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Fiscal Decentralization and Economic Development

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  • Woo Sik Kee

    (International Bank for Reconstruction and Development)

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    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.

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    Bibliographic Info

    Article provided by in its journal Public Finance Review.

    Volume (Year): 5 (1977)
    Issue (Month): 1 (January)
    Pages: 79-97

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    Handle: RePEc:sae:pubfin:v:5:y:1977:i:1:p:79-97

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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. 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.
    3. Jorge Martinez-Vazquez & Robert McNab, 2001. "Fiscal Decentralization and Economic Growth," International Center for Public Policy Working Paper Series, at AYSPS, GSU paper0101, International Center for Public Policy, Andrew Young School of Policy Studies, Georgia State University.
    4. Stegarescu, Dan, 2004. "Economic Integration and Fiscal Decentralization: Evidence from OECD Countries," ZEW Discussion Papers 04-86, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research.
    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. Philip Bodman & Kathryn Ford & Tom Gole & Andrew Hodge, . "What Drives Fiscal Decentralisation?," MRG Discussion Paper Series 3009, School of Economics, University of Queensland, Australia.
    7. 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.

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