Introduction, Mila Freire. Part I: City Management and Strategy: Globalization and the new urban challenge, Yeung Yue-man The challenges of peri-urban growth in East Asia: the case of China Hangzhou-Ningbo Corridor, Douglas Webster and Larissa Muller Planning Singapore growth for better living, Belinda Yuen Strategic management and citizen empowerment: the Naga City experience, Jesse Robredo City strategy and governance, Mila Freire and Angela Griffin. Part II: Finance and Budget Issues: From conceptual framework to practice: the municipal budget, Markus Stadler Decentralization, devolution and development in the Philippines, Alex Brillantes, Jr Revenue sources of local governments: nature and determinants, Robert Ebel and Francois Vaillancourt The private sector in water and sanitation, Penelope J. Brook and Nicola Tynan. Part III: Land, Poverty and Other Issues: Strengthening local government capacities in urban planning and finance: lessons from the East Asia city development strategies, Nathaniel von Einsiedel Industrial estate planning and development: case studies, Seetoh Kum Chun The city poverty assessment: a primer, Jesko Hentschel and Radha Seshigirl Preserving the cultural (built) heritage of cities, Heng Chye Klang. Resume: Lessons Learned, Belinda Yuen.
This article discusses the contemporary problem of the county or village-town fiscal difficulties from the view of the fiscal decentralization theory, and points out that the root of the county or village-town fiscal difficulties lies in the irrational system arrangement of fiscal decentralization on the basis of the statement of several basic principles of rational fiscal decentralization. The essential way to extricate from the county or village-town fiscal difficulties is to aim at rational fiscal decentralization among various levels of governments.
National governments often choose to delegate tasks and burdens to lower levels in a comprehensive system of administration. Local and regional governance thereby becomes an important factor in policy implementation. This paper focuses on the incentive problem that follows from such a delegation of competences to collect taxes and do lending at the local level in a multi-level geo-administrative system. The paper uses the Danish administrative system to illustrate the actual outcomes from such incentive problems. A two-step estimation procedure will be used to derive results on the importance of incentive problems in multi-level geo-administrative systems. Setting up elaborate administrative systems will introduce agency problems that lead to inefficiencies in both local and national governance.
The effective economy must be able to allocate resources, opportunities,risks,and furthermore social power effectively. From the aspect of finance, how to allocate the tax revenue between central and local statement and make it optimal will influence the enthusiasm of central and local statement to supply demanded public goods for economic activities. The analysis of the Cobb-Douglas production function on the variables of the national public goods, the local public goods and the private capital reveals that the degree of finance decentralization is optimal when the proportion of the tax revenue possessed by the local government equals to the rate of the elasticity of the local public goods to the sum of the elasticity of the local public goods and the elasticity of the national public goods.
The tax-sharing system reform since 1994 has hardened budgetary constraints on local governments, but has not derailed the fiscal decentralization trend since China started the reform and opening up. This fiscal decentralization has provided a strong impetus to local finance, so that local governments have become quite enthusiastic in pursuing local economic development and improving local economic efficiency. As market competition intensifies, the public-owned enterprises have gradually become a financial burden on local finance. Meanwhile, the non-state sector has made an increasing contribution to the local economy and to local coffers. Therefore, it has become the optimal choice for local governments, in pursuit of their own interests, to reform the ownership structure of public-owned enterprises.
Fiscal federalism implies a challenge of holding fiscal discipline at the local level. Recent analyses of fiscal adjustment have addressed the design of fiscal and political institutions for the U.S. states, and have shown how tax limits and anti-deficit rules strengthen immediate shock adjustment. Here we extend the evidence to the case of centralized financing in Norway. In this system central government takes a larger responsibility in smoothing decentralized government revenue, but at the same time the localities are more vulnerable to shocks because of their limited room to maneuver. The empirical analysis of responses to budgetary shocks shows that local public investment is the main shock absorber in this system and that investments are procyclical. Local fiscal crisis is avoided, but decentralized government is destabilizing.
Twelve years into the implementation of the Local Government Code of 1991, it is but opportune to assess how the key features of this landmark legislation has contributed to (or detracted from) achieving the balance between local autonomy and accountability. The literature on fiscal decentralization suggests that these two goals are not incompatible. In fact, real autonomy (in the sense of subnational governments being able to link their spending decisions with their revenue/tax decisions) promotes fiscal responsibility. In the context of the ongoing debate in the Philippines, however, local autonomy has been equated (by many LGUs officials) with the independence of LGUs from central government interference. As such, LGU officials have focused more on securing even higher levels of block grants in order to address the widely perceived vertical fiscal imbalance. However, closer scrutiny of the problem indicates that greater_x000D_ tax decentralization coupled with a well designed intergovernmental transfer system that includes elements of fiscal equalization and categorical grants conditional on the achievement of minimum service standards would better enhance the gains that are forthcoming from the decentralization process while minimizing the risks of macroinstability.
