Blockchain Papers

Fred Schroyen

No abstract is available for this record.

Anwar Dec Shah

The author reviews the conceptual basis for fiscal equalization transfers, analyzes the theoretical implications for optimal design of equalization transfers, and suggests quantitative approaches for assessing the fiscal needs of subnational governments and determining their entitlement to transfers. The author illustrates proposed methods using data for local and provincial Canadian governments. The proposed methods could be useful tools, he says, for undertaking systematic objective reviews of aggregate and sectoral public spending in developing countries. The author argues that in a decentralized federation, fiscal inefficiencies and inequities arise because of subnational governments'differing levels of ability to provide comparable public services at comparable tax rates. Fiscal equalization transfers that reduce or eliminate differentials in net fiscal benefits create a rare instance in economics when considerations of equity and efficiency coincide. These transfers must allow for differences in the spending needs and revenues-raising abilities of the various subnational governments. The author argues for a two-tiered approach to equalization. The first tier would be a federal responsibility to equalize the burden of federal taxes. The second tier would be an interprovincial equalization fund to be administered by the Council of Provincial Finance Ministers. It would entail a comprehensive equalization system that takes into account provincial spending needs. The standard of equalization would be negotiated.

Oded Hochman, David Pines, Jacques‐François Thisse

The authors show that space matters in designing the optimal provision of local public goods. Geography imposes a particular institutional structure of local governments due to the overlapping of market areas associated with different local public goods. The optimum can be decentralized through local governments that have jurisdiction over market areas of all local public good types. This implies that the appropriate suppliers of local public goods are metropolitan governments which finance them through user charges and land rent. In addition, the authors' approach invalidates the prevailing theory of fiscal federalism, according to which a layer of government should be established for each type of local public good. Copyright 1995 by American Economic Association.

Richard M. Bird

The author examines the many faces of infrastructure decentralization: the costs and benefits, the government structure (constraint or variable?), the"polycentric"approach, and how to make decentralization work (for whom?). He proposes basic principles and guidelines for policy design, for both small projects and large. Broadly, these guidelines are summed up in a few propositions. In all countries, some critical infrastructure is provided through a decentralized political structure. Current trends make that likely to be more true in the future. Decentralization, however defined, in and of itself had no necessary implications for good or evil so far as infrastructure is concerned: its effects depend on the incentives various decisionmakers face. The key to ensuring that these incentives are conducive to"good"decisions (about design, siting, timing, finance, pricing, operation, maintenance, and use of infrastructure) is to ensure that those who made the decisions bear the financial (and political) consequences, as much as possible. Politically, this means that political leaders at all levels should be responsive and responsible to their constituents, and that those constituents are fully informed about the consequences of all decisions. Making politicians bear the consequences of their own mistakes is as close as one can get to a"hard"political budget constraint. Economically, it must be difficult for local residents to shift cost to nonresidents who do not receive benefits and to make local decisionmakers fully responsible to their citizens for the use they make of revenues collected from them (through local taxes), to users of infrastructure (local or otherwise) for the use made of the revenues they contribute (through user charges of various sorts), and to taxpayers in general for the use made of any transfers (or subsidized loans) they receive. Administratively, what such a system requires is a clear set of"framework"laws (on local budgeting, financial reporting, taxation, contracting, dispute settlement, rules to be followed in designing user charges and so on), as well as adequate institutional support for localities to operate in this environment. To the extent that these conditions are not met, the perverse incentives that too often exist because of the structure and finance of the public sector in many countries will probably be exacerbated by the current tendency to decentralize more and more decisions in the public sector.

David W. K. Yeung

In the past decade, there is an emerging trend for the use of game theoretical framework in studying government tax plicies. The game theoretical approach allows the possibility of simultaneous interactions between government policy and decentralized private decisions. This paper develops a stochastic differential game between the government and the public. The public chooses an investment strategy to maximize the present value of income net of tax and investment expenditures. The government controls the tax system and aims at maximizing a weighted sum of tax collected, the level of bonds outstanding and income net of investment expenditures. Two dynamic processes — one for the capital formation and the other for bonds accumulation — are present in the model. The dynamic processes are subject to stochastic shocks. A feedback Nash equilibrium solution of the game is obtained. The parabolic partial differential equations characterizing the value functions of the game equilibrium is solved explicitly. Closed-from solutions of the equilibrium investment strategy and tax policy are provided. The stationary (longrun equilibrium) joint density function of capital stock and bonds is also obtained. These keywords were added by machine and not by the authors. This process is experimental and the keywords may be updated as the learning algorithm improves.

