Against the backdrop of the financial and economic crisis, federal and regional States are engaging in several reforms. The financial constitutional design and institutional setting in the area of fiscal and financial matters are being revised in order to better adapt to the current challenges, which result both from the supranational sphere of economic governance and the domestic one. The rationale behind these reforming processes lies in the struggle between the apparent needs to re-centralize while accommodating decentralization claims. The paper focuses on federal and highly regionalized European States by adopting a comparative domestic perspective and investigates reform processes in the area of fiscal matters and financial intergovernmental relations. It explores the most significant features that permeate the various legal orders, trying to single out the different trends in shifting powers in favour of either (re)centralization or decentralization. To this extent the recognition of autonomy on the revenue side and the accommodation of autonomy and solidarity within the new fiscal regimes will be analyzed. Moreover,intergovernmental cooperation in fiscal and financial areas will be scrutinized trying to point out crucial characteristics from a comparative perspective. To this regard particular attention will be given to major recently established bodies and procedures in the fiscal and public finance area as well as to their role within domestic economic governance.
The high degree of centralization of tax legislative power in China has produced frequent controversies in practice, and is also fundamentally inconsistent with certain basic principles of public finance and the rule of law. However, this arrangement is commonly assumed as a given for the contemporary Chinese policy. This article challenges this prevalent view. It argues that the centralization of tax legislative power began only in 1977, and was by no means a fixed institution before that time. Moreover, such centralization strengthened between 1977 and 1993, which was a period regarded as the golden age of fiscal decentralization. Thus there was a sharp contrast at the time between the distribution of tax legislative power and the predominance of fiscal decentralization. The article argues that this contrast could not be explained by the lack of importance of law during the period. “Taxation according to law” was a core idea in the development of the tax system, and this was inevitable due to the need to have a consistent set of tax rules for everyone to follow, to give these rules the backing of the force of the state, and to ensure that such rules were known to the public. The high degree of tax legislative centralization in China is thus historically contingent, and cries out for explanations as to its causes.
From an analitycal historical perspective, this paper deals with the important public finance issue of decentralizing the government’s economic activities and functions into distinct branches, respectively devoted to collecting taxes and to allocating a given budget to different public goods. We start with the so-called Italian tradition in public finance and go on to the crucial contributions from James Pigou, Paul Samuelson and Richard Musgrave, up till the modern second best and optimal taxation approaches. Starting from the Italian tradition is meaningful as this stream of literature has given important pioneristic contributions to this topic, namely by Maffeo Pantaleoni and Enrico Barone. However, it is in developing the relationships of these contributions with the modern second best optimal taxation approach that we may find rigorous solutions to the main emerging problems of the issue.
One important aspect of fiscal decentralization policy is delegation of authority and responsibility of management of public finance to regional governments, especially those of municipalities/districts. After more than ten years of implementation, it is now the right time to evaluate the policy questioning how effective its impacts on regional economic development. The study intends to find on how effective the performance of regional public finance is in providing basic infrastructures and how effective the provision of basic infrastructures reduces the poverty rates. By using panel data methods, this study confirms the positive relationship between performance of regional finance management and provision of basic infrastructures (especially those of road and electricity, but not that of drinking water). On the other hand, the relationship between the provision of basic infrastructures and poverty rates, as expected, is negative. This finding strengthens the belief that it is necessary to further enhance the basic infrastructures development to reduce poverty rates.
Our country's financial decentralization of authority belongs to the scope of decentralization authorization.There are some tax preference margins in the local finance,but it has no pivotal decision-making power and independent taxation power.Based on the data collected from 28 provincial administrative regions in our country between 2003 and 2009,this paper,in view of the special situation of the present social system and economic development,made a specific analysis of the mechanism of action in the local government financial behaviors and proposed some suggestions that the central government need to make further adjustment about assessment criterion for officials' performance and regional economy evaluation index,and properly pilot the local government financial behaviors.