The distribution of competencies between the different levels of a federal system may have remarkable effects on economic growth, because mainly the regions of a country contribute to national economic development. Thus, a governments economic policy is reasonably shaped along regional lines. The theoretical discussion in economics focuses however on the efficiency aspects of a decentralized provision and financing of public services; rarely the argument is raised that decentralization or federalism increases growth through a higher ability of the political system to innovate and to carry out reforms. After a discussion of the theoretical arguments on federalism and growth, we address the empirical question in this paper how important the assignment of decision making competencies and the design of fiscal federalism are for economic development. Finally, on the basis of existing theoretical and empirical studies on economic growth and federalism, open questions and possible ways of answering them are presented.
A major theoretical as well as political approach to transport infrastructure investment and management is the idea that such services are public goods and should not be subject to private market considerations. However, from time to time, public provision seems to fail, which increases the importance of various forms of private sector participation. Assessing the impact of devolution on the country's road infrastructure, the author underscores the lack of coherence in the design and redistribution of resources and responsibilities, which resulted in a coordination gap between national government agencies and local government units. An important insight is that the private provision of a public good may be feasible, for as long as its consumer-beneficiaries can be made to pay a use price, such that the revenue stream to the private provider is greater than the cost of construction, administration, and upkeep of the public good.
The restructuring of the state bureaucracy deals largely with the relations between the state and market. It does not tell us how the Chinese government has used modern economic means to manage and regulate the economy. This chapter shifts to the latter aspect, focusing on the reforms in the key sectors of taxation, finance, and the enterprise system. In reforming China's fiscal and financial systems, the leadership sought to achieve two main goals. First, fiscal and financial reforms aimed to promote the development of the market economy by changing the relationship between the state and the enterprises, and second, the reforms were expected to build a modern state by managing the economy more efficiently and shifting economic power from local government to the central state. This chapter attempts to link the reforms in taxation, finance, and state-owned enterprises (SOEs) with state-building efforts by the leadership. Taxation reform and the tax regime China's fiscal system since the late 1970s has undergone a drastic transformation from a unitary system to a federal one. When the leadership first embarked on economic reform, it recognized that enterprises as well as local governments had to be provided with incentives to support the reform effort. This was achieved through fiscal decentralization. But this process augmented local autonomy at the expense of the center's fiscal capacity.
This note presents the methodology and \n findings of a field study on the financing needs of \n Madagascar's communes-the country's lowest but \n most institutionally advanced level of subnational \n government. Following a first round of municipal elections \n in 1995, more than 1,500 communes are now formally \n responsible for maintaining basic administrative services \n and social and economic infrastructure, including local \n waste disposal and sanitation. In addition, communes are \n responsible for identifying and coordinating local \n investments and for supporting implementation of the \n national Poverty Reduction Strategy at the local level. To \n finance these activities, communes receive population-based \n transfers and small conditional transfers, and can collect \n revenue from property, market, and consumption taxes as well \n as user charges. Yet little is known about how much these \n fiscal assignments satisfy local needs. As part of its \n policy dialogue with the government of Madagascar, the World \n Bank is engaged in extensive research that includes \n geographic mapping of social spending and a review of \n opportunities and obstacles to fiscal and sectoral \n decentralization. This research generated the following \n analysis of local and cross-sectoral service needs and \n available financing.
This paper reviews Russian municipal budget revenues and expenditures reforms in 1992–2002. Recent tax reforms have resulted in the decrease of local fiscal autonomy. Municipal budget revenues have dropped sharply in relative as well as absolute terms. Despite significant formal expenditure powers Russian municipalities are completely financially dependent on higher-level governments. Within regions regional governments have continued to increasingly finance municipal social expenditures. The examination of possible scenarios of development after the enactment of the draft law"On the General Principles of the Organization of Local Self-governance in the Russian Federation" shows that the fiscal centralization trend will continue.
Die Kompetenzverteilung zwischen den verschiedenen Gebietskörperschaftsebenen eines föderativen Staates kann sich erheblich auf das Wirtschaftswachstum auswirken, da es insbesondere die Regionen eines Landes sind, die zu seiner gesamten wirtschaftlichen Entwicklung beitragen. Dies legt einen regionalen Zuschnitt der staatlichen Wirtschaftspolitik nahe. Aus ökonomischer Sicht wird in der theoretischen Diskussion hingegen vornehmlich auf die Effizienzaspekte einer dezentralen Bereitstellung und die Finanzierung öffentlicher Leistungen abgehoben. Selten findet sich das Argument, dass Dezentralität oder Föderalismus – vermittelt über eine höhere Innovationsund Reformfähigkeit des politischen Systems – zu einer Steigerung des Wachstums führen. Nach einer Diskussion der theoretischen Überlegungen zu Föderalismus und Wachstum wenden wir uns in diesem Beitrag der empirischen Frage zu, welche Bedeutung die Zuordnung von Entscheidungskompetenzen und die institutionelle Ausgestaltung des fiskalischen Föderalismus für die wirtschaftliche Entwicklung eines Landes haben. Auf Basis der bisher existierenden theoretischen und empirischen Studien zu Wirtschaftswachstum und Föderalismus werden offene Fragen und mögliche Ansätze zu ihrer Beantwortung formuliert. <bold>Abstract</bold> The assignment of competencies in a federal state can have a strong impact on economic growth, because the regions of a country particularly contribute to its total economic development. Hence, public policy should be tailored to regional needs. Public economists however mainly focus on the efficiency of decentralized public goods provision and financing; seldom arguments concerning political innovation due to a decentralized experimentation of policies and its impact on economic growth are considered. After a discussion of theoretical arguments on federalism and economic growth, the empirical question is addressed in this paper whether the assignment of autonomy and the institutional design of fiscal federalism influence economic development of a country. On this basis, open question and potential routes of research are formulated.
