Blockchain Papers

Robin Boadway, Isao Horiba, Raghbendra Jha

No abstract is available for this record.

Emanuela di Gropello

Decentralization of social services is one of the central elements of the social policy reforms being carried out in Latin America in order to make the provision of such services more efficient and to strengthen the democratization processes. This article analyses the processes of decentralization of education in seven Latin American countries (Argentina, Bolivia, Brazil, Chile, Colombia, Mexico and Nicaragua). It seeks to systematize these experiences, using a theoretical typology of reform models; to present some results and trends in terms of the efficiency and equity of the provision of these services, and to extract some useful lessons for the design of future reforms. Although the models developed in the various countries differ from each other, they nevertheless have some common features: they depend on the resources provided by the central level to finance the services, and in many cases they subordinate schools to decisions taken at other levels. Among the main economic and social effects of the reforms are the limited progress made in participation and, hence, social efficiency; the ambiguous results obtained in terms of technical efficiency, and a trend which is not yet fully confirmed towards greater inter-territorial disparities in educational indicators. Among the lessons for policy formulation is the importance of giving the new levels of supply some degree of real autonomy, using a system of transfers which encourages a quest for efficiency while at the same time safeguarding equity, taking care to preserve the internal coherence of the models, giving some responsibilities directly to the schools, and ensuring that there is a suitable framework for the regulation and supervision of decentralized service supply systems.

Roy Bahl

Fiscal Decentralization is a popular economic development strategy among transition and developing countries. This article reviews the advantages of fiscal decentralization in a theoretical context, but critiques the relevance of the standard theory of federalism as it applies to emerging economies. It is argued that the macroeconomic benefits of fiscal centralization, the absence of good instruments of local government finance, and the centralist politics that characterize most low income countries have been strong enough to hold back increased emphasis on local government finance.

Lev Freinkman, Plamen Yossifov

To shed light on decentralization in Russia, the authors examine intergovernmental fiscal relations within regions. To analyze trends, they review channels of fiscal allocation within regions - tax sharing and local transfer schemes. To evaluate the potential impact of various fiscal decentralization patterns on regional economic performance (including growth and the budget deficit), the authors study data on the structure of 89 Russian consolidated regional budgets for 1992-96. They find that local governments'relative share of Russia's consolidated budget, although substantive (roughly a quarter of the total budget), did not expand after 1994. The federal government's relative role in financing public goods and services declined as the relative role of local governments increased substantially. Local governments collected more revenues in 1996 (6.4 percent of GDP) and spent more than regional governments. They also substantially increased social financing (including health, education, and social protection). Russia made no progress toward a more transparent system for tax assignments. The average level of expenditure decentralization is similar for ethnically Russian regions and national republics and"okrugs"but revenue arrangements differ greatly."True"decentralization has taken place in"oblasts"and"krais"where local authorities are provided with a bigger share of sub-national tax revenues. A redistribution model applies in republics and autonomous okrugs, where greater local outlays have been financed through larger transfers from regional governments. Regions near each other tend to have similar budget arrangements - the result of intensive interactions between neighbors and probably supported by the activities of regional associations. The size of a region's territory does not influence decentralization outcomes. Fiscal decentralization seems positively related to the share of education spending in regional budgets. And regions with more decentralized finances tend to experience less economic decline. But budget control is weaker in more decentralized regions. Instability and lack of transparency in intergovernmental fiscal relations provide sub-national governments little incentive for responsible fiscal policy. Further decentralization without greater transparency could bring greater debt and deficits.

Edward M. Grämlich

Fiscal decentralization has been an important topic among public finance economists for nearly 40 years now, but recently it has become important in the real world as well. The United States has, in effect, implemented a decentralization strategy as it has tried to cut its federal government budget deficit, largely by reducing state and local grants. For Canada, fiscal decentralization is tied up closely with the Quebec issue, and, for Germany, with the unification issue. The European Community is beginning to worry about fiscal decentralization issues in connection with policy harmonization—what policies and/or conventions should be harmonized and what need not be? Many developing countries are also groping with decentralization issues as they try to find a way to manage the public sector side of their growth process. Decentralization has always been understood to mean the proper location, by level of government, of various taxes, spending programs, grants, and regulations. What types of spending should be conducted by what levels of government, what types of taxes should be assessed by what levels of government, how should grants help fill in gaps, and how should regulations be harmonized? On the one hand, taste differences across jurisdictions argue for separate policies—governments in jurisdiction x should do what the voters in jurisdiction x want. On the other hand, the existence of benefit spillovers across jurisdictions and the potential migration of taxpayers and spending beneficiaries across jurisdictional lines make things complicated.

