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Ensuring Inter-regional Equity and Poverty Reduction

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Author Info
Bert Hofman
Susana Cordeira Guerra
Abstract

This paper reviews causes and consequences of fiscal inequities among subnational governments in East Asia. It shows that endowments and fiscal capacities among subnational entities are large, and that these inequities translate into large fiscal inequities prior to equalization. The current transfer systems in East Asian countries are only mildly equalizing, so that even after equalization the remaining fiscal disparities are still large. This paper discusses the possible consequences for service delivery inputs, outputs, and outcomes of these disparities. It concludes by some guidelines on how to make progress in increasing transparency on inequalities at the sub-national level, and how transfer systems can be made more equalizing without undermining the incentives for local governments to raise their own revenues and to spend their resources efficiently.

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Paper provided by International Studies Program, Andrew Young School of Policy Studies, Georgia State University in its series International Studies Program Working Paper Series, at AYSPS, GSU with number paper0411.

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Length: 33 pages
Date of creation: 01 Nov 2004
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Handle: RePEc:ays:ispwps:paper0411

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Keywords: Inter-regional Equity; Poverty Reduction; fiscal inequlities;

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This paper has been announced in the following NEP Reports: References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
  1. Filmer, Deon & Hammer, Jeffrey & Pritchett, Lant, 1998. "Health policy in poor countries : weak links in the chain," Policy Research Working Paper Series 1874, The World Bank. [Downloadable!]
  2. Zhihua Zhang & Jorge Martinez-Vazquez, 2003. "The System of Equalization Transfers in China," International Studies Program Working Paper Series, at AYSPS, GSU paper0312, International Studies Program, Andrew Young School of Policy Studies, Georgia State University. [Downloadable!]
  3. Lewis, Blane D., 2003. "Local Government Borrowing and Repayment in Indonesia: Does Fiscal Capacity Matter?," World Development, Elsevier, vol. 31(6), pages 1047-1063, June. [Downloadable!] (restricted)
  4. Andrés Rodríguez-Pose & Nicholas Gill, 2004. "Is there a global link between regional disparities and devolution?," Environment and Planning A, Pion Ltd, London, vol. 36(12), pages 2097-2117, December. [Downloadable!] (restricted)
  5. Arsenio M. Balisacan & Ernesto M. Pernia & Abuzar Asra, 2003. "Revisiting growth and poverty reduction in Indonesia: what do subnational data show?," Bulletin of Indonesian Economic Studies, Taylor and Francis Journals, vol. 39(3), pages 329-351, December. [Downloadable!] (restricted)
  6. Gauri, Varun, 2003. "Social rights and economics : claims to health care and education in developing countries," Policy Research Working Paper Series 3006, The World Bank. [Downloadable!]
    Other versions:
  7. Bob Searle, 2002. "Federal fiscal relations in Australia - 2001," ICER Working Papers 01-2002, ICER - International Centre for Economic Research. [Downloadable!]
  8. Birdsall, Nancy & James, Estelle, 1990. "Efficiency and equity in social spending : how and why governments misbehave," Policy Research Working Paper Series 274, The World Bank. [Downloadable!]
  9. Jorge Garcia & Lana Soelistianingsih, 1998. "Why Do Differences in Provincial Incomes Persist in Indonesia?," Bulletin of Indonesian Economic Studies, Taylor and Francis Journals, vol. 34(1), pages 95-120, April. [Downloadable!] (restricted)
  10. Donald Cox & Emmanuel Jiminez, 1993. "Private Transfers And The Effectiveness Of Public Income Redistribution In The Philippines," Boston College Working Papers in Economics 236, Boston College Department of Economics.
  11. Prud'homme, Remy, 1995. "The Dangers of Decentralization," World Bank Research Observer, Oxford University Press, vol. 10(2), pages 201-20, August.
  12. Hal Hill, 2002. "Spatial Disparities in Developing East Asia: a survey," Asian-Pacific Economic Literature, 2004 Asia Pacific School of Economics and Government, The Australian National University and Blackwell Publishing Asia Pty Ltd, vol. 16(1), pages 10-35, 05. [Downloadable!] (restricted)
  13. Baoyun Qiao & Jorge Martinez-Vazquez & Yongsheng Xu, 2002. "Growth and Equity Tradeoff in Decentralization Policy: China's Experience," International Studies Program Working Paper Series, at AYSPS, GSU paper0216, International Studies Program, Andrew Young School of Policy Studies, Georgia State University. [Downloadable!]
  14. Ravallion, Martin, 1999. "Are poorer states worse at targeting their poor?," Economics Letters, Elsevier, vol. 65(3), pages 373-377, December. [Downloadable!] (restricted)
Full references

Cited by:
(explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)

  1. Jorge Martinez-Vazquez & Andrey Timofeev, 2006. "Regional-Local Dimension of Russia's Fiscal Equalization," International Studies Program Working Paper Series, at AYSPS, GSU paper0616, International Studies Program, Andrew Young School of Policy Studies, Georgia State University. [Downloadable!]
    Other versions:
  2. Era Dabla-Norris, 2005. "Issues in Intergovernmental Fiscal Relations in China," IMF Working Papers 05/30, International Monetary Fund. [Downloadable!]
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