Tatiana MoČteanu, Carmen Maria LÄcÄtuĹ, Mirela Anca Postole
This paper work aims to identify the issues of Romanian local public decentralization, recommending measures to streamline the public finance circuit. The reorganization of the public government in three levels, the growth of the financial independence of local authorities and public administrationâs decisionsâ transparency next to a better information of citizens, coupled with their empowerment and involvement in public affairs, all these represents key points for the discharge of decentralization of public finances: to increase social welfare.
This book, compiled from the 2nd Global Report of United Cities and Local Governments (UCLG) on Decentralization and Local Democracy, analyzes the architecture of fiscal decentralization in one hundred and ten countries as well as in major metropolitan areas. In the majority of these countries, local authorities are taking on more and more responsibilities for public investment and the provision of services that are essential for both economic development and the well being of their citizens.
The primary purpose of this chapter is to review global trends in decentralization, that is, the transfer of decision-making power and responsibilities from central to local authorities, along with changes in public finance, in the past decade.1 In highlighting common features in the process of decentralization, the secondary objective is to spot linkages in policy and practice that have relevance for local economic development (LED).
This article presents a model of optimal decentralization of economic governance. It focuses on the provision of public input for private production. It considers that the decision power is given to a local government if it has the full right to decide new investments and new taxes to finance it. Three economic forces act on this optimal decentralization of the decision. First is the centripetal force which consists in the increasing accuracy and relevance of public investments when decided more locally. The second and third are the centrifugal forces of the administrative costs on the one hand and of the fiscal competition among decentralized jurisdictions on the other. Formal proofs of the existence and uniqueness of solutions are given under special hypotheses and in general. Numerical analysis is also done to understand the impact on the optimal decentralization level of the different model parameters.
This paper explores the mechanism of China's tax growth within a framework of intergovernmental competition.Tax Competition takes place through endogenous tax collecting efficiency.Horizontal competition tends to lower the effective equilibrium tax rate,while vertical competition has the reverse effect.Since the 1993 tax reform,concentration of tax revenue to upper-level governments and regulation of local public finance imposed by the central government,have led to stronger vertical effects and relatively weaker horizontal effects.The paper offers us not only a new perspective to understand China's fiscal decentralization,but also an efficiency principle to design optimal tax sharing system.
We construct a model of endogenous investment specific techological change in which the stock of public capital influences the real price of capital goods. We show that the growth and welfare maximizing tax rates coincide in the planned economy. When factor income taxes finance public investment infintely many tax-subsidy combinations can decentralize the planner's allocations. The optimal capital income tax can be positive in this environment. We then augment the model to incorporate administrative costs. A unique combination of factor income taxes now decentralizes the planner's allocations. A simple calibration exercise suggests that changes in factor income taxes does not cause a significant change in the optimal growth rate or welfare. Our framework broadens the environment in which investment specific technological change occurs, and characterizes the role of optimal factor income taxation in raising long run growth and welfare.
The government administrative expenses has the dual attributes: on the one hand,too much spending is harmful to economic growth,making local governments in a disadvantaged position in competition and doing harm to the promotion of officials,and goes against the macro-policy objectives of China Central Government at the same time;but it can improve the economic well-being of local government officials.Therefore,local governments face a dilemma on the issue of administrative expenses.This paper uses the panel data from China's 30 provinces(including autonomous regions and municipalities) from 1998-2006 to conduct empirical analysis and robustness test of the relationship between fiscal decentralization and administrative expenses.The main conclusions are as followings: In China's institutional environment,with the expansion of local government fiscal expenditure discretion,the overall effect is the increase of administrative expenses.There is a significant positive correlation between the number of administrative staff and the amount of administrative expenses.The level of regional economic development,resource endowments,and social structure has significant impact on local government administrative expenses.In the context of public finance reform,the other items of public expenditure(except for social security expenditure) have significant crowding out effect on administrative expenses.
Providing financial resources for public funds is difficult to effectuate and the central government and local government level. Since local budgets do not own income sufficient to ensure the financing of all expenditures on behalf of local collectivities, then the state budget provides funding for social, economic local destinations. Decentralization of public services is accompanied by financial descentralization. In this paper we present some aspects of VAT revenue from the state budget used to support certain activities at the local level, the evolution of these allocations in the context of current budgetary constraints due to financial crisis.
Published in: Jorge Martinez Vazquez. Local Finance in Latin America in <em>Local government finance : the challenges of the 21st century : second global report on decentralization and local democracy : GOLD II 2010 / United Cities and Local Governments</em>. 191-229. Cheltenham, UK ; Northampton, MA : Edward Elgar, 2011. (c) United Cities and Local Governments, published by <a href="http://www.e-elgar.co.uk/">Edward Elgar Publisher</a>. Posted with the permission of the publisher for personal use only.
