Decentralization in Africa and the nature of local governments' competition: evidence from Benin
AbstractWithout denying particular dimensions of the decentralisation in Sub-Saharan countries, this paper applies standard reasoning from the fiscal federalism literature to a developing country and tests the existence of strategic interactions among local Beninese governments, called 'communes'. We first propose a two-jurisdiction model of public expenditure interactions, considering a constrained Nash equilibrium to capture the extreme poverty of some communes. We show that spillovers among jurisdictions involve strategic behaviours of local officials who have sufficient levels of fiscal resources. Second, by estimating a spatial lag model, our analysis provides evidence for the presence of strategic interactions in Benin, contingent on 'communes fiscal autonomy. Such interactions arise among communes which are geographically or ethnically close. We also highlight both an opportunistic behaviour of local governments before local elections and an effect of partisan affiliations. This African democracy appears to be as concerned as developed democracies with strategic fiscal interactions.
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Date of creation: 06 Jan 2011
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Fiscal interactions; benin; decentralisation; local government; dynamic panel data;
Other versions of this item:
- Emilie Caldeira & Martial Foucault & Grégoire Rota-Graziosi, 2012. "Decentralisation in Africa and the Nature of Local Governments' Competition: Evidence from Benin," NBER Working Papers 18126, National Bureau of Economic Research, Inc.
- Grégoire ROTA-GRAZIOSI & Emilie CALDEIRA & Martial FOUCAULT, 2010. "Decentralization in Africa and the nature of local governments' competition: evidence from Benin," Working Papers 201019, CERDI.
- H7 - Public Economics - - State and Local Government; Intergovernmental Relations
- H2 - Public Economics - - Taxation, Subsidies, and Revenue
- D72 - Microeconomics - - Analysis of Collective Decision-Making - - - Political Processes: Rent-seeking, Lobbying, Elections, Legislatures, and Voting Behavior
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