Tatiana N. Litvinova, Olga А. Kochetkova, D. V. Kaverin
Introduction. The article analyses the features of the socio-economic development of the republics of the North Caucasian Federal District in the conditions of external challenges that our country has been facing over the past three years, including the consequences of the COVID-19 pandemic, as well as external sanctions pressure in 2022. The relevance of the study is due to the constant dependence of the budgets of the republics of the North Caucasian Federal District on revenues from the federal budget, tension in the labor market, and the need to improve the mechanisms of regional governance.Materials and methods. The concept of economic (budgetary federalism) developed by J. Stigler, W. Oates, L. Feld and F. Schneider serves as the theoretical and methodological basis of the study. Foreign theories of economic federalism offer two models of the budget process – decentralized and centralized. The Russian model of budgetary federalism, functioning as a centralized unitary state, was considered in the works of A. Avetisyan, I. Kharitonov, E. Mashchenko and many others. On the one hand, such a system makes it possible to accumulate federal budget funds for solving common problems. On the other hand, there are still regions with a strong economic dependence on gratuitous receipts from the budget of a higher level. This study is based on the analysis of socio-economic statistics and monitoring of regional media.Results. The Republics of the North Caucasian Federal District continue to demonstrate a high subsidized dependence of their budgets on gratuitous receipts from the federal budget. At the same time, in the post-pandemic period, there has been a slight growth in own budget revenues due to an increase of small and medium-sized businesses. Unemployment remains a serious systemic problem. The digitalization and the development of e-government play an important role in the optimization of management processes. During the pandemic, the number of citizens of the North Caucasian Federal District receiving public services in electronic form increased by 12%. The sanctions pressure after the start of the Special Military Operation in Ukraine did not have a significant impact on the economy of the republics of the North Caucasian Federal District due to their weak involvement in the international division of labor.Discussion and conclusion. The serious dependence of the budgets of the republics of the North Caucasian Federal District on subsidies from the federal center, on the one hand, makes the socio-economic situation in the republics free from external challenges. On the other hand, the entire burden of economic support and financing of the necessary social measures falls on the federal government, in particular, smoothing out inflationary risks for small businesses and families with children. The difference in the possibilities of regional budgets was also manifested in the provision of one-time financial assistance to the families of the mobilized. This again raises the need to increase the revenue side of regional budgets, due to the growth in the number of taxpaying enterprises.
Using panel data from 275 prefecture-level cities in China spanning from 2003 to 2019, this paper employs the multiperiod difference-in-differences method to empirically analyze the policy effect of land negotiation policy on local governments’ hidden debt. The paper also investigates the influence mechanisms of land finance, budget soft constraints, fiscal decentralization and government competition. The empirical results reveal that: (1) Land negotiations promote the expansion of local governments’ hidden debt, which is counterproductive to the sustainable development of government finances. (2) The impact of land negotiation policy on local government’s hidden debt is transmitted via its effects on land finance. (3) The greater the degree of soft budget constraint and the degree of government competition, the less the expansion effect of land negotiations on the hidden debt of the government. The greater the degree of fiscal decentralization, the greater the expansion effect of land negotiations on the government’s hidden debt. (4) Land negotiation promotes the expansion of hidden debt in eastern China and inhibits it in central China, with no significant effect observed in western China. (5) Cities with larger urban scale and higher economic development levels experience stronger effects from land negotiation policies. Therefore, it is imperative to deepen the land negotiation system further, develop policy indicators and feedback mechanisms tailored to local conditions, and introduce a multiparty supervision system to enhance implementation of the land negotiation system.