Андреас Каппелер, Albert Solé Ollé, Andreas Stephan, Timo Välilä
The aim of this paper is to analyze the effect of revenue decentralization on\nthe provision of infrastructure at the sub-national level. We estimate the effects of revenue\ndecentralization and earmarked grant financing on the level of sub-national infrastructure\ninvestment in 20 European countries over the period 1990-2009. The results are interpreted\nin light of the predictions of the theory on fiscal federalism. We find that it is sub-national\ninfrastructure investment that increases after revenue decentralization and not investment in\nredistribution. However, the effect of revenue decentralization is lower the higher the use of\nearmarked grants to fund infrastructure investment
Built on the theories about talent competition between rent-seeking and entrepreneurship, and the theories about constitutional environment and rent-seeking, this dissertation explores empirically the effects of a country's constitutional settings on entrepreneurship, in terms of the quantity of entrepreneurs and the quality of their performance. Both the de facto and de jure constitutional environments are studied. In particular, with respect to the de facto constitutional environment, I considered the property rights protection, decentralization, and the factors suggested by the "selectorate theory". In relation to the de jure constitutional environment, I focused on six aspects including electoral rules, form of government, federalism, property rights protection, judicial independence and antidiscrimination provisions. Three indexes were constructed to measure the de jure property rights protection, judicial independence and antidiscrimination provisions, using the data set provided by the Comparative Constitution Project.The empirical study first shows that the quantity of entrepreneurs is inversely correlated with the quality of entrepreneurship in a country. If entrepreneurship does serve as the engine of economic growth, it is perhaps the quality, rather than quantity, that matters. This study then demonstrates that the de facto property rights protection is associated negatively with the quantity of entrepreneurs, but positively with the quality of entrepreneurship. The effects of the two key factors of the selectorate theory, the size of the winning coalition and the ratio of this size to the size of the selectorate, also appear to be compatible with what the theory is to predict. On the other hand, neither fiscal nor political decentralization is found to significantly affect entrepreneurship. Among the de jure constitutional features, two have significant influence on entrepreneurship. First, the constitutional design of judicial independence has a negative effect on the quantity of entrepreneurs, but a positive one on the quality of their performance. Second, majoritarian electoral rules, compared with non-majoritarian rules, have a negative effect on the quality of entrepreneurship. In contrast, the presumed effects of the other three formal constitutional attributes, federalism, presidentialism and property rights protection, cannot be ascertained.Apart from the cross-country study, I also conducted a detailed research on China. Entrepreneurship in China is a case of entrepreneurial development in an authoritarian state lack of secure property rights and the rule of law, hence afflicted with profuse rent-seeking activities. Under these circumstances, entrepreneurship hinges on both the rent-seeking and the entrepreneurial abilities. Drawing on the private enterprise surveys, I found that, in China, the politically connected were systematically advantaged in terms of bank finance, entry to regulated industries and judicial treatment, when they plunged into the business world. The Chinese case also indicates that, when entrepreneurs cannot trust the commitment made by the state in the constitution, they will be eager to scoop profits as soon as possible and exit swiftly with accumulated wealth.Finally, this dissertation concludes by suggesting that a healthy development of entrepreneurship should be sustainable rather than aiming merely at quick money and instant success. It should allow all talented people to reach their full potentials, rather than keep the politically disconnected away from resources needed to make the best use of their potentials. Above all, it wants a constitutional environment with reliable property rights and equal access to opportunities, neither of which is seen in today's China.