Jeni Klugman

No abstract is available for this record.

Jeni Klugman

Decentralization has been a popular theme in development thinking and practice due to the impact of decentralisation of government expenditures and revenues upon human development. This survey explores the extensive literature on decentralisation, revealing the lack of quantitative and rigorous studies. A detailed analysis of the various dimensions of decentralisation - participation, financing and comparative priorities - and of the relevant effects upon efficiency, resource availability and equity, enable the author to draw some interesting lessons from its theory and practice.

Dolores María Rufián Lizana, Rufián Llzana

The financing of a State’s sub-national levels of government, in federal and other systems alike, is an instrument of decentralization; first, each State has to decide what area of responsibility to assign to each governmental level and then it must design a suitable financing mechanism. If these sub-national governments’ degrees of fiscal and administrative autonomy are not kept in alignment, then eventually the initiative may fait as the bodies at these levels gradually lose decision-making power within their sphere of responsibility.

Russell Krelove

No abstract is available for this record.

Juan Prawda

No abstract is available for this record.

Yingyi Qian, Chenggang Xu

China's thirteen years of economic reforms (1979-1991) have achieved an average GNP annual growth rate of 8.6%.What makes China's reforms differ from those of Eastern Europe and the Soviet Union is the sustained entry and expansion of the non-state sector.We argue that the organization structure of the economy matters.Unlike their unitary hierarchical structure based on functional or specialization principles (the Uform), China's hierarchical economy has been the multi-layer-multi-regional one mainly based on territorial principle (the deep M-form, or briefly, the M-form).Reforms have further decentralized the M-form economy along regional lines, which provided flexibility and opportunities for carrying out regional experiments, for the rise of nonstate enterprises, and for the emergence of markets.This is why China's non-state sector share of industrial output increased from 22% in 1978 to 47% in 1991 and its private sector's share from zero to about 10%, both being achieved without mass privatization and changes in the political system.2 Data sources in this paper are from Statistical Yearbook of China (various issues from 1985 to 1992), otherwise noted.3 Statistical Communique of the State Statistical Bureau on the 1992 National Economic and Social Development, February 18, 1992. 4 The export-GNP ratios are calculated based on the official exchange rate and are upward biased.But the dramatic increase of export share in GNP during the reform is unmistaken. 2 both before and after their radical transformations in 1989.It appears that China had no coherent reform programs, no commitment to private ownership, and no changes in the political system, and China's economy was still not fully liberalized.From both the theoretical and policy perspectives, China's different reform strategies and outstanding reform performances are particularly interesting and puzzling.The economic reforms in China formally started in 1979 following the Third Plenum of the Eleventh Congress of the Chinese Communist Party in December 1978.The starting time was later than that of Yugoslavia (1950) and Hungary ( 1968) and was about the same as for Poland (1980), and earlier than the Soviet Union (1986).Between 1979 and 1991, China's GNP grew at an average annual rate of 8.6%, or at 7.2% on the per capita basis. 2 In 1992, the growth of GNP reached 12.8%. 3Exports grew at a faster pace, so that China's export-GNP ratio increased from below 5% in 1978 to nearly 20% in 1991. 4 Also in this period, inflation was kept within a single-digit range except for three years (11.9% in 1985, 20.7% in 1988 and 16.3% in 1989); the household bank deposits to GNP ratio increased from 6% in 1978 to 46% in 1991; and the government budget deficit accounted for about 2-3% of GNP, about half of which was financed from bond issues (Table 1.1).Even more convincing evidence of the success of the reform is the increase in consumption and consumer durable goods by an average Chinese consumer in physical terms.For example, between 1978 and 1991, an average Chinese consumer increased his/her consumption about three times for edible vegetable oil, pork, and eggs (Table 1.2).In the rural areas, which account for about 75% of total population, the living space per person increased about 130% between 1978 and 1991 (Table 1.3).The 5 Data source for Hungary and Poland is from Table 9.1 of Kornai (1992).6 For example, Summers (1992) expressed this view when he highly praised China's reform performance.Sachs (1992) also expressed similar ideas during his interview with the Chinese Journal of Comparative Economic and Social Systems.