Rafał Trzeciakowski, Piotr Ciżkowicz, Andrzej Rzońca
This dataset covers 2476-2479 Polish municipalities and cities (dependent on the year) over a period from 2004 when Poland joined the EU to the pre-COVID-19-pandemic 2019. The created 113 yearly panel variables include budgetary, electoral competitiveness, and European Union funded investment drive data. While the dataset has been created out of publicly available sources, their use requires advanced knowledge of budgetary data and their classification, as well as data gathering, merging, and clearing, which required many hours of work over a year. Fiscal variables were created out of raw data of over 25 million subcentral governments records. They were sourced from Rb27s (revenue), Rb28s (expenditure), RbNDS (balance), and RbZtd (debt) forms, which are reported quarterly by all subcentral governments to the Ministry of Finance. These data were aggregated according to the governmental budgetary classification keys into ready-to-use variables. Furthermore, these data were used to create original EU-financed local investment drives proxy variables based on large investments in general and in sports objects in particular. Moreover, subcentral electoral data from 2002, 2006, 2010, 2014, and 2018 were sourced from the National Electoral Commission, mapped, cleared, merged, and used to create original electoral competitiveness variables. This dataset can be used to model different aspects of fiscal decentralization, political budget cycles, and EU-funded investment in a large sample of local government units.
The purpose of this study is to find out in detail how the ability of local revenues to finance regional expenditures. the object in this study is the government of West Sumba Regency. The type of data used is secondary data and primary data. Secondary data was obtained from BPS NTT, while primary data was obtained from the research location, namely the West Sumba Regional Development Planning Agency. This study used data analysis techniques using four financial ratio analysis, namely: the ratio of the degree of fiscal decentralization, the ratio of regional financial independence, the ratio of PAD effectiveness, and the ratio of financial efficiency. Regional. Based on regional financial analysis with 4 ratio calculations, it shows that from 2017-2021 the ratio level is less and very effective.
The uniformity of management policies in local government in Indonesia hinders development for regions with special characteristics. The asymmetric policy is expected to accommodate the border area of the country that has been discriminated against in terms of development. Not only related to infrastructure and state security, but the human security aspect is also a common challenge, especially in providing education and health services which are the rights of citizens living on the border. Special treatment for border areas is expected to offer a new approach in border area development, especially responding to the region's limited capacity in terms of authority and finance
Carolina Gueiros, Sébastien Jodoin, Constance L. McDermott
Although the role of subnational governments in multi-level climate governance is recognized by scholars and policymakers, we still know little about whether and why some subnational jurisdictions in the Global South decide to engage in decentralized climate action. This article yields new insights on this question by explaining variations in the decision of Brazilian states to establish legal frameworks for jurisdictional REDD+, enabling them to receive transnational climate finance, in the early stages of the emergence of REDD+ in Brazil between 2007 and 2017. We draw on key informant interviews with policy entrepreneurs and actors to understand the roles played by (1) the transnational pathways of influence associated with the regime complex for REDD+ and (2) the strategies adopted by state-level policy entrepreneurs in subnational REDD+ readiness policy processes in Brazil in five case studies (Amazonas, Acre, Mato Grosso, Pará and Amapá). According to respondents, credible market incentives were the key influence for state governors to adopt a jurisdictional framework to channel REDD+ funds, but transnational norms and material assistance played important mediating roles. The perceived credibility of market incentives was influenced by: (1) the presence of policy entrepreneurs at the state level; (2) the timing of strategies employed by policy entrepreneurs; (3) the policy beliefs held by the governor regarding environmental issues; and (4) evidence regarding availability of REDD+ finance for states.
Open access
Policy Transfer and Learning
Local Government Finance and Decentralization
Conservation, Biodiversity, and Resource Management
Márcia Miranda Soares, Encarnación Murillo García, Jesús Ruiz-Huerta Carbonell
Abstract The article compares the patterns and territorial inequalities in the funding of two social policies that are pillars of the welfare state and present a high degree of territorial decentralization in Spain and Brazil: education and health. The analysis uses specialist literature, national legislation and government documents to describe the policies and their financing mechanisms. Fiscal data are used to analyze subnational government inequalities in the funding of education and health in both countries. The conclusion is that the Spanish experience has significantly leveled spending on health and education between the autonomous communities of common regime, with lower levels of inequality than those observed in Brazilian states and municipalities. The Spanish result derives from an incremental process of improvement of the country’s fiscal federalism, which culminated in a model marked by prioritization and territorial solidarity in the funding of social policies. This model is reference for the analysis and discussion of the Brazilian case, which has configured its fiscal federalism with little concern for reconciling efficiency and equity in the distribution of resources between subnational governments, but which has presented important advances in the reforms of education and health funding.
