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Federalism and Inclusion in Developing Economies

Author

Listed:
  • Raul V. Fabella

    (School of Economics, University of the Philippines Diliman
    National Academy of Science and Technology)

  • Sarah Lynne S. Daway-Ducanes

    (School of Economics, University of the Philippines Diliman)

Abstract

Using two-step system-GMM on a panel data of 105 economies over the period 1987-2016, we present formal statistical evidence that Federalism is a strong predictor of greater income inequality in developing economies. It is also a strong predictor of higher poverty incidence and poverty severity on average for all countries. Federalism does not predict lower poverty incidence and severity in developing countries. Thus for a developing economy such as the Philippines, Federalism appears to be a leap from the frying pan into the fire of even greater income inequality and poverty incidence.

Suggested Citation

  • Raul V. Fabella & Sarah Lynne S. Daway-Ducanes, 2018. "Federalism and Inclusion in Developing Economies," UP School of Economics Discussion Papers 201804, University of the Philippines School of Economics.
    • Handle: RePEc:phs:dpaper:201804
    as

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    File URL: https://www.econ.upd.edu.ph/dp/index.php/dp/article/view/1517
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    References listed on IDEAS

    as
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    4. L. ALAN WINTERS & NEIL McCULLOCH & ANDREW McKAY, 2015. "Trade Liberalization and Poverty: The Evidence So Far," World Scientific Book Chapters, in: Non-Tariff Barriers, Regionalism and Poverty Essays in Applied International Trade Analysis, chapter 14, pages 271-314, World Scientific Publishing Co. Pte. Ltd..
    5. Barro, Robert J, 2000. "Inequality and Growth in a Panel of Countries," Journal of Economic Growth, Springer, vol. 5(1), pages 5-32, March.
    6. Liyanage Devangi H. Perera & Grace H.Y. Lee, 2013. "Have Economic Growth And Institutional Quality Contributed To Poverty And Inequality Reduction In Asia?," Monash Economics Working Papers 37-13, Monash University, Department of Economics.
    7. Charles R. Hankla, 2009. "When is Fiscal Decentralization Good for Governance?," Publius: The Journal of Federalism, CSF Associates Inc., vol. 39(4), pages 632-650, Fall.
    8. Perera, Liyanage Devangi H. & Lee, Grace H.Y., 2013. "Have economic growth and institutional quality contributed to poverty and inequality reduction in Asia?," MPRA Paper 52763, University Library of Munich, Germany.
    9. Barro, Robert J., 2008. "Inequality and Growth Revisited," Working Papers on Regional Economic Integration 11, Asian Development Bank.
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    Cited by:

    1. Raul V. Fabella & Geoffrey Ducanes, 2019. "Power Industry Disruptors and Prospects of the Electricity Demand in the Greater Metro-Manila Area," UP School of Economics Discussion Papers 201901, University of the Philippines School of Economics.

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    More about this item

    Keywords

    federalism; poverty; inequality;
    All these keywords.

    JEL classification:

    • D3 - Microeconomics - - Distribution
    • I3 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty
    • O1 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development

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