Based on analyses on the usage and sources of the loans of local government-backed financing vehicles, this paper discusses the challenges of public capital financing that local governments in China face. Recently rapid increase of the loans of local government-backed financing vehicles could induce serious risk to local governmentsâ fiscal stability. The authors argue that the traditional thoughts focusing on inappropriate fiscal decentralization might not bring to light the core problems concerning local government-backed financing vehicles. This paper suggests that the problems indeed reflect the deficiencies of the public capital financing and investment system of local governments in China. Currently, a comprehensive solution is needed in order to establish a sustainable public capital financing system. The authors insist that a public capital financing system based on municipal bonds would be more efficient. Meanwhile, a rigorous public capital budget constraint would be indispensable to maintain local governmentsâ fiscal sustainability.
Decentralization is a mechanism by means of which the local administration authorities receive the authority and the resources allowing them to make decisions concerning the provision of public services. The balancing of the local budgets in Romania is the consequence of the financial decentralization, according to which the local communities were entrusted with/allotted their responsibilities and then they were entrusted with/allotted their resources as well. The separation of the attributions of the central and of the local administration conditions the way the revenues and the expenses were distributed between the two levels. This process depends on the degree of regional development, on the concentration of the population on its welfare degree, on the tasks each community has to face, on the possibility of financing the foreseen expenses from local resources.
Claudia Dziobek, Miguel Alves, Majdeline El Rayess, Carlos Alberto Gutierrez Mangas ¡ 5 authors
A useful but little known feature of the IMFâs Government Finance Statistics Yearbook (GFSY) is the information on the structure of governments. Institutional tables, included in the GFSY, provide detail on the central, state, and local levels of governments, social security, and extrabudgetary units. We refer to the main levels of government as GL1, GL2, and GL3 in ascending order of institutional coverage. We present maps of the various levels of government for 74 countries to illustrate the usefulness of this database and make it more accessible to users. The maps provide information about how centralized or decentralized government finances and employment are and their size relative to the overall economy. Government map data facilitate the monitoring of fiscal policy and fiscal rules.
One of the fundamental tenets of fiscal federalism is that, absent various sorts of externalities, decentralized governments that rely on own-source revenues should be more fiscally efficient than decentralized governments that rely on grant financing. The argument relies in part on the idea that sub-national governments, being closer to the people, are more accountable to its citizens. Accountability to citizens is also important in understanding the presence of corruption in government. This suggests that the financial structure and institutions of decentralized governments can potentially influence the degree and extent of corrupt activity. Financial structures that make governments more accountable should be associated with less corruption (other things equal), while financial structures with less accountability should be associated with more corrupt activities. We develop a simple model in which the use of grants rather than locally raised taxes increases corruption. We then use a panel data set of Mexican states to study the relationship between funding sources for Mexican states and the level of corruption in those states. We find that greater use of own tax revenues lowers corruption while greater use of grants increases corruption. This suggests that expenditure decentralization that is accompanied by revenue decentralization is likely to discourage corruption while expenditure decentralization that is funded by grants tends to encourage corruption. We also find that poverty, a measure of uninformed citizens, leads to greater corruption.
Claudia Dziobek, Carlos Alberto Gutierrez Mangas, Phebby Kufa
Conventional wisdom postulates that there are benefits from decentralizing government finances but there is little empirical evidence about actual country practices. This paper presents data on fiscal decentralization for about 80 countries over a period of about 20 years (1990 - 2008) from the IMFâs Government Finance Statistics Yearbook (GFSY), the only global database with fiscal data for several levels of government. The data show that in many countries, revenue collection remains relatively more centralized than expenditures and that employment tends to be concentrated in lower levels of government. Except for transition economies, the levels of decentralization are relatively stable over the time period. The findings are shown by degree of economic development, constitutional power arrangements, and geographic area, broadly confirming key factors identified in the literature as determining the extent of fiscal decentralization.
This article contributes to the limited empirical literature on the impact of decentralization on economic welfare by investigating the hypothesis that shifts towards more fiscal decentralization in health services would be accompanied by improvements in population health. Building on a conventional public finance model applied to health care, this hypothesis is tested on a panel data of the highly decentralized Canadian provinces during the period 1979 to 1995. The results of the exploratory empirical analysis presented in this article suggest that fiscal decentralization of health services in Canada has had a positive and substantial influence on the effectiveness of public policy in improving a population's health over the period studied.