Abstract Canada has evolved into one of the most fiscally decentralized federations in the world. Provinces enjoy considerable autonomy and play a central role in designing and implementing economic and social policies. This chapter outlines key features of Canadian fiscal federalism, especially the extensive decentralization of legislative responsibilities and taxation powers to provincial governments, the wide-ranging intergovernmental transfer system designed to maintain fiscal balance between orders of governments and among provinces, as well as the mechanisms in place to promote some harmonization of policies and cooperation among provinces. Current challenges to Canadian fiscal federalism are outlined including pressures on horizontal and vertical fiscal balance associated with demographic changes, rapidly increasing costs in the public health care system which have been intensified by the Covid-19 pandemic, persistent tensions associated with the geographic concentration of natural resources, as well as pressures on municipal finance resulting from ongoing urbanization and growing infrastructure needs, among others.
Ato Rakhmawan, Arifuddin Arifuddin, Anas Iswanto, Hamrullah Hamrullah
Economic growth is the main target in the economic development of an area as well as in the city of Makassar where local governments are required to maintain the stability of economic growth in the region.The Fiscal Decentralization in Indonesia has been applied since 2000, the consequences of this policy are given the financial to local governments.However, there are several issues which are whether the delegation of authority given by the central government to the local governments that can contribute to economic growth in the region in the implementation of authority.Fiscal decentralization is one of the indicators affecting economic growth in line with financial performance and the Human Development Index.The purpose of this research is to find out how big the influence of fiscal decentralization, financial performance and the Human Development Index on economic growth in Makassar City for the period 2011 to 2021.The data in this study are secondary data taken at the regional Finance and Assets Office.and the office of the Central Bureau of Statistics.By using the multiple linear regression method and using SPSS application tools, the results of the study were found.Based on the partial test results indicate that Fiscal Decentralization and HDI have a negative and insignificant effect on economic growth, while the financial performance variable has a positive and significant effect on economic growth in Makassar city.
The current financial predicament of Local Government Councils and constant pressure for increase in allocation has been in the front burner of Local Governments Administration in Nigeria. The focus of this research paper examined Local Government Finance in Nigeria using Ife Central Local Government. Data for the study were gathered from face-to-face interview and available records in Ife Central Local Government. The data collected were subjected to descriptive statistics (simple percentage) and content analysis. The study explored various sources of financing local governments in Nigeria. It also explained financial relationship of Nigerian local government vis-à-vis State and Federal Government using theory of decentralization. The study went further to explain financial management in Ife Central L.G. Result obtained from the analysis shows that financial transfers from federal government (Statutory Federal Allocation) are the most viable and reliable source of local government revenue and that without Federal Allocation no capital project can be embarked on. Therefore, to arrest this financial situation that local government find itself, that is over dependence on federal allocation, this work submitted that local government should increase their revenue base by laying more emphasis on the internal revenue sources, especially those areas that are hitherto neglected or not been fully exploited.
This paper studies the impact of financial decentralization on innovation activities in China based on the perspective of "finance-innovation". Using the data of China's industrial enterprises above designated size in 30 provinces from 2000 to 2019, this paper verifies the relationship between financial decentralization and innovation, reach conclusions that: Financial decentralization plays a significant role in promoting China's innovation ability; Financial decentralization has obvious regional heterogeneity, which has a positive effect on the improvement of innovation ability in the eastern and central regions with high economic development level, and a negative effect in the western regions.Meanwhile, it's found that the local financial decentralization is more obvious when the industrial structure is more perfect, and the financial decentralization contributes to the improvement of the local industrial structure.In the future, each region should choose the best degree of financial decentralization according to its different financial characteristics, and rationally use it to help local industrial innovation, to promote high-quality economic development.
Abstract Fiscal federalism in Ethiopia has been implemented within a unique political context. The adoption of a multiethnic federal system has reshaped the fiscal and economic landscape of the country since 1991. Following the political restructuring towards federalization, the culture of centralization of fiscal powers and responsibilities, which had been witnessed for more than half a century, has significantly been altered. Yet, Ethiopia is a highly centralized federation, both in design and practice. The division of powers favors the Federal government in legislation and policymaking. The provision of most public services is, however, significantly decentralized. The lucrative sources of revenue are assigned to be either exclusive federal powers or concurrent. As a result, Ethiopia’s fiscal federalism has been characterized by a high degree of fiscal imbalances, the Federal General-Purpose Grant (FGPG), an equalization transfer, being the dominant mechanism to bridge the imbalances. Revenue sharing and specific purpose transfers constitute only a very small proportion of Subnational finance. States’ borrowing rights are limited to internal sources and are subject to stringent preconditions set by the federal government.
