibilities, and this varies according to the type and level of LGU, and their capacity to access financing. These commonly include capital investment projects, socioeconomic enterprises, and self-liquidating and income-generating projects. This paper describes the experiences of the Philippines after close to three decades of fiscal decentralization in the country, presents trends and patterns of local debt management practices, highlights the roles of national government agencies and regulatory policies, and proposes emerging ideas and recommendations on how to improve debt management as an important pillar in local finance and decentralization.
Phetcharee Rupavijetra, Ploypailin Rupavijetra, Jun Kawaguchi, Keiichi Ogawa
The research ‘Decentralization of the Financing and Administration of Public Secondary Schools in Thailand: a Case Study in Chiang Mai’ aimed at investigating the current secondary education from financial and management perspectives with a case study of a school in Chiang Mai. The methodology for data collection consists of interviews and documentary research. Interviews were conducted on 1 Deputy Director of Finance Management and 4 teachers at Yupparaj School whom were key informants, and 2 Deputy Directors of Chiang Mai Education Service Area 34.\nSince the National Education Act in 1999 which emphasizes decentralization of education and financial management on a per-student basis, funding was allocated directly to Education Service Areas in the form of block grants and later on distributed to schools. The case of Yupparaj School which is a large well-known school in Chiang Mai Province is the case study for this research. In terms of financing, Yupparaj School as the large size school and reputation so the school receives a large amount of total government subsidies on education per student each year (THB 52 million in 2014). Another aspect is the school’s financial management in that the school is capable of finding external sources of funding i.e. donations, selling self-branded bottled water, letting food stalls, and managing its own Trust Fund, the school director, school administration committee and alumni association are crucial key factors for raising external funding.\nIn terms of school administration, Yupparaj School as other schools in Thailand operate on the basis of school-based management, director of the school has a certain amount of authority in administration. A school needs to have a committee called school administrative committee which control the budget allocation to projects by each department. Moreover, the committee is responsible for finding external source of funding. Decentralization of financial policy is benefit for large size school and reputation, on the other hand, small schools, which have less students, do not have enough budgets to operate school efficiently.
Research on Local Revenue, General Allocation Fund, and Special Allocation Fund on economic growth, poverty, unemployment, and Gini ratios have often been done. However, there is no research that uses these three funding sources as latent variables that have a simultaneous influence on quality economic growth variables as a latent variable consisting of economic growth, poverty, unemployment and the Gini ratio as constructs. Similarly, capital expenditure as a moderating variable will be seen as influencing the source of funds. East Java is a province with 38 districts/cities where the level of economic growth is quite high and even exceeds the level of national economic growth. But the level of poverty, unemployment, and inequality is also very high. This study aims to look at the effect of decentralized funding sources on Quality Economic Growth in East Java. The data used comes from the Directorate General of Financial Balance of the Ministry of Finance in 2012 -2015 for realization's fund, and from the Central Bureau of Statistics for economic growth, poverty, unemployment, and Gini ratios. This study uses Partial Least Squares (PLS) in analyzing data, where quality economic growth becomes endogenous latent variables that are influenced by funding sources as exogenous latent variables and capital expenditure as a moderating variable. The results of the analysis show that the source of funds does not significantly affect quality economic growth even though the direction is positive. Likewise, capital expenditure cannot strengthen the influence of funding sources on quality economic growth. From this research, it is expected that the regional government can reanalyze the allocation of funds and the realization of regional expenditures which are prioritized for public service spending so that the triple track strategy can be implemented properly and achieve quality economic growth.
The Kenya Vision 2030 flagship projects expected to generate rapid economic growth in the country are threatened by inadequate source of funding, financial management problems and failure to link policy, planning and expenditure budgeting. The projects continue to experience inadequacies in project appraisal and implementation time overruns. Therefore, without a clear financial framework, fiscal indiscipline, resource misallocation and inefficient use of resources will militate against achieving the Kenya Vision 2030 targets. The overall objective of this study was to evaluate determinants of government expenditure on public flagship projects in Kenya. The specific objectives were to: evaluate the influence of planning process; source of funds; and management responsibility on government expenditure on public flagship projects in Kenya. The theories reviewed in the study were public finance, budget, cost-benefit analysis and principal-agent which provided grounds for conceptual framework. The study employed descriptive research design, positivist philosophy and multiple regression model. The target population was the planned 348 flagship projects for the period 2008-2012. The unit of analysis was projects based on sample size of 96 stratified random sample while data was collected using a questionnaire. The findings showed that planning process, source of funds and management responsibility had significant positive influence in determining government expenditure on public flagship project in Kenya. The study recommended that, public entities should strengthen and improve planning process by deepening MTEF within programme-based budgeting; the National Treasury should increase resources required for financing public flagship projects by considering public-private-partnerships as a potential source; and public entities should improve, strengthen and enforce management responsibility when designing public flagship projects. The two areas suggested for further research were; impact of project characteristics on the choice of Public-Private Partnership financing model; and impact of fiscal decentralization on financing public projects in light of devolved systems of governance in Kenya.
This comparative study tries to map several aspects concerning finance relation between central and local government in both countries. The main purpose is to compare fiscal implementation through decentralization policy in the two countries, especially the case of vertical fiscal imbalance. The research focuses on vertical imbalance because it is a common problem in various countries around the world. It also occurs in Japan and Indonesia in line with fiscal implementation through decentralization policy. The analysis will be in the inter-related context of decentralization policy and fiscal decentralization.
Considering the critical influencing phenomena, the study explores the causal mechanism of influences, as well as how such process works that lead to shape the dominant implications of influences on local government Union Councils’ budgetary autonomy, leading to the impact on their local governance.The research reveals the fact that the effects of the influencing phenomena on the budgetary autonomy of Union Councils in Bangladesh are evident with varying degrees and dimensions, but the influences do not always collide with the budgetary autonomy of Union Councils there. The indicator-based empirical analysis reveals that the magnitude of influences is almost double than that of the budgetary autonomy of Union Councils in Bangladesh. Thus, the autonomy of Union Councils in their budgeting decisions is a concern in the study of decentralization and local governance in Bangladesh.Originality and significance:The research contributed in the literature stream of public administration, specifically in decentralization, local government finance as well as budgeting, and in local governance studies. The study findings to some extent substantiated the rationality of conditional national government transfers to the sub-national governments in Bangladesh. Beyond the general theoretical and practical significance of the study, its findings led to inviting a fundamental debate on the national-local tax base system and appreciated the fact that central hindrance towards effective functioning of the local government Union Councils in Bangladesh is the crisis of ownership and competence of UP representatives.