Roy Bahl

In China's fiscal system, the distinction blurs as among tax policy reform, tax administration reform, and intergovernmental fiscal reform. So linked are they that changes in any one of the three legs of the public financing structure will automatically affect the other two: all tax rates and bases are centrally determined, so structural changes have direct impacts on local as well as central government revenues; revenues from these centrally determined taxes are shared between the central and local governments, partly on a derivation basis with the retention rates varying by tax, and partly in the form of an ad hoc grant; the tax administration system is decentralized enough that local governments have derived some fiscal autonomy from a creative implementation of the tax assessment and collection system. The comprehensive fiscal reform in China in 1994 altered the structure of the major taxes, changed the responsibilities for tax administration, and modified the revenue-sharing arrangements. It also curtailed the ability of local governments to use “back-door” approaches to revenue mobilization. As a result, the entire intergovernmental system was redefined. This chapter is an attempt to evaluate the impact of these changes. In the next sections, the Chinese intergovernmental fiscal system before and after the 1994 reform is described and the underlying revenue concerns that drove the reform are considered. Most of the remainder of the chapter is an evaluation of the impacts of the 1994 reform on the intergovernmental fiscal system. A concluding section presents a summary comparison of Chinese fiscal decentralization with the world practice.

Richard M. Bird, François Vaillancourt

Recent years have seen worldwide interest in fiscal decentralization. Developed countries are reshaping their intergovernmental fiscal structure to be more in tune with the realities of the “post-welfare state” (Bennett, 1990; Wildasin, 1997a). The countries in transition in eastern and central Europe are busily setting up new systems of local and intergovernmental finance (Bird, Ebel, and Wallich, 1995). Many developing countries are also turning to various forms of fiscal decentralization as one possible way of escaping from the traps of ineffective and inefficient governance, macroeconomic instability, and inadequate economic growth in which so many of them have become mired in recent years. Each country does what it does for its own peculiar reasons, but when so many countries in so many different circumstances do somewhat similar things, there is likely to be more at work than meets the local eye. The principal purpose of this book is to take stock of the progress, problems, and potentials of fiscal decentralization in developing countries by bringing together a set of studies from a variety of countries around the world. Decentralization in developing countries sometimes seems to be viewed as either a panacea or a plague – either a cure for all the ills of such countries or an addition to their already heavy burdens. Some argue for decentralization on grounds of improved economic efficiency, some on grounds of cost efficiency, some in terms of improved accountability, and some in terms of increased resource mobilization.

Chuji Sakamoto

The purpose of the paper is to revaluate the roles of the reformed local autonomy for promoting decentralization and local autonomy against new centralization. I consider the local autonomy and finance in Japan after World War II, focussing on the roles of so called 'Kakushin Jichitai', reformed local autonomy in the 1960's and 1970's. Firstly I review the developing and declining processes of 'reformed local autonomy' in the period of high economic growth in Japan. Then I discuss the roles of these reformed local government bodies through rising citizen movements. The local governments like Minobe-Tosei or Asukata-Yokohama-Shisei contributed to the tax reforms and some other financial reforms and promoting decentralization. The 1960's and 1970's in Japan are called 'The Period of New Centralization' in intergovernmental relations. However, the roles of these reformed local autonomy for promoting decentralization against new centralization should be revaluated.

Gilles Duranton, Stéphane Déo

No abstract is available for this record.