Rafael Berriel, Eugenia Gonzalez-Aguado, Patrick J. Kehoe, Elena Pastorino
We apply ideas from fiscal federalism to reassess how fiscal authority should be delegated within a monetary union.In a real-economy model with no fiscal externalities, in which local fiscal authorities have an informational advantage about the preferences of their citizens for public spending relative to a fiscal union, a natural generalization of the classic decentralization result by Oates (1972) applies.Namely, a decentralized fiscal regime dominates a fiscal union, and the degree of dominance increases as the information of the fiscal union worsens in quality.In the presence of direct fiscal externalities across countries, however, a decentralized regime is optimal for small federations of countries, whereas a centralized regime is optimal for large ones.We then consider a monetary-economy model, in which governments finance their expenditures with nominal debt and inflation has a negative impact on aggregate productivity.If the monetary authority can commit to an inflation policy, then a version of Oates (1972)'s decentralization result holds.By contrast, when the monetary authority lacks commitment power, the resulting time-inconsistency problem generates an indirect endogenous fiscal externality.In this case, when a country-level fiscal authority chooses a higher level of nominal debt, it induces the monetary authority to inflate more to reduce the level of distortionary taxes needed to finance the higher debt.Because country-level fiscal authorities do not take into account the costs to other countries of the inflation that their fiscal policies induce, a negative fiscal externality arises.This externality naturally becomes more severe as the number of countries in the monetary union increases.Hence, as in the real-economy model, a decentralized fiscal regime is optimal for small monetary unions, whereas a fiscal union is optimal for sufficiently large ones.Our key result is that as the size of a monetary union increases, it becomes relatively more desirable to centralize fiscal authority.We conclude by discussing the implications of our results for the debate on the integration of fiscal policy within the EU and its enlargement.
The purpose of the article is to disclose and deepen the theoretical provisions on the nature and role of the revenue side of local budgets in ensuring the socioeconomic development of territories. The State financial policy should be focused not only on solving urgent current problems and tasks, but also have a perspective character, which consists in creating the preconditions for socioeconomic development. The article conceptualizes the role of the local budgets’ revenues in ensuring the socioeconomic development of territorial communities. The main functions of local budgets are defined. The concept of sustainable development and a totality of indicators that characterize it are studied. The theoretical aspects of the impact of local budget revenues on socioeconomic development are revealed. The advantages of budgetary decentralization are determined, the indicators of budgetary decentralization in the field of revenues are considered. The provisions on the impact of decentralization on socioeconomic development are generalized. The authors applied a system approach. They also used the dialectical method, methods of synthesis and analysis, comparison and generalization. It is substantiated that local budgets play a significant role in regulating socioeconomic processes, performing both distributive and regulatory functions. Local institutions should have sufficient financial resources at their disposal to finance public services and infrastructure development. The transformation of interbudgetary relations is intended to increase fiscal responsibility and motivation to accumulate own budget revenues to cover expenditures. It is defined that fiscal decentralization is aimed at improving the quality of public administration and the formation of financially viable territorial communities. The decentralization processes are intended to improve the quality of public administration and form financially viable territorial communities in which the basic set of public services will be as close to the consumer as possible, and the quality of these services will meet the established criteria.
This paper investigates the socioeconomic impact of fiscal decentralization in Pakistan. The time-series sample during 1982-2018 is divided between pre and post-periods of the 7th National Finance Commission (NFC) Award of 2009. The socioeconomic impacts were separated into growth, education, and health. Results found that there is a positive long-run relationship across the variables. At the same time, the total effect from composite decentralization has positively impacted economic growth and education but none to the health sector after the 7th NFC award. The outcomes have been elaborated with socioeconomic analysis. The study also provides policy recommendations based on empirical outcomes.
