This objective is to examine the original income of the region for sustainable regional development in Indonesia, using normative legal research. Regional government finance is a very decisive factor in the administration of regional government. The financial capacity of a region is determined by the existence of a source of regional income and its level of lucrative. The level of a local source of revenue is determined by the extent to which the basis for imposing taxes is responsive to inflation, population growth and economic growth. Generally in developed countries that implement decentralization policies tend to give greater authority to the regions to manage sources of revenue that are lucrative. On the other hand, in developing countries, financial resources are controlled by the central government. Local governments only manage financial resources that are less potential.
Recently, the issue of federalism has turned at the centre of the political debate in Italy. It is basically due to the growing demand of rich northern regions who in 2018 laid down the requests to exercise additional functions retaining a more significant part of revenues that the central government collects in their territories. Another reason for attention to this issue is that the long period of public finance consolidation in Italy (2011-15) put the implementation of fiscal federalism to a standstill. There is a growing demand to ascertain the measure to which this implementation has been biased o remained undone. This paper focuses on this second issue investigating to which extent the design of fiscal federalism reform has been applied to the Italian municipalities with a special focus on the equalization system. The paper first proposes a review on the evolution of public finance setting in Italy before the crisis (2008-09), considering the decentralization process in the 1990s and the Constitutional reform of 2001 followed by the enabling law 42 in 2009. Then it looks at the period of fiscal consolidation after the financial crisis in 2011 focusing on the burden of adjustment measures imposed to Italian municipalities. Finally, it tries to summarize the contradictions that the overlapping of two contrasting political agendas – the centralization of public finance under fiscal consolidation and the ongoing fiscal federalism reform – created for the equalization system of municipalities.
Purpose Over the past 20 years, China's infrastructure has developed at an extraordinary speed. The current literature mainly focuses on the effects of political incentives on the infrastructure. However, this paper indicates that the structural change of China's land regime is an important clue and that the supernormal development of China's infrastructure is an explicable result for that. Design/methodology/approach This paper theoretically proves that in a politically centralized and economically decentralized economic entity with a public land-ownership regime, the self-financing mechanism formed by local officials through regulation of the land-grant price is the primary factor that influences the optimal supply volume of infrastructure in a region, in addition to political and economic incentives, and whether the self-financing mechanism can be formed or not depends on the structure of a country's land regime, which can help to explain the difference between the development of infrastructure in China and that in other developing countries from a theoretical angle. Findings The paper suggests that the mode is facing an important transformation toward land reform and new-type urbanization construction, and the replication and promotion of China's experience in infrastructure construction are of further significance under the Belt and Road Initiative as it provides a method for helping developing countries to eliminate infrastructure bottlenecks. Originality/value Through the test of multinational panel data, the paper indicates that the structural change of China's land regime around 1990 had an overall effect on the supernormal development of infrastructure in China. The paper indicates that the “land-based development mode” of China's infrastructure indeed contributed to the supernormal development of infrastructure in China, but there are still some shortcomings in this mode.
In the given paper, the features of the influence of institutional incentives and power tools on the efficiency of decentralization in ensuring prosperity and in the context of economic growth are explored. The purpose of the given paper is to determine the instruments of government and to characterize the methods of using them to promote decentralization, as well as the mechanisms for financing local governments, the decentralization of information and to define their role in the application of market incentives for decentralization. To study the peculiarities of power tools and institutional incentives for decentralization, to determine the conditions for effective work of local government financing mechanisms, the benefits of information decentralization and types of market incentives, a methodology of desk research was used with analysis of the results of theoretical and applied research published in foreign literature. Secondary information has been gathered in the context of the experience of implementing reforms on decentralization of state power, the peculiarities of the institutional environment and the establishment of stimulating factors for increasing the efficiency of state power. Institutional incentives to increase the effectiveness of decentralization have a complex hierarchical structure, and their impact depends on many factors of local culture and management traditions. Decentralization of information and different market incentives may also have different effectiveness in their application. In any case, many changes are needed in the political system. In future studies, it is planned to focus on the peculiarities of decentralization in certain regions of Ukraine and to assess the state of implementation of the proposed mechanisms for funding local governments in specific circumstances.
