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Fiscal Decentralization and Economic Development

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  • Woo Sik Kee

    (International Bank for Reconstruction and Development)

Abstract

Empirical tests of several hypotheses are performed for 64 selected countries. The results of the analyses indicate that the degree of fiscal decentralization in both developed and developing countries is greatly dependent on the ratio of intergovernmental transfer payment, form of government (federal versus nonfederal), level of per capita income, and the degree of urbanization. In a sample of developing countries only, however, the government form as an explanatory variable loses its statistical significance. and the degree of openness of the economy emerges as an important explanatory variable. Although decentralization and centralization of public finances are analyzed here only in aggregate, the knowledge of their determinants may be useful in finding the limits to which decentralization of fiscal programs can be carried out.

Suggested Citation

  • Woo Sik Kee, 1977. "Fiscal Decentralization and Economic Development," Public Finance Review, , vol. 5(1), pages 79-97, January.
    • Handle: RePEc:sae:pubfin:v:5:y:1977:i:1:p:79-97
    DOI: 10.1177/109114217700500106
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    References listed on IDEAS

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    1. Lotz, Joergen R, 1970. "Patterns of Government Spending in Developing Countries," The Manchester School of Economic & Social Studies, University of Manchester, vol. 38(2), pages 119-144, June.
    2. Jerome Rothenberg, 1970. "Local Decentralization and the Theory of Optimal Government," NBER Chapters, in: The Analysis of Public Output, pages 31-68, National Bureau of Economic Research, Inc.
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    7. Gandhi, Ved P, 1971. "Wagner's Law of Public Expenditure: Do Recent Cross-Section Studies Confirm it?," Public Finance = Finances publiques, , vol. 26(1), pages 44-56.
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    Cited by:

    1. Wu, Alfred M. & Wang, Wen, 2013. "Determinants of Expenditure Decentralization: Evidence from China," World Development, Elsevier, vol. 46(C), pages 176-184.
    2. Martinez-Vazquez, Jorge & McNab, Robert M., 2003. "Fiscal Decentralization and Economic Growth," World Development, Elsevier, vol. 31(9), pages 1597-1616, September.
    3. Gustavo Canavire-Bacarreza & Jorge Martinez-Vazquez & Bauyrzhan Yedgenov, 2017. "Reexamining the determinants of fiscal decentralization: what is the role of geography?," Journal of Economic Geography, Oxford University Press, vol. 17(6), pages 1209-1249.
    4. Jorge Martinez-Vazquez & Robert McNab, 1997. "Fiscal Decentralization, Economic Growth, and Democratic Governance," International Center for Public Policy Working Paper Series, at AYSPS, GSU paper9707, International Center for Public Policy, Andrew Young School of Policy Studies, Georgia State University.
    5. Cerniglia, Floriana, 2003. "Decentralization in the public sector: quantitative aspects in federal and unitary countries," Journal of Policy Modeling, Elsevier, vol. 25(8), pages 749-776, November.
    6. Canavire-Bacarreza, Gustavo & Martinez-Vazquez, Jorge & Yedgenov, Bauyrzhan, 2020. "Identifying and disentangling the impact of fiscal decentralization on economic growth," World Development, Elsevier, vol. 127(C).
    7. repec:tkp:ijsrsy:v:2:y:2012:i:1:p:57-70 is not listed on IDEAS
    8. Nikolay Patonov, 2013. "Local Fiscal Capacity in the New Members of the European Union: Is It Efficient?," International Journal of Synergy and Research, ToKnowPress, vol. 2(1), pages 57-70.
    9. Milan Jílek, 2015. "Factors of Tax Decentralization in OECD-Europe Countries," European Financial and Accounting Journal, Prague University of Economics and Business, vol. 2015(2), pages 33-49.
    10. Stegarescu, Dan, 2004. "Economic Integration and Fiscal Decentralization: Evidence from OECD Countries," ZEW Discussion Papers 04-86, ZEW - Leibniz Centre for European Economic Research.
    11. Philip Bodman & Kathryn Ford & Tom Gole & Andrew Hodge, "undated". "What Drives Fiscal Decentralisation?," MRG Discussion Paper Series 3009, School of Economics, University of Queensland, Australia.

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