The aim of this research is to better understand the effects of a decentralized health system of the Philippines on public health care expenditures by investigating determinants of local government public health spending for year 2007. Within the context of the Philippinesâ decentralized health system and health externalities that arise at the individual-level and manifest at the regional level, particular emphasis is given to spatial spillovers and fiscal interactions among municipalities. The research addresses these issues in an empirical spatial econometric framework utilizing public finance local government data for the Philippines. Competition for health resources including doctors and drugs, thereby bidding up the costs of health inputs is one of the potential causes for positive fiscal spatial dependence cited in this paper. It is also anticipated that this could be an outcome of yardstick competition, where local agents strategically compete with each other by spending higher in order to be re-elected, 2007 being an election year.
Abstract When external effects are important, markets will be inefficient, and economists have considered several broad classes of economic instruments to correct these inefficiencies. However, the standard economic analysis has tended to take the region, and the government, as a given; that is, this work has neglected important distinctions and interactions between the geographic scope of different pollutants, the enforcement authority of various levels of government, and the fiscal responsibilities of the various levels of government. It typically ignores the possibility that the externality may be created and addressed by local governments, and it does not consider the implications of decentralization for the design of economic instruments targeted at environmental problems. This paper examines the implications of decentralization for the design of corrective policies; that is, how does one design economic instruments in a decentralized fiscal system in which externalities exist at the local level and in which subnational governments have the power to provide local public services and to choose tax instruments that can both finance these expenditures and correct the market failures of externalities?
China has been carrying out a significant fiscal decentralization policy for over three decades. However, reforms have largely concentrated on the revenue side of budgets, and generally they have not been coordinated with an explicit strategy for the decentralization of expenditure assignments. Although significant strides have been made in the areas of tax assignments and tax administration, other areasâin particular, the assignment of government functionsâhave advanced much less. Yet a stable, efficient, and fair decentralized system of public finance in China will require an unambiguous and well-defined institutional framework in the assignment of expenditure responsibilities among the different levels of government. The assignment of responsibilities is by no means the only condition, but it is the most important, and it should also be the first in a well-sequenced decentralization reform effort. This chapter reviews the most important current issues surrounding the assignment of expenditure responsibilities in China. In order to put those issues in the proper perspective, an overview is provided of the general principles of expenditure assignments and the common problems encountered in the international experience. The chapter also provides a road map and practical recommendations for the reform of expenditure assignments in China.
Based on statistics data from 1987 to 2007 in China, this paper, using spatial panel data model, has conducted an empirical study of the influence factors on finance competition of local governments to foreign direct investment (FDI) inflows. The results show that tax competition and expense competition, two widely-used finance competition tools for absorbing FDI, have different promotion to FDI inflows. Expense competition is significantly positive correlated to FDI inflows, but tax competition is not significant. Furthermore, competition tool selection is correlate with time span and economic development level in China. On the one hand, judging from the time aspect, on a nation wide scale, the use of competition tools have changed from tax competition to expense competition since the 1994 fiscal decentralization reform in view of FDI inflows competition. On the other hand, judging from the regional aspect, the developed regions tend to use expense competition tool, while the underdeveloped ones remain preferential tax policy for absorbing FDI.
CART19 therapy has revolutionized the treatment of CD19<sup>+</sup> acute lymphoblastic leukemia, demonstrating an unprecedented complete remission rate; however, as follow-up prolongs, a high relapse rate after CART19 therapy has emerged as one of the major problems. Relapse can be attributed to the loss of leukemic cell immunogenicity, diminished function and amount of CART19 cells, and the inhibitory bone marrow microenvironment. Although studies to prevent and treat relapse have begun, some encouraging results have demonstrated the possibility of decreasing the relapse rate. In this review, we focus on the possible mechanisms behind relapse. We will summarize and propose strategies to prevent and manage relapse on the basis of these potential mechanisms.
Local authority financing is currently at the heart of the political debate. All the states are faced with the challenge of reconciling the need to control and reduce public spending with greater financial autonomy in local government; they are accordingly seeking ways of achieving an equitable distribution of financial resources among the different levels of government in a context of budgetary cutbacks at every level of public administration. If strengthening democracy means strengthening local selfgovernment, this in turn means establishing systems of financing for local authorities which are at once efficient, fair and consistent with the state's economic imperatives. In other words, the principle of subsidiary, decentralization and local finances are all interdependent.In Romania this process started in 1990 and it is on the move even today. This paper is trying to find, by using economic instruments, what is the degree in which we succeed to create a real local financial selfgovernment.