The research on the influencing phenomena at the budgetary process of Local Government Union Councils in Bangladesh is based on a combination of political psychology, applied economics and public management issues (i.e. decentralization, local government finance, and local governance, as well as the budgeting theory and local government budgetary process). The purpose of the research is to explore the critical influencing phenomena and their relative influences on Union Councils’ budgeting decisions. The study reveals that the influence of concerned phenomena or issues does not always collide with the budgetary autonomy of Union Councils, but the effects of the influencing issues on their budgeting decisions are evident with varying degrees and dimensions. The study has employed qualitative method with six case studies on criteria based purposively selected Union Councils at Sunamganj District in Bangladesh.
BACKGROUND: The Philippines decentralized government health services through devolution to local governments in 1992. Over the years, opinions varied on the impact of devolved governance to decision-making for local health services. The objective of this study was to analyze decision-makers' perspectives on who should be making decisions for local health services and on their preferred structure of health service governance should they be able to change the situation. METHODS: We employed a mixed methods approach that included an online survey in one region and in-depth interviews with purposively-selected decision-makers in the Philippine health system. Study participants were asked about their perspectives on decision-making in the functions of planning, health financing, resource management, human resources for health, health service delivery, and data management and monitoring. Analysis of survey results through visualization of data on charts was complemented by the themes that emerged from the qualitative analysis of in-depth interviews based on the Framework Method. RESULTS: We received 24 online survey responses and interviewed 27 other decision-makers. Survey respondents expressed a preference to shift decision-making away from the local politician in favor of the local health officer in five functions. Most survey participants also preferred re-centralization. Analysis of the interviews suggested that the preferences expressed were likely driven by an expectation that re-centralization would provide a solution to the perceived politicization in decision-making and the reliance of local governments on central support. CONCLUSIONS: Rather than re-centralize the health system, one policy option for consideration for the Philippines would be to maintain devolution but with a revitalized role for the central level to maintain oversight over local governments and regulate their decision-making for the functions. Decentralization, whether in the Philippines or elsewhere, must not only transfer decision-making responsibility to local levels but also ensure that those granted with the decision space could perform decision-making with adequate capacities and could grasp the importance of health services.
Fiscal decentralization is a form of delegated authority of the central government to local governments in matters of financial management. Local governments are given the authority to explore potential sources of local revenue in accordance with applicable regulations. Submission sources of revenue for local governments in the region should ideally be able to encourage selffinance its expenditure. Minimum local governments are able to finance expenditures of local government employee nevertheless remains dependent on central government transfers, it is shown by the local government is still dependent on the balance of funds by the central government through the DAU, DAK and other legal equalization funds. This study aims to determine the level of regional dependency on the central government decentralization era during his journey in the past 10 years (2001-2011). The sample in this study are some regencies/districts and cities in the Province of West Java. The results showed that the degree of independence of local government is still low, which means dependence on the central government is still high. Some areas even shows for local income can not afford to finance recurrent expenditure.
The objective of this study is to analyse the phenomenon of flypaper effect in Aceh after the implementation of fiscal decentralization. Data used in the study were panel data covering all 23 district/municipalities in Aceh from 2011 to 2013. Pooled Least Square was utilized. The results of this study revealed that ownsource revenue, sharing revenue, special allocation funds, general allocation funds, and special autonomy funds are statistically significant variables and have a positive relation to regional spending. It was proven that flypaper effect has occured in Aceh as the coefficient of the own-source revenue variabel was smaller than that of sharing revenue variabel. This implied that Aceh has been dependent on the national government in term of regional financing. Based on descriptive analysis, provinces having dominant share of tertiary sector to their regional gross domestic products show fiscally independent. In order to achieve fiscal independence, the phenomenon of flypaper effect could be overcomed by shifting the economic structure from the primary and secondary to the tertiary sectors of the economy. In doing so, the contribution of own-source revenue to regional spending outweigh intergovernment transfer funds from national government.
The author considers fiscal incentives of regional authorities in the system of federal intergovernmental relations. The aim of the study is to determine how the debt burden of Russian regions affects regional fiscal policy in the context of federal co-financing of expenditure obligations. The work employed the methods of grouping, one-dimensional cluster analysis, correlation analysis, and regression by generalized method of moments (system-GMM). The study found that the increase in the regional debt burden relates to a decrease in the level of local fiscal decentralization. Intensive debt financing of regional expenditures in 2013–2015 also reduces the willingness to regionally co-finance federal priorities. The author concludes that high debt burden reduces the fiscal incentives of regional authorities to co-finance federal initiatives and creates the risk of underfunding of national projects.