Richard M. Bird

Fiscal decentralization in many guises has become a central concern around the world. This paper discusses several aspects of this complex subject that have turned out to be important in policy work on the issue in a number of countries. First, I discuss briefly the meaning and rationale of fiscal decentralization. There is much that has to be disentangled before one can approach the issue in a particular policy setting, including distinguishing between the problems of federal finance and fiscal federalism. Second, I review the issue of the choice of local revenue sources from the perspective of establishing efficient local governments, including the roles of user charges, property taxes, and income taxes. Finally, I sketch some considerations with respect to the design of intergovernmental transfers from the same perspective, with particular emphasis on the desirability in many settings of transfers that are both conditional and equalizing.

Susumu Sato

No abstract is available for this record.

Alec Ian Gershberg

While the theoretical arguments for fiscal decentralization developed over the past thirty-five years have proven compelling enough for the concept to win great favor, very little empirical work has proven the merits of such policies in the forms governments have actually implemented. We examine the results of educational fiscal decentralization in a developing country with an established framework for fiscal federalism and a concomitant history of intense centralization. The structure of the flow of funds in the Mexican education sector provide an example to study: (1) the importance of the spatial distribution of outcomes resulting from expenditures rather than simply the distribution of the expenditures alone; (2) the distribution of resources to subnational political units; (3) intergovernmental relations and the resulting incentive structure for service provision, particularly with respect to fiscal transfers and grants administration; (4) the effects from decentralization efforts over the past decade, and the resulting implications for probable outcomes from efforts to decentralize; and (5) the interplay of centralized versus decentralized finance and administration. We develop methods to analyze political and socio-economic factors that affect intergovernmental fiscal allocations. The results show that (1) the Federal Government does trade some efficiency for the sake of distributional concerns in the provision of educational resources, but in doing so may discriminate against subnational jurisdictions based on factors like voting behavior or marginalized minority populations; and (2) the pattern of Federal-to-state allocations may not be replicated at the state-to-municipal level, even by Federal agencies at the state level. We also provide evidence that states may not currently be as effective educational providers as the Federal Government, raising concern for efforts to decentralize. Policy implications and recommendations resulting from Mexico's experience revolve around the development of an accountable matching grant mechanism for fiscal transfers that would retain those aspects of centralized financial control beneficial to efficient and equitable service provision, while stimulating the improvements that may result from augmenting regional and local fiscal and administrative responsibilities for education.

Kang, Byung Joo, Wan‐Teck Lim, Sung Il

No abstract is available for this record.

Gregory D. Schmidt

The case study of the linkages between departmental-level and national organizations in Peru shows how linkages can play a significant role in national reform. A general overview of current articles on interorganizational linkages and decentralization pertinent to the Peruvian context of control oriented public sectors is provided. The Peruvian institutional context and the constraints faced by decentralized development agencies called departmental development corporations (CORDES) are identified. CORDES members were provincial mayors, representatives of private sector professional and economic organizations, and heads of ministerial field offices, autonomous agencies, and public enterprises. Microregional offices were established and received public funding. USAID channeled funding through the national organizations to the CORDES in the Integrated Regional Development Project (IRD) between 1979-86, and the Disaster Relief, Rehabilitation, and Reconstruction (DRR) Project between 1983-87. The IRD and the DRR are described in addition to the decentralized organization support network established by the 2 projects. There is an analysis of how these interorganizational linkages contributed to conventional uses of linkages and unconventional or institutional reform. Reforms were facilitated by direct persuasion of central agencies to change their administrative regulations, policies, and operating procedures, and extensive lobbying by the support network to pass budgetary reform favoring CORDES and bureaucratic reorientation. Conclusions were reached on 1) the importance of assistance linkages for hastening implementation, building capacity, and overcoming organizational weaknesses (conventional wisdom); 2) the usefulness of vertical linkages in resolving administrative or technical weaknesses (unconventional wisdom); and 3) the usefulness of reinforcing project related units within key national level agencies which increases access to power while specific objectives maintain assistance orientations. Politically marginal agencies are not considered viable. These projects demonstrated that linkages are useful in supporting institutional reform and respecting country self-determination.

Daniel Berkowitz, Beth Mitchneck

No abstract is available for this record.