Le-Yin Zhang

The Chinese central-provincial fiscal relationship of the reform era has been at the centre of academic attention in the last few years. It is rapidly becoming one of the most researched areas regarding China. Despite numerous publications, however, there are still some crucial issues that have not been sufficiently elucidated. First, the emphasis of discussions so far has been on formal budgetary relations, particularly the distributive pattern of revenue collection. In reality, the scope and impact of the Chinese budget are very much smaller than those elsewhere and the pattern of revenue collection is only one aspect of the multi-faceted central-provincial fiscal relationship. An appreciation of these aspects and their implications requires a better understanding of the full range of arenas in which the Chinese central government interacts with the provinces over public finance than is currently available. Secondly, it is generally accepted that the Chinese central-provincial fiscal relationship has been decentralized during the reform era, and that this change has underpinned the growing strength of the provinces and the decline in central power. However, the change in the relationship is actually more complex than one-dimensional decentralization would suggest, and the link between fiscal decentralization and political decentralization is less straightforward from a comparative perspective. Thirdly, it is widely accepted that there has been a fiscal decline in China and that the revenue-sharing system – implemented up to 1993 – was the cause of this decline. From this understanding, erroneous conclusions have been drawn. On the one hand, some scholars suggest that this decline signifies a limit on the Chinese state in its relation to the economy, and it is this factor that has underpinned the success of the Chinese economy during the reform. On the other, this decline is considered to epitomize the emergence of a “weak centre, strong localities” situation in China that may eventually lead to the disintegration of the Chinese political system. But it is far from established that there has indeed been a fiscal decline in the true sense of the term. The same can be said on the question of this decline, if it exists, representing the limiting of the Chinese state in relation to the economy or the decline of the central power relative to that of the provinces. Fourthly, in 1994 the Chinese government launched important reforms to the central-provincial fiscal relationship, aiming to replace the previous revenue-sharing system with a tax-sharing system (TSS, or fenshuizhi ), and ultimately to stem so-called fiscal decline. Despite earlier reported problems, recent official reports have claimed substantial success of this reform in terms of improvement in the so-called “two ratios” – the ratio of budgetary revenue to GDP, and the ratio of central budgetary revenue to total budgetary revenue. What do these two ratios signify? How should we interpret such success? Does the success on the one hand confirm the allegation that the revenue-sharing system was the cause of the Chinese fiscal decline? And does it on the other hand indicate a strengthening in the centre's power relative to the provinces'?

Beatriz Armendáriz de Aghion

No abstract is available for this record.

Anand N. Asthana

No abstract is available for this record.

Myung-Hwan Huh

During the five-millenium history of Korea, 1995 was the first time mayors and governors were elected by local residents, instead of being appointed by the central government. This could be the starting point of fiscal decentralization in this country, and, whether intended or not, this has the potential of enhancing allocational efficiency through the realization of local preference in the provision of local public services. Hence, this research aims to review and analyze the indigenous characteristics of the current local public finance system from the view point of the western normative theory, and develop a more equitable revenue sharing formulas to support Korean new fiscal decentralization. Since this is one of the first attempts to examine the evolving local autonomy squarely using the lens of normative theory of intergovernmental relations, its results could make a great contribution to the theory of local public finance in Korea. This research has developed two conceptual frameworks for the new revenue sharing formulas, and presented their aid simulations. The first model is the economic activity model, which tries to measure economic income of residents by measuring the level of economic activity in each jurisdiction. This model improves on the existing system, because it could motivate local governments to utilize the flexible tax rate system, and measure non-tax revenue as well. The other one is the expenditure need model, which measures the expenditure needs beyond local control in the form of expenditure need index. By controlling for expenditure needs beyond local control in the revenue sharing formula, mayors and governors could fairly compete with each other to provide better services with less cost. Unfortunately, lack of relevant data as well as service quality measures have confined this research to develop aid formulas for only garbage/road services instead of for overall local public services of city governments. This research finds that the fiscal capacity measure derived from the economic activity model and the expenditure needs indices from the expenditure need model are highly consistent with the reality of Korean city governments. Moreover, aid simulations for garbage/road services using the revenue sharing formula in this dissertation would result in a very different distribution of aid than the present formula. With the development of relevant data of service quality for local services, this approach could be a foundation for the new general revenue sharing formulas to support fiscal decentralization in Korea.

Caroline Hoxby

I construct an agency model of local public goods producers with special reference to public schools. The model assumes that households make Tiebout choices among jurisdictions, but it has more realistic assumptions about information and the cost of residential mobility. I examine producers' effort and rent under local property tax finance and centralized finance. I show that, if there are a sufficient number of jurisdictions to choose among, conventional local property tax finance substantially reduces the agency problem and associated loss of productivity. Specifically, I demonstrate that local property tax finance can attain about as much productivity as a social planner with centralized finance can, even if the social planner is armed with more information that a real social planner could plausibly have. The key insight is that decentralized Tiebout choices make some information the social planner would need verifiable and other information unnecessary.

Junaid Aḥmad

The note highlights the importance of
\n sound intergovernmental fiscal relations, and proper
\n regulation for successful sub-national borrowing, and
\n illustrates the potential macroeconomic hazards of
\n decentralizing borrowing powers, arguing that the impact of
\n a possible moral hazard problem, namely, the access to
\n financial markets by sub-national governments, may generate
\n unplanned liabilities for central governments. Yet academia,
\n and country experiences do not suggest adverse links between
\n decentralized borrowing powers, and the central
\n government's ability to maintain fiscal discipline, and
\n macroeconomic stability. Rather the key seems to lie in the
\n design of fiscal decentralization, particularly the
\n regulatory framework under which borrowing powers are
\n decentralized. The note outlines the reasons why
\n sub-national governments require access to financial
\n markets: to finance capital spending, and foster political
\n accountability, which can be achieved through direct
\n borrowing by central government, through a public financial
\n intermediary, or, through direct borrowing. As per designing
\n the regulatory framework, the note suggests better
\n information systems, bankruptcy laws, and access to tax
\n bases, in addition to separate fiscal/financial systems, and
\n sound legislation to impose budget discipline, enabling
\n access to capital markets to complement fiscal powers
\n devolution to regional authorities.