Abstrak Otonomi daerah dan desentralisasi fiskal mempunyai tujuan untuk menciptakan suatu kemandirian daerah. Tidak semua daerah mempunyai kesiapan yang sama dalam menciptakan kemandiriannya. Untuk mengatasi permasalahan ini, pemerintah pusat memberikan dana perimbangan/dana transfer kepada pemerintah daerah. Tetapi bukti empiris beberapa penelitian menunjukkan adanya fenomena terjadinya flypaper effect pemerintah daerah di Indonesia, dengan indikasi dominannya peran dana transfer terhadap pendapatan daerah dalam membiayai pengeluaran pemerintah daerah. Penelitian ini menggunakan sampel sebanyak 30 daerah di Jawa Tengah yang bersumber dari Laporan Realisasi Anggaran Pendapatan dan Belanja Daerah (APBD) dari tahun 2009 hingga 2011. Metode pengambilan sampel menggunakan metode purposive sampling . Alat yang digunakan penelitian adalah regresi logistik. Hasil dari penelitian ini Belanja Pegawai mempunyai pengaruh yang signifikan terhadap flypaper effect . Sedangkan Investasi Pemerintah Daerah dan Pembayaran Utang Pemerintah Daerah tidak berpengaruh terhadap flypaper effect . . Abstract Regional autonomy and fiscal decentralization has the objective to create a regional self-reliance. Not all regions have the same readiness in creating independence. To overcome this problem, the central government balance fund / fund transfers to local governments. But the empirical evidence, some studies suggest the existence of the flypaper phenomenon of local government in Indonesia, with an indication of the dominant role of the transfer of funds to finance revenue expenditure in the region. This study uses a sample of 30 regions in Central Java are sourced from the Report of Actual Revenue and Expenditure Budget (budget) from 2009 to 2011. Sampling method using Purposive Sampling method. Research tool used is logistic regression. The results of this study Shopping Employees has a significant effect on flypaper. While the Local Government Investments and Local Government Debt Payments had no effect on flypaper.
The current fiscal decentralization system worsens the local government fiscal deficit.Under the condition of the constrained autonomy in income,local government can only rely on the land finance to alleviate the fiscal deficit.The current performance appraisal system and the imperfect budget system result in land finance.In this paper,we take J province as an example,which is the less-developed areas in central provinces,and verify that the local fiscal deficit plays positive impact on the land finance.Finally,we advise the government to cure the problem of land financial by improving the existing system of fiscal decentralization,giving local governments more financial power,improving the budget management system,enhancing the normalization of the budget,and building a performance evaluation mechanism of people-oriented and promoting the scientific development.
Based on the phenomenon that serious inflation and local investment overheated coexist now,we establish one empirical model in order to investigates into the impact of local government investment impact on inflation under fiscal decentralization system.The study indicates that the local government’s investment in China form a positive factor in inflation,local government investment windens the needs of the community through the multiplier effect of stimulating.At the same time,the increased investment strengthen the dependence on the land finance,the two together promotes a rise in inflation.
Decentralisation and Reform in Latin America analyses the process of intergovernmental reform in Latin America in the last two decades and presents a number of emerging issues. These include the impacts of decentralization and the response of countries in the region to challenge such as social cohesion, interregional and interpersonal disparities, the assignment of social and infrastructure expenditure, macrofinancial shocks, fiscal rules and the sharing of natural resources revenue. The main aim of the book is to assess the effective working of decentralized arrangements and institutions, with a view of suggesting corrections and reforms where the system is not working according to expectations.
