Purpose: Administrative decentralization seeks to redistribute authority, responsibility and financial resources to provide public services among different levels of the government. It is the transfer of responsibility for the planning, financing and management of certain public functions from the central government and its agencies to field units of government agencies, subordinate units or levels of government, semi-autonomous public authorities or corporations, or area-wide, regional or functional authorities. When governments devolve functions, they transfer authority for decision-making, finances, and management to quasi-autonomous units of local government with corporate status. According to Article 3 of the Constitution of Malaysia, Islam is the country's official religion; therefore, studying the legal system of this country, which has a Muslim background, is essentially important to our country. In addition, given the importance of decentralization in Iran, it is of considerable importance to study the challenges of the decentralization system, even when they are formed in a federal system. The Malaysian legal system, modeled based on the English law, has, after independence of the former country, chosen federalism, and, consequently, the political decentralization system for their government. However, the important issue refers to whether the system of political decentralization has been achieved completely and properly in this country and what are its damages? Decentralization can be a way of improving access to services, tailoring government actions to private needs, and increasing the opportunities for state-society interactions. Design/Methodology/Approach: This paper is formed and based on the critical paradigm with the descriptive method, and has been conducted in two sections. The first section of the study investigated the levels of government, and, in the second part, the relationship between federal, state and local governments will be discussed. Findings: Malaysia is one of the three Asian countries and the only southeastern Asian country which has chosen a federal government. The important matter is whether the mentioned federal system results in decentralization? The Malaysian government includes three layers: the federal government, the government of provinces and local government. The provincial and local governments, as the symbol of decentralization in such countries, are determined in Malaysiaâs Constitution with their duties, discretions and limitations. Actually, however, the federal government interferes in provincial activities. 91 percent of financial resources are controlled by the federal government. The independent activities of local governments are hindered by factors such as limited responsibilities, federal and provincial governmentsâ interference in local government affairs, the role of the national association and housing ministry parallel to the local government regarding law and policy-making, existence of unique obligatory policies for all local governments, limited financial resources, and the appointment of local authorities by the federal government. Consequently, the above explanations imply that federalism, as a governmental system, will not necessarily result in decentralization. Originality/Value: Given the large number of studies on the issue of decentralization in the Iranian legal system, this paper, with the aim of observing the originality principle, intends to conduct a comparative study on the legal systems of Malaysia and the United Kingdom.
One component of regional finance sources, part of decentralization policy currently transferred by the central government, is the transfer of general allocation fund (DAU) and special allocation fund (DAK). The DAU is given for the regions to finance its govemmental function and authority, whose sources can be exploited from the real income of the local governments (PAD). ln fact, howeven the DAU transfer becomes the primary source of the regional governments to cover its spending. This study intended fo discuss the relationship between the DAU and PAD to localgovernments expenditures in provinces in Java. Based on panel regression analysrs, its concludes that the DAU growth significantly affects the growth of total expendituresof the local govemments, while, in contrast, the PAD does not significantly affect their expenditures' The study also concludes that there is flypaper effect of the DAU and PAD to the regional or local govemments 'expenditures' Similarly, the DAU and PAD have their significant impacts on employee and capital expenditures.
This paper examines the effects of fiscal decentralization on the education sector for a sample of 62 countries. The results suggest that different sources of fiscal decentralization have distinct effects on education expenditure and quality. While subnational governments that are financed through own-tax revenues are more likely to increase the funds allocated to education, they also seem less concerned with maintaining teaching quality. This study provides evidence that decentralized structures cater better to local social needs. Fiscal decentralization is, therefore, an important policy instrument for achieving social goals.
This chapter examines the issues involved in the continuation of both Panchayati Raj Institutions (PRIs) and parallel bodies or merging of these two institutions or convergence of these institutions at the grass-roots level. Andhra Pradesh is one of the first two states in the country to establish the PRIs much on the lines of the Balwantrai Mehta Committee Report. The objective behind establishing the Panchayati Raj system has multi-fold purpose. Apart from providing civic and developmental services the core objective includes strengthening the grass-root democracy by making the people to participate in the decision-making process through delegating the authority to the lowest layer in the society. Most of the parallel organizations are working in the field of agriculture, health, education and finance. Among them some are created by central government through centrally sponsored schemes and by the concerned state governments through state-sponsored schemes. The parallel bodies (PBs) are created for supposedly speedy implementation of rural development policies and greater accountability.