Kadmiel Wekwete

Abstract Since Zimbabwe won its independence in 1980, the country's leaders have embarked on an ambitious programme of decentralization and local government reform. At the same time, urban conditions in the country have become increasingly difficult. This paper examines major aspects of urban local government finances in this environment of reform and growing fiscal pressures, with special reference to the experience of Harare City Council. It is argued that some relative successes have been recorded, although a number of undesirable elements of colonial practices and various fiscal problem persist.

Marlaine E. Lockheed

Decentralization policies are at the heart of education reform efforts in many countries internationally. Two important types of policies are those that: (a) remove barriers to private education; and (b) devolve authority and responsibility for schools from central level administrations to intermediate level organizations and ultimately to schools, relying more on local communities for financing, with an overall goal of improving effectiveness. While both types of policies are largely uninformed by empirical evidence regarding their impact on such education outcomes as student learning, in developing countries the evidence regarding the effects of local control is much weaker than that regarding private schools. This paper extends the literature on the impact of private education on achievement, while providing the first evidence on the impact of local control on achievement in a developing county. It analyzes data from 214 secondary schools in the Philippines to answer questions regarding: (a) the relative effectiveness of local, government and private secondary schools; and (b) the factors that account for observed differences.

Robert Cervero

Over successive five‐year development plans, Indonesia has channeled large sums of foreign loans and domestic funds into water supply projects with the aim of providing clean water for a majority of households. Most projects have been planned and financed through the central government's public works ministry, though a growing share of rural water projects are being funded through earmarked grants provided to local governments. This paper examines how these central government transfers, in the aggregate, have responded to various indicators of expenditure needs. Overall, past allocations have matched existing demand and supply levels closely–funding has generally favored provinces with large populations, large numbers of water enterprises, extensive distribution networks in place, and high production capacity. They have not, however, worked in favor of either equalization or economic productivity objectives, as reflected by per capita income or GRDP growth rates. This analysis suggests that equity would be promoted either by including income‐related factors in future block grant allocation formulas or by shifting funding emphasis in the water supply sector from grants‐in‐kind controlled by the central government to sectoral grants controlled mainly at the local level. Such policy reforms would also further promote the nation's professed goal of decentralizing infrastructure development.

Michael E. Bell, Joanna Regulska

No abstract is available for this record.

Christine Wong

Finding the proper balance between central control and local autonomy is a perennial problem in the Chinese economy, and the Chinese fiscal system has undergone numerous changes in central-provincial revenue-sharing arrangements since the 1950s. In the post-Mao period, fiscal decentralization began in 1980 under the slogan of “cooking in separate kitchens” ( fenzao chifan ), and a series of reforms was implemented to put local governments increasingly on a self-financing basis. However, this attempt to revamp the financial interaction between the central and provincial governments has been made immensely more complicated by rapid changes in the fiscal system and the shifting composition of revenues and expenditures brought by economic reform.

Gordon Hughes, Stephen Smith, Guido Tabellini

Local government Gordon Hughes and Stephen Smith Many OECD countries are uncomfortable with the structure and financing of their decentralized governments. In some, the pressures for change have even led to tax revolts. Much of the existing economic literature on decentralization considers that the purpose of local governments is to decentralize decisions. Lower tiers of government are assigned local public goods and matching taxes. This contrasts with actual arrangements. The patterns of government decentralization in OECD countries are diverse. Most local governments in Europe actually perform a major administrative role, in effect acting as agents for the central government. While this is justified by the advantages that local governments have over central governments in terms of information and control by voters, such arrangements require large financial resources, and more control by central government than where local governments simply provide local public goods. A drawback is the potential for conflict between different tiers of government. The trend towards more decentralization, common to most countries, has had to be met by more taxation or more grants. The need for revenue has encouraged a move away from property taxes to broader-based local taxes. Tax-sharing arrangements have often been under-rated, but in practice they compare favourably with complex and discretionary systems of transfers between levels of government.

Robert H. Freilich, S M White

Increasingly, a volatile public policy issue in rapidly growing areas is traffic congestion. The sprawl of suburban growth, decentralization of urban centers and the shift of jobs from urban centers to suburban areas contributes to traffic congestion. Traditionally, government's response to traffic congestion has been to use engineering, public finance and regulatory control to design and build new highway systems or expand exiting ones. The authors suggest instead that state and local governments use a combination of techniques to better manage land use applications and explore public finance alternatives to achieve a better balance between travel demand, transportation capacity and environmental concerns.