The main purpose of this paper is to set a model in which there exist multiple firms producing data in a situation where each firm produces data and shares it voluntarily for new additional revenue. The model is used for theoretical examination of the revenue distribution rule and behaviors to maximize the social welfare. Consequently, the following three main results can be obtained. First, if the number of firms is sufficiently large and some conditions are assumed, the revenue distribution rule to maximize social welfare in a decentralized economy coincides with the elasticity of additional revenue with respect to the provided data. Second, if each firm maximizes profit in the decentralized economy, the firm can achieve allocations to maximize social welfare in a command optimum for any revenue distribution rule as long as the government provides the policy of lump-sum tax and subsidy appropriately. Third, if the subsidy for data sharing is financed by a flat rate tax for additional profit, each firm has an incentive to participate in the platform irrespective of the subsidy rate and revenue distribution rule.
Decentralization in the public sector, in general, has been discussed in the perspective of revenue sharing between spheres of government in the federation and the distribution of decision-making autonomy in the application of public resources and government management processes. This research is part of this context, and it investigates the decentralization of the expenditure execution process, a practice carried out within governments, and its impact on municipal spending. The analysis was carried out from the perspective of the Theory of Public Choice, which presupposes the self-interested behavior of managers when they participate in government decision-making processes and, therefore, the autonomy granted to them to decide on expenditure is important. To operationalize the research, five areas of government activity were selected – education, health, social assistance, sports and leisure, and urbanism – to represent different expenditure characteristics and sources of financing to explain the behavior of managers in different expenditure realities. The data were collected through an electronic questionnaire, whose respondents were managers of city halls, complemented by data from public sources of information. The econometric analysis was done through the estimation of the model by quantile regression for each of the areas analyzed, with data from 290 municipal governments in the period between 2013 and 2018. The results show that the decentralization of the process of spending execution (i) for area with insufficient resources decreased the expenditure; (ii) for areas with insufficient resources and characteristics that make it possible for managers to bargain budgets, the expenditure has increased; and (iii) for areas with insufficient resources, but without characteristics that allow bargaining by budget, decentralization was ineffective. It is concluded, therefore, that the decentralization of spending execution affects municipal expenditure and these effects are different depending on the characteristics of the area in which decentralization occurs, since the behavior of managers is affected by these characteristics. This research points out theoretical implications when it highlights the behavior of managers and the expenditure characteristics of the areas as relevant factors to be considered in the analysis of the relationship between decentralization of spending execution and expenditure. Governments can use the results of this research to assess the desirability of decentralization, as well as consider the need to implement controls on expenditure in decentralized environments.
Розглянуто вплив децентралізаці влади на управління системою фінансів місцевого самоврядування в Україні. Узагальнено та проаналізовано законодавчі акти в контексті децентралізації та визначено їх вплив фінансову систему країни. Проведено аналіз структури джерел надходжень місцевих бюджетів, їх динаміку. Встановлено збільшення державної підтримки місцевого та регіонального розвитку, зокрема значне зростання ресурсів Фонду регіонального розвитку, субвенцій на інфраструктуру та соціально-економічний розвиток об'єднаних територіальних громад (ОТГ). Запропоновано заходи для розв'язання комплексу проблем функціонування місцевих фінансів в умовах реформи децентралізації в найближчій перспективі, серед яких запровадження і розвиток на рівні центральної влади ефективного механізму моніторингу та ідентифікації проблем планування та виконання бюджету, підвищення рівня освіти керівництва громад, а також залучення громадськості до бюджетного процесу.
Fiscal asymmetric decentralization is seen as the panacea in solving persistent income inequalities facing developing economies. Despite efforts to finance County governments, about 42% of Kenyan’s 47.6 million people still live below the poverty level. This study evaluates the influence of County fiscal autonomy on household effects in Kenya. Both primary and secondary data, collected from households in 47 county governments and the Commission on Revenue Allocation, respectively. A Sample of 4,813 households was drawn from 96,251 lists of households developed by Kenya National Bureau of Statistics. Cochran's correction formula was used. The result finds an insignificant negative correlation between county fiscal autonomy and household effects in Kenya. Further studies are recommended with diverse indicators. Findings in this paper are generalizable and a point of reference for policymakers in Kenya.