The purpose of local governments is to facilitate the well-being of communities and regions. Through the provision of different public goods and services local governments have the mission to provide security and stable conditions for individuals and firms by ensuring the necessary public infrastructure and amenities for their activities in the region, such as water supply, roads, waste disposal, parks, schools, and other public functions decentralized in the case of federal systems, among others. Many of these public goods and services are ICT-enabled, and therefore are included within the local digital government strategy. This is the context of digital government initiatives in municipal governments. The critical question for any local government in terms of digital government initiatives is how should they be provided and financed? Assessing this question of whether these ICT-enabled goods and services related to digital government might be more likely to be provided and funded, this article propose a model that embraces the concepts of public good and externalities from the economic perspective in order to provide a useful basis for developing a framework for financing digital government. This article describes a proposal for this framework based on these concepts and applies it in the case of several digital government initiatives undertaken by the City of Aguascalientes, Mexico. This framework applies to local as well as state and national levels of governments. Implications for research and practice are discussed.
This article aims at presenting trends in the state-local budget-cooperation system in Denmark, following the local government reform in 2007 and the fiscal rules in the budget law from 2012. The article investigates some of the characteristics of the development from 1980 until 2016. Evidence gives support to the hypothesis that the possibility for the municipalitiesâ organization to negotiate increasing expenditures has been narrowed, however accompanied by more liberal grant financing. The local government reform seems to have opened a window of opportunity for an elaborated system of collective and especially individual central government sanctions to strengthen the macroeconomic management of service expenditures of local governments. The identified trends in the Danish state-local relations may indicate that the decentralized model of local governments in Denmark is increasingly under pressure. However, the Danish municipal sector is still growing with respect to economic significance.
Decentralized service delivery refers to the mode in which service delivery is done through delegation and devolution of power from center to local governments whereby efficiency and effectiveness are likely to be achieved. The purpose of this study was to assess the improvements in education and health services delivery in Yeka sub city of Addis Ababa city government. To realize the purpose of the study, case study research method was conducted. The study is qualitative whereby simple quantitative tools were employed so as to complement the qualitative narrations. The study primarily utilized secondary data obtained, from policy documents, constitution, proclamations, intervention plans and performance reports, etc. The study was supported with primary data obtained through interviews and questionnaires. The data results revealed that there is achievement in health and education service delivery as well as there are gaps in the services delivered. The findings of the study revealed that various functions of education and health services have been devolved to the lowest tier of government. The study has indicated that there are multiple bodies established at lower levels of government to support school and health centers activities. As a result, the services provided have expanded; there is now an increased availability and accessibility of the services in both education and health. The study also observed constraints; the constraints consider human resource, finance and facilities . Key Words concepts: service delivery, education & health, decentralization
The heavy reliance of Chinese local governments on landâleasing revenues in recent decades has attracted widespread criticism due to its potential risks and problems. This research, using a panel dataset of 280 prefectureâlevel cities in China from 1999 to 2009, explores what factors affect Chinese city governmentsâ dependence on land finance. The findings provide strong support for hypotheses concerning the effects of both fiscal incentives and political incentives on local fiscal behavior. Both fiscal factorsâsuch as local reliance on fiscal transfers and fiscal decentralizationâand political factorsâincluding local top leadersâ tenure and their distance to mandatory retirementâhave exerted significant impacts on city governmentsâ reliance on land finance. These findings point to the significance of intergovernmental fiscal arrangements and political institutions in affecting local government fiscal behavior in developing countries.
âPromotion tournament modelâ is used to explain the Chinese economic miracle. The key of the promotion tournament model is competition for economic growth which brings economic growth together with some societal problems. Competition for economic growth influences local governmentsâ behavior and is one of the reasons for the rapid rising of local debts. The article proposes a new competition modelâcompetition for inhabitantsâ satisfaction. It is a better choice under the system of political centralization with fiscal decentralization in China. It gives inhabitants the right to supervise the government officials while the central government has the power of appointment. Competition for inhabitantsâ satisfaction changes the local governmentsâ investment and finance behaviors, which is meaningful to improve Chinaâs local government debt governance.
The paper provides empirical evidence on the association between decentralization and fiscal performance of the general government on a panel of 11 former transition countries during 1996-2012, controlling for the effects of various demographic, institutional, and macroeconomic variables. Also, for robustness check we make a comparison with a panel of 18 industrialized European economies. The main findings from the empirical investigation suggest that decentralizing government activities in Central and Eastern Europe leads to an increase in the efficiency in the provision of public goods. Also, we show that not only the extent of fiscal decentralization, but the composition of local revenue, too, matters for fiscal discipline. In these regards, providing local governments with higher autonomy in financing their activities by relying more on their âownâ tax revenues instead of intergovernmental grants seems to be conducive with fiscal discipline. In contrast to the sample consisting of the former transition economies, we cannot find evidence on the association between decentralization and fiscal discipline in the developed European countries.