The Hong Kong government has dedicated considerable resources to study and test the viability of office decentralization within the city since the 1980s, with objectives to achieve more sustainable industry spatial patterns and to relieve the Central Business District (CBD)from pressures created by high density of establishments and employment. Policies encouraging firm relocation from CBD areas to other office nodes have been implemented, and it was believed that the construction of new railway lines would facilitate such decentralization policies. In addition, a review of literature suggests that decentralization seems to be an inevitable trend in the evolution of a city. In particular, it was proposed by Smith & Selwood (1983) that decentralization could be industry-selective. \n \nWith this background, this research aims to examine whether industries in Hong Kong have actually exhibited decentralizing spatial patterns from the period 1995 to 2010and to compare trend of changes in spatial patterns among different industries. Four industries were selected as the target of study, which are (1) finance and insurance, (2) professionals services, (3) real estate, and (4) import/export, wholesale and retail trades. Their employment and establishment data at Tertiary Planning Unit (TPU) level were obtained from the Census and Statistics Department and processed. \n \nThrough the use of spatial tools, it was found that the real estate industry experienced most rapid trends of decentralization, both in establishment and employment. The other industries were less obviously decentralized; for the finance and insurance industry and the import/export, wholesale and retail industry, there even appeared indicators of stronger concentration in the study period. These findings provide strong support for future relocation policies to be industry-oriented. Another important finding is that for all industries in all study years, employment distribution tends to be more centralized than establishment distribution, which suggests that decentralizing people may be harder to achieve than decentralizing offices. It is thus envisaged that in the future, government policies regarding traffic management need to complement decentralization policies in order to alleviate transportation pressure in Hong Kong’s CBD area.
Jesús Ruiz-Huerta Carbonell, Miguel Ángel García Díaz
In Spain, as a consequence of the persistence of the economic crisis, the deficit and debt of the public administrations have become a main issue on the current economic and political debates In the case of a highly decentralized scenario, such it is the Spanish one, even if we recognize the principal role of Central Government´s debt, a large part of the increased Autonomous Communities’ deficit and indebtedness is explained by the difficulties they have to face in financing services they have to cover. The paper describes the main characteristics of public accounts’ disequilibria in Spain and the regulatory limits established to make use of public debt. Also, the article offers different explanations of those disequilibria, putting the emphasis on those linked to the crisis: i.e. the increasing weight of basic welfare services covered by the Autonomous Communities (such as public health and as education); as the expansive policies implemented to fight the initial effects of the crisis; as the existence of previous and large “extraordinary” resources coming from the housing sector and its consequent collapse; as growth of the debt of the autonomous-community quangos and as the lack of effective accountability mechanisms addressed to control the expenditures of the autonomous communities.
A perfect arrangement of fiscal decentralization has two characteristics: one is the symmetry between financial power and administrative right,and the other is the effectiveness of enforcement mechanism.When financial power and administrative right are asymmetric and the responsibility of local government becomes larger and larder,the local government will resort to land revenues besides taxation.At the same time,when there is a lack of an effective mechanism to guarantee the enforcement of responsibility,the local government will spend more and more land revenues in the field benefiting individuals.For this reason,land finance tends to have two-edged effects on economic growth.On the one hand,it provides the foundation for the expansion of government spending,which facilitates rapid economic growth.On the other hand,it also provides the possibility for the government's wrong investment,which results in a kind of misspent economic growth.The misspent economic growth is typically embodied in the aspects such as visual projects,short-lived project,repeated construction,error investment and job consumption and so on,which is also the major cause of social corruption.
By using the panel data of house price and the economic fundamentals of 35 cities in China from 1999 to 2008,the paper studies the interactions between house price,fiscal decentralization and local government competition.The empirical analysis shows that fiscal decentralization and local government competition have significantly positive influence on house price,and the influence of fiscal decentralization is different between regions.To realize rational house price growth,financial management system of the local government should be sound,the land finance should be regulated,the proportion of the local government fiscal revenue should be increased and the assessing system of the local government official achievements should be established.
This paper explores school finance management in the context of two different organizational models, rather decentralized Norwegian school management and highly centralized school management in Ukraine. Based on the both cases, the paper analyzes the experience of the school leaders in Norway and Ukraine regarding their budget efforts, and challenges they have met within the framework of the national contexts. It is argued that greater budget autonomy in schools in Ukraine might provide resource and time efficiency. It is discussed that formula-based allocation of money might increase accountability and transparency to the Ukrainian customers of educational services. The study involves deliberations on the possibility to apply greater school autonomy on budget matters in socio-economic context of Ukraine, and a series of policies is proposed, aimed at decentralization of the educational sector.