Stephen L. Ross, John Ýinger

No abstract is available for this record.

Stephen L. Ross, John Ýinger

This chapter reviews the literature on the boundary between urban economics and local public finance, defined as research that considers both a housing market and the market for local public services. The first part of the chapter considers positive theories. This part presents the consensus model of the allocation of households to jurisdictions, which is built on bid functions and household sorting, as well as alternative approaches to this issue. It also examines models of local tax and spending decisions, which exhibit no consensus, and reviews research in which both housing and local fiscal variables are endogenous. The second part of the chapter considers empirical research, with a focus on tax and service capitalization, on household heterogeneity within jurisdictions, and on the impact of zoning. The third part considers normative theories about a decentralized system of local governments. This part examines the extent to which such a system leads to an efficient allocation of households to communities or efficient local public service levels, and it discusses the fairness of local public spending. This review shows that the bidding/sorting framework is strongly supported by the evidence and has wide applicability in countries with decentralized governmental systems. In contrast, models of local public service determination depend on institutional detail, and their connections with housing markets have been largely unexplored in empirical work. Ever since Tiebout (1956), many scholars have argued that decentralized local governments have efficiency advantages over centralized forms. However, a general treatment of this issue identifies four key sources of inefficiency even in a decentralized system: misallocation of households to communities, the property tax, public service capitalization and heterogeneity. Few policies to eliminate these sources of inefficiency have yet been identified. Finally, this review explores the equity implications of household sorting and other features of a decentralized system.

Chong‐En Bai, Pan Yu, Yijiang Wang

Local governments (LGs) are seen as producers of the local public good ('the good'). An authoritarian country is one in which the government decides if the good should be produced and how much to tax to finance it, as versus a democracy in which voters decide. This paper identifies conditions under which it is more efficient for a non-democratic government to delegate to the LGs the authority to 1) decide whether or not to produce the good and2) Collect tax to finance it if the good is produced. Two conditions are identified First, when the net benefit of producing the good is sufficiently small so that, compared with the benefit, inducing LGs effort under the centralized system is too costly (a moral hazard problem). Second, when the net benefit of the is higher in a locale with a higher production cost parameters, making it difficult for the center to induce the LGs to truthfully reveal the cost parameter (an adverse selection problem). These results are consistent with the experience of China in the past several decades, where "too small to be worth bothering" and "too diversified and complicated local conditions for the center to know" have been the two most prominent official arguments made by the communist government itself for decentralization

David Levinson

This dissertation examines why and how jurisdictions choose to finance their roads. The systematic causes of revenue choice are explored qualitatively by examining the history of turnpikes. The question is approached analytically by employing game theory to model revenue choice on a long road. The road is covered by a series of jurisdictions seeking to maximize local welfare. Jurisdictions are responsible for building and maintaining the local network. Complexity arises because local network users may not be local residents, and local residents may use non-local networks. Key factors posited to explain the choice of revenue mechanism include the length of trips using the road, the size of the governing jurisdiction, the degree of excludability, and the transaction costs of toll collection. These factors dictate the size and scope of the free rider problem. It is hypothesized that smaller jurisdictions and lower collection costs favor tolling policies over taxes.The analytical model is operationalized by assuming jurisdictions have two decisions: the strategic decision to tax or toll, and the tactical decision of setting the rate of tax or toll. Models of user demand as a function of trip distance and monetary cost and of network costs as a function of traffic flow and the number of toll collections are specified. The values of the constants and coefficients of the model are developed from recent cost literature and the estimation of a model of collection costs from California Toll Bridge data.The model is applied to evaluate the dissertation's hypotheses. The application evaluates the welfare implications of a jurisdiction and its neighbors imposing general tax, cordon toll, odometer tax, or perfect toll policies. Sensitivity tests of the model under alternative behavioral assumptions, and with varying model coefficients are conducted. Finally, policy implications from the analysis are drawn. The general trends which bode well for road pricing (electronic toll collection (ETC), decentralization, advanced infrastructure, privatization, and federal rules) are established. Possible scenarios for three cases are presented: deploying ETC and building new toll roads, and converting free roads.