The fiscal incentives literature emphasizes how the design of transfer systems has a significant implication on the behavior of local governments within decentralized systems. The empirical findings on the relationship between intergovernmental transfers and the incentives they create for local revenue generation are inconclusive and differ from country to country. Given the lack of data on local public finances, this type of study rarely involves developing countries. Using a unique and rich socio-economic and public finance data covering a large set of Moroccan municipalities over the period 2005 to 2009, this paper contributes to the new generation of fiscal federalism literature by assessing the fiscal incentive effects of two types of transfers: general purpose transfers (unconditional) defined by a formula and specific purpose transfers (conditional) allocated on an ad-hoc basis. After correcting for the endogeneity problem, our findings support the existence of a significant incentive effect of unconditional transfers and a less robust effect of conditional transfers. Suggesting that transfers from the central government complement local own revenues by encouraging Moroccan municipalities to collect more revenues.
The research aims to measure the inequality of income distribution of each area and regional finance in Purbalingga District. The inequality of income distribution of each area was measured by the Williamson Index and the fiscal capacity was measured by the fiscal decentralization degree.The result of this research shows that the average of economic growth per year is 5.07 percent, the average of fiscal decentralization degree per year is 16.42 percent thai it is included to a high level of fiscal dependency on the central government category, while the average of inequality of income distribution of each area per year is 0.45 that it is included to a medium inequality category.
There are two major models in China's Province-Managing-County (PMC) reform: the Province-Fiscally-Managing-County (PFMC) and the Power-Expanding-County (PEC). This paper is intended to compare the fiscal and economic effects of these two reform models based on their different categories of reform policiesâfiscal decentralization policies and economic empowerment policies. By taking Henan's PMC reform as an empirical case study, we find that a) Henan's PFMC reform did not contribute to the growth of county economy through a series of economic empowerment policies and exclusively fiscal decentralization policies, though it promoted the increase in transfer revenue at the county level. b) By contrast, Henan's PEC reform through only economic empowerment policies did not contribute to county's growth of transfer incomes, but it significantly promoted the growth of county economy with an annual downward trend. The further analyses on these findings show that the expansion of economic autonomy by the economic empowerment is the key positive factor to the growth of county economy in the PEC reform, while the moral hazard caused by the fiscal decentralization is the major negative factor holding back the economic effect of the PFMC reform. Therefore, this throws out a hint that the improvement of economic autonomy in county governments will be a right and effective approach to promote the sustainable development of county economy, though it should be further examined in the future research.
This paper aims at investigating the impact of fiscal decentralization on two key social services: education and healthcare outcomes. We use both a simple time series data set and panel data set covering four provinces of Pakistan over the period from 1975 to 2009 to empirically test the impact of fiscal decentralization on infant mortality rate, crude death rate and literacy rate. Besides Ordinary Least Square method we use Generalized Method of Moment econometric technique to obtain robust and consistent results. The empirical findings of this paper indicate that fiscal decentralization is effective in enhancing the delivery and augmenting the quality of education and healthcare services. These findings are important because they suggest, contrary to the traditional public finance theory, that provincial governments can play a far better role in improving the social services delivery like basic education and healthcare compare to federal government.
Government leaders' attention to participatory governance, public-private partnership, and community empowering has been increased in developing countries as well as developed countries as a way of enhancing public trust in government and overcoming economic and social challenges in governance. Korea is no exception. Especially, the evolution of participatory budgeting (PB) in the Republic of Korea shows very interesting dynamics in the context of democratization and decentralization. PB in Korea is a mandatory citizen participation program in local governments since enacting the Local Finance Act in 2011. The case of PB program in Korea presents an important policy diffusion process from a bottom-up approach to a top-down one concerning intergovernmental relations for implementing a citizen participation program. As PB has been implemented in all the local governments in Korea, it provides a great opportunity to conduct a nation-wide assessment study of the PB adoption and diffusion, local government capacity for the PB implementation, and the impacts of the PB on public administration and values in local governance. Focusing on local governments' experiences of PB implementation, "Participatory Governance and Policy Diffusion in Local Governments in Korea: Implementation of Participatory Budgeting," provides theoretical and practical insights for understanding policy diffusion, implementation capacity, impacts, and challenges. It further elaborates several policy recommendations for enhancing PB implementation capacity given the ongoing challenges of PB implementation, including weak financial independency of local governments, the relation between local government and local council, and the low level of citizen participation in the PB program.
Maria Ambrosanio, Paolo Balduzzi, Massimo Bordignon
For almost two decades, starting from the early â90s, Italy experienced the strongest wave of decentralization reforms in its post II World War history. The causes were both economic and political. Yet, in recent years, again economic and political causes seem to call for opposite reforms. Along with a second wave of scandals, this time interesting local politicians, the crisis that has hit our country since 2008 is having relevant effects on the relationships between central and local governments. The aim of this paper is to assess dimension and direction of these effects. We first review the situation of "fiscal federalism" in Italy before the crisis, summarizing the decentralization process in the â90s, its consequences in terms of financing and functions for local governments, the constitutional reform of 2001 and the implementation problems this created. We then look at the numbers of the crisis; the "double dip" of the economic cycle in the period 2007- 2013, the policies implemented to contrast the financial market confidence crisis and the distribution of the burden of the fiscal consolidation across levels of government. We also discuss the institutional features of the implemented policies, in particular referring to number of local governments and to the financial relationships between level of governments, including taxes, transfers, fiscal rules and bankruptcy procedurals. Finally, we look at the future: what consequences will the new European rules, as enshrined in the new art. 81, have on the financial relationships between levels of government? And how is the balance of power between the center and the periphery going to change in lieu of the new proposed Constitutional reform?