The fiscal decentralization in Myanmar continues to deteriorate and pose a challenge the long lasting for the growth in the longer time horizon.The main objective of this paper is to observe the fiscal decentralization and rural infrastructure development: evidence from Myanmar and examine whether fiscal decentralization effect directly or indirectly on infrastructure by using an econometric model for the period 2011-2018.This study examines the budget decentralization's impact on infrastructure not only in the long run but also in the short run.The long and short run estimates are investigated using multiple regression method and fixed effects estimation method.Two variables including Revenue autonomy and the total number of miles of earth road construction were used in this analysis.The data was collected from the Ministry of Planning, Finance and Industry, Budget Department and the Department of Highways.Through the analysis findings show that Revenue autonomy positively causes the earth road construction.That's why this observation concluded that earth road construction causes Revenue autonomy and Revenue autonomy causes the earth road construction.There is a bidirectional causal relationship in both the earth road construction variable and Revenue autonomy variable and exists a long run relationship between Revenue autonomy and the earth road construction from multiple regression method and fixed effects estimation method.Therefore, Revenue autonomy policy needs to be coordinated with each other for curbing the earth road construction.
Ilham Maulana Saud, Eka Asterina, Gisti Fairuz Trisha
Research aims : To analyze the effect of local taxes, regional retribution, special allocation fund, and area size on the allocation of capital expenditure with economic growth as a moderating variable in the regency/city Governments in Indonesia from 2016 to 2017. Design/Methodology/Approach : This study used secondary data obtained through the website of the Ministry of Home Affairs, Ministry of Finance, and Audit Board of the Republic of Indonesia. Based on the purposive sampling method, a sample of 565 regencies/cities in Indonesia was obtained. The hypothesis testing in this study used Moderated Regression Analysis. Research findings : Based on the results of the study, it could be concluded that partially the local tax variables, special allocation fund, and area had a positive and significant effect on capital expenditure allocation. In contrast, regional retribution variables did not affect capital expenditure allocation, and economic growth could moderate the effect of local tax on capital expenditure allocation, but unable to moderate the effect of regional regional on capital expenditure allocations. Theoretical contribution/Originality : This research proved the theory of fiscal federalism in the relationship to fiscal decentralization, such as local taxes, economic conditions, public services, and public welfare. Moreover, this study enriched the literature on the application of the theory of stewardship in government agencies. Practitioner/Policy implication : Regional governments in regencies/cities in Indonesia are expected to explore the potential of their regions better so that they can improve the steward function to the community. Research limitation/Implication : The research period was relatively short; due to the availability of data only from 2016 to 2017, many research data were outliers. Future research is expected to renew the observation period and change the intervening model, as well as add other variables related to capital expenditure, such as General Allocation Funds (DAU), Revenue Sharing Funds (DBH), population numbers, Budget Surplus (SILPA) and others.
Government of Uganda is undertaking reforms to improve on the funding levels and modalities of local governments but is faced with a limited budget to fund both the central government and decentralized functions. Less is known about the effect of central government transfers to local revenue collection especially in the context of decentralization in Uganda. We assessed the effects of central government transfers on local revenue generation by municipalities in Uganda by analyzing the trends of central government transfers and locally generated revenues by the municipal councils and assessing the effects of central government transfers on own local revenue generation. Our study focused on municipalities that have been in existence since introduction of decentralization policy and some of these have recently been upgraded into cities. Time series data covering the selected municipalities were obtained from the Local Government Finance Commission. The dataset comprised of locally generated revenue and central government transfers for 13 old municipal councils. The data was in Excel and it had to be exported to E-Views statistical software for further analysis using the fixed effects regression model. Our findings indicate that over the period 2002 to 2017, both central government grants and local revenue generation grew exponentially. We find that increased central government grants contributed to a decline in locally generated revenue and this partly attributable to too much reliance of the local governments on central grants. The results showed that the lagged total central government grants had a significant negative effect on the locally generated revenue. Government should factor in the allocation formula for central government grants to the local revenue performance to serve as an incentive for the municipal councils to raise own local revenue.
In the process of further transferring to the county of the space of economic and social development, how to solve the financial predicament at the county level, stimulate the vitality of county development and improve the people’s livelihood security system at the county level through the adjustment of the financial system have become the core content of the financial system reform below the province level. Finance is a kind of distribution system of “controlling finance by government and administrating through finance” with the state regime system as the main body. It has great significance for the government to perform and transform its functions. Financial reform will inevitably become an important part of the overall reform. Based on the decentralized reform mode under the province, this paper investigates the economic performance of the reform of the County Administrated by Province and the transmission mechanism of the reform from the two aspects of economic growth speed and industrial structure adjustment.