In the context of recent decentralization of regional development in Indonesia, the local authorities and communities need to understand by how potential sources for financing regional development effect the economic growth. There is three sources of financing such as government, private investor and local communities. The purpose of this paper is to explain the role of financing resources of the economic sectors in regional economic growth. Using panel data generated from economic sectors among 20 kabupaten/kota (municipalities) in Jawa Barat Province during 1991-2000 I examine the effect in economic growth of different financing sources. The pattern of development financing was varied among regions. The financing concentration was occurred in some regions where have good available infrastructures and characterised with industry-based development. The results from empirical analysis suggest that the impact of both government and private financing on economic growth is significant in industry-based regions. In the period analysis, communities financing through bank loans supported the regional development significantly in both industry-based and agro-based regions. The implication based on this study is that the local authority should encourage the private financing sources to promote local economic growth.
This article analyzes how administrative decentralization can improve the provision of social services in Africa. It uses political, economic, and historical approaches, to investigate the bureaucratic dysfunctions that administrative decentralization may reduce. It argues that administrative decentralization can overcome the all-time challenge for African central governments to broadcast authority over harsh and sparsely inhabited territories. Also, by tackling the use of public employment and wages to leverage distributive politics, it may reduce the distortions affecting the financing of public services, and which particularly undermine the quality of education. Administrative decentralization may also enhance merit-based appointments and promotions of bureaucrats by reducing the propensity to resort to public employment and wages as a means for political officials to reward loyalty and to recruit fellows. Finally, administrative decentralization may leverage effectively civil service reforms seeking to align central bureaucracies with the objective of poverty reduction through enhanced service delivery. Attention is drawn, however, to the conflicts that may arise, as administrative decentralization will come to threaten vested interests. The paper argues that for reformer international institutions, handling situations of political crises and learning how to use them to leverage reform will be critical for the success of administrative decentralization in Africa.
This article seeks to explain cross‐cantonal variation in public education expenditure between 1985 and 1998. Four possible explanations are located: socio‐demographic and socio‐economic pressures, the impact of political institutions, the partisan theory, and the power resources of organized interests. Taking the research advantage of Swiss federalism our findings provide strong evidence that educational expenditure is systematically related to the socio‐demographic and socio‐economic pressures in a given canton. Furthermore, consensus democracy promotes educational finance, while the decentralization of the cantonal polity lessens the educational policy output. Finally, the instruments of direct democracy as well as partisan variables do not seem to account for differences regarding the budget expenditures on education in the Swiss cantons.
The purpose of this study is to offer a resonable perspective of local government financial autonomy according to the policy decentralization by focusing on the french experience and to seek suggestions for this policy. In order to explain and analyse french local financial system, this article used the analytical framework concerning the variable elements that can be explained local financial autonomy system in France. This study tried to find the basic principes including financial logic of decentralization, and how these principes had application to local finance. A further purpose is to describe the current and emerging factors of local finance structure in France after the policy decentralization. This study finds the following facts: 1) a guaranty the freedom administration local government in law system of unitary nation 2) the prohibition control of local government on the other local government 3) a simultaneous transfer of competences and resources and a integral compensation of charges 4) the rigorous management control on the financial activity in local government.
Very few researchers have addressed the long‐term financing arrangements of municipal governments in developing countries. No research has evaluated empirically either the elements that affect municipal borrowing in developing countries or what those elements reveal about the municipal credit system. Analyzing Brazilian municipal loan and financial data with a series of simultaneous equations, this paper addresses the following questions: What factors determine municipal government investment levels, borrowing levels, and borrowing prices? What do empirical data reveal about the character of the Brazilian municipal credit system? The results show that investment, borrowing, and borrowing prices are interconnected. Furthermore, while some signs of a market‐based system exist, there is evidence that investment and borrowing decisions are made within an administered market.
The main proposal of this paper is to try to make calculable how politicians are favoring in their discourses, regarding the new General Law of Budgetary Stability approved in December 2001, the process, which is still taking place in Spain. For this goal the research offers a new approach through the construction of a of decentralization. The index of decentralization developed from the matrix goes from 9.69 for the family of arguments A (budgetary and financing autonomy) to only 3.33 for the family of arguments B (income redistribution and spending on social issues). It is remarkable how most of the political parties attacking the law and in opposition of the government reach 10.00 points. In other words, they are really supporting through their discourses. The political party in the government reaches only 3.80 points, but also he is offering decentralized arguments supporting the law.