Central governments canalize to decentralized organization for compensate public demands faster, high quality and efficiency in globalization process. Local governments take effectively charge in distribution of income, education, health, housing on local basis which are parts of public policy and increasing the welfare level of the citizens of their municipality with their own facilities. The most important mission is incumbent to municipalities which is local governmentsââŹâ˘ type, in decentralized organization. Municipalities have two types incoming source; one of them from central governments sources the other one is internal revenue. This study aims to give information about municipalities which are at the forefront among local governments and property tax which is one of income sources municipalities. In this sense, law no. 5393 which was accepted on the 3rd of July, 2007 was studied in the frame of property tax and information about the phases of municipalities from the foundation up to now and their financial structure was given. Keywords: property tax, local government, decentralization, budget.
Over the period 2007â2013, a series of undertakings were made to introduce fundamental elements of decentralized education finance to Egypt. In 2009, 8.4M Egyptian pounds (EGP) of the Government of Egyptâs (GOE) budget was decentralized to every primary school in three pilot governorates. By 2013, EGP 1.2B of the GOEâs money had been decentralized nationwide. This paper describes what these undertakings strived to achieve, what specifically was done to achieve these objectives, the degree to which these objectives were achieved, the reasons why they were achieved to the degree they were with particular attention paid to the institutional and political context within which these undertakings unfolded. The account of the technical work that was undertaken to decentralize these funds is important, but more important is the account of the interplay between the technical work, the fact that this work supported a GOE-led initiative, and the volatile political environmentâpre-revolution, revolution, and post-revolution Egyptâin which the work was done for it is here where important lessons about reform emerge.
The system of local and regional self- government in Croatia consists of two levels. The level of local self-government is made of cities and municipalities, while the level of regional self-government is made of counties. There are 428 municipalities, 127 cities, and 20 counties, with the City of Zagreb, having special status of simultaneously being the city and the county. Therefore, the Croatian system of local and regional self-government comprises 576 self-governmental units in total. Since the inception of the system in 1990s, there are constant discussions in public between different interested parties about its functionality and appropriateness. A highly fragmented system of 576 self-governmental units in a country of 4, 2 mil citizens, by default, is characterized by mostly economically weak units that are dependent on the central government and often unable to fully deliver public services in their jurisdiction. Sixty cities have less than 10.000 inhabitants, what makes about 42% of all cities, while 220 municipalities have less than 2.500 inhabitants, what makes about 51% of all municipalities. Additionally, the counties are also very diverse in terms of population and area, as well as in terms of their economic strength. The City of Zagreb plays in its own league, making 19% of the total population and 33% of total GDP in 2012, and having a large share in the public finances of self- governmental units, thus influencing and distorting the results of every local and regional government analysis. The responsibilities and duties of the self- governmental units (which translate into public expenditures) are prescribed by the law, as well as their financing (the sources of local and regional public revenues). Although the process of fiscal decentralization started in 2001 with the transfer of certain so-called decentralized functions and corresponding financial funds from the central level to local and regional governments, it has not been continued as expected in following years. The fiscal decentralization should distribute financing sources between central, regional and local level differently, ensuring a larger share of public revenues for self-governmental units in order to deliver needed public services. The role of counties has been especially highly debated in ongoing discussions. Therefore, the paper discusses the position of counties in terms of their legal definition, financing sources, territorial and other characteristics, fiscal capacities, as well as it analyzes their public revenues and expenditures in past periods.
Giving local government to arrange regional receipt to purchase expenses bugget is part of Regional Otonomy. Not only depend on Central Government, Government genuine Receipt is one regional receipt that shows how stronger local goverment finance can handled all the expenditure. Metro as a local government in Indonesia, has the increase in regional otonomy espescialy in finance. The higher decentralization is a indicatoin that indicate higher ability on local government to fulfill all expenditure. It can be shown on share of Government Genuine Receipt and Tax and non Tax Share compare Total Regional Receipt and Total Regional Expenditure. Higher fiscal Desentralization needed by Metro to get higher Regional otonomy. Government Genuine Receipt and Tax and non Tax must be increased to get higher regional receipt and increasing share in Total Regional Receipt and higher share to offord the Total Regional Expenditure.