Charles E. McLure, Jorge Martínez-Vázquez

Intergovernmental fiscal relations play a fundamental role in the economic and social development of Vietnam. As in all unitary forms of government, the central government sets national policies and assists with the financing of the activities of subnational administrative units, as well as undertaking certain expenditure responsibilities directly. On the other hand, decentralization facilitates implementation of policies that reflect the preferences of inhabitants of subnational administrative units. An important objective, therefore, is to design a system that reconciles the sometimes conflicting objectives of centralization and decentralization. This report is intended to assist the government of Vietnam in designing its system of intergovernmental fiscal relations (IFR).The next section describes the political system within which intergovernmental fiscal relations are imbedded. The third section provides an overview of intergovernmental fiscal relations in Vietnam. Section IV describes the assignment of expenditure responsibilities among levels of government, Section V discusses fiscal management and budgeting, and Section VI describes and appraises the revenue side of intergovernmental fiscal relations. These sections contain descriptions of current practice, a brief statement of criteria against which they are to be appraised, an appraisal of current practice, and recommendations for improvements. Section VII describes how the present system of subventions could be replaced by an improved system of intergovernmental transfers. This discussion focuses primarily on relations between the central government and the provinces; relations between provinces and districts and between districts and communes are generally quite similar.Working Paper Number 98-02.

Virginia Pineda, Maria Lourdes Lim

This paper is one of eight case studies in the health sector conducted under the project "Population and Urbanization: Managing the Urbanization Process Under the decentralized Governance Framework" jointly undertaken by the Philippine Institute for Development Studies, National Economic and Development Authority and Development Academy of the Philippines. This paper is a case study on Cotabato City recommended by NEDA-Region XII as a model city for health. The city has come up with the Special Project on Health and Sanitation that won a silver Award in the 1997 Health and Management Information System Contest.

Guillém López i Casasnovas

espanolLa evolucion de la prestacion sanitaria media parece moverse a impulsos de dos grandes factores: los tecnologicos, en gran medida exogenos a las autoridades sanitarias, y los politicos, o endogenos en respuesta a las expectativas y preferencias sociales sobre las posibilidades de la medicina en las sociedades occidentales. Como resultado, las capacidades de tratamiento sanitario se expanden, de la mano de la presion ciudadana, en sociedades cada vez mas medicalizadas y en las que la industria sanitaria tiene un gran peso mediatico. En Espana, el incremento de la prestacion sanitaria media registrada en los ultimos anos aparece como coetanea a la descentralizacion sanitaria. Asi, existe diversidad no solo en razon del contenido de algunas prestaciones sanitarias, sino tambien de su utilizacion por parte de la poblacion. Nos interrogaremos en este trabajo acerca de la influencia de la descentralizacion sanitaria como inductor del crecimiento del gasto sanitario. A dicho fenomeno se asociaran aspectos relativos aprocesos de financiera, o de emulacion de politicas con falta de corresponsabilizacion en el gasto por parte de sus gestores. La tesis que deseamos mantener es que la devolucion de responsabilidades fiscales a las comunidades autonomas puede ser un buen antidoto para el control del gasto sanitario y, en particular, de los diferenciales de utilizacion. Con el nuevo sistema de financiacion autonomica, la integracion de la financiacion sanitaria en la general permite introducir los mecanismos necesarios para el autocontrol del gasto que aseguren una efectiva sostenibilidad de la financiacion de la sanidad publica en el proximo futuro. EnglishTechnological and social factors are beyond the increasing share of health expenditure on GDP. This implies that a mix of exogenous and endogenous factors influence health care delivery. Professional aims and social expectations on the production possibility frontier of health, on cure and care treatments, make for a rather difficult control of public health expenditure in OECD countries if reforms are not undertaken in the near future. In Spain, the rise in public health expenditure seems to go hand by hand, with an important decentralization power of health care delivery to Regional Authorities. Whether this is just a coetaneous or a relevant explanatory factor is examined in this paper.The lack of accountability and some fiscal ilusion aspects may undoubtedly influence, overall, public expenditure. But the absence of a rational distribution formula of regional health expenditure at he national level is an important factor too. The argument of the paper focusses on the need of devolution of full responsabilities on health expenditure to the Spanish Autonomous Communities. A fiscal room process is proposed as a result of some technical adjustments on a capitative finance basis. Cross-boundary flows of patients, age structure of the population, teaching and research externalities

Nobuki Mochida

No abstract is available for this record.

政三 大川

No abstract is available for this record.