Decentralized Autonomous Organization (DAO) is a blockchain-based governance structure allowing all shareholders to participate in daily decision-making through voting on proposals. However, as centralization trends of blockchain documented in previous literature, voting delegation is on the rise for governance efficiency. This paper utilizes a DeFi company called MakerDAO to analyze the efficiency of such delegation design on DAO. Firstly, the delegates have demonstrated their expertise, thereby more likely to participate in voting and make well-informed choices. Secondly, voting delegates may prioritize personal interests over the collective interests of MakerDAO when their interest conflicted with MakerDAO is large enough and they gain sufficient voting power to influence the voting outcome. Thirdly, market monitoring can generally reward (punish) delegates for correct (wrong) votes through giving new or withdraw old delegations. What’s more, delegates with skills will be further rewarded. However, it remains challenging to consistently penalize delegates whose interests misalign with those of DAO, even when their holdings are transparently visible. This paper contributes to literatures on the evolutionary process of decentralized designed platform to be centralized or reintermediated.
Since the emergence of environmental federalism theory in the 1960s, the empirical research on it has been pursued by scholars, mainly focusing on whether a country’s environmental regulation should be centralized or decentralized. For a long time, countries have been actively exploring and putting environmental governance systems into practice for themselves, especially at present, in the face of multiple constraints of resources, environment, sustainable development power and other factors. How to build an appropriate environmental governance system and promote the level of green development by encouraging enterprises’ technological innovation is a practical problem to be solved urgently. Based on this, this paper constructs a new research framework of environmental decentralization—technological innovation—green total factor productivity (GTFP) and investigates the effect and mechanism of environmental decentralization on GTFP. The results show that environmental decentralization can reduce the quality of environmental information disclosure and inhibit the innovative output of enterprises, ultimately leading to the decrease of GTFP. Environmental decentralization has a spatial spillover effect on GTFP, which can promote GTFP in neighboring areas. This paper tries to enrich the research results of traditional environmental federalism theory, the “Porter Hypothesis”, and growth pole theory, and it provides a solution to enterprises’ financing constraint problem.
The literature continues to debate the effects of democracy and fiscal capacity on economic growth, both partially and jointly. To remedy the literature puzzle, this study examines the economic growth effects of democracy and fiscal capacity in 34 Indonesian provinces from 2016 to 2021. Using a fixed-effect model, this study documents no evidence of a partial effect; rather, it finds a joint effect of democracy and fiscal capacity on Indonesian economic growth. These findings remain relatively robust even when provincial heterogeneity, COVID-19 pandemic shocks, and sectoral composition are factored into the model. This finding indicates that regions with democracy and strong fiscal capacity possess relatively fast per capita GRDP growth. Based on these findings, the study concludes that democracy and fiscal capacity should exist side by side. Indonesia's sub-national economic growth strategy, like a tango game, requires reforming two types of decentralization: political decentralization to improve the quality of democracy that upholds the merit system and fiscal decentralization to expand local tax capacity to finance public goods productively.
Cenay Babaoğlu, Lucie Sobotková, Martin Sobotka, Murat Altuğ Köktaş · 5 authors
Abstract The article deals with the issue of fiscal decentralization in relation to compliance with fiscal discipline at the municipal level. The article evaluates the situation of selected Czech and Turkish cities. In the case of Czech cities, so-called statutory cities were selected, which, due to their size and budget, have a certain independence from the central government. In the case of Turkish cities, the largest ones were analyzed, which also have a high degree of autonomy due to their size. The unifying element of both samples is approximately similar financing conditions. In both cases, shared taxes are used, but they are in the hands of the central government, and the municipalities have no possibility to influence them. In the case of municipalities, they can receive subsidies from the central government. From the perspective of fiscal responsibility management, relations with the central government appear to be a stabilizing element. However, at the same time, strengthening revenues associated with local government could also support fiscal discipline. In particular, this possibility would be significant in the case of smaller municipalities when the share of local income in total income is increasing. Another option for discussion is the availability of debt financial instruments. In the case of Turkish cities, fiscal discipline is significantly correlated with external debt. Although Czech municipalities can easily access debt financial instruments, they cannot use foreign financing. JEL Classification: C33, C35, H71, H72, H77