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Fiscal Decentralization and Economic Growth: Theory and Application

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  • Göcen, Serdar
  • Bayhanay, Alp
  • Göktaş, Nilüfer

Abstract

In this study, we examined the effect of fiscal decentralization on economic growth. In economics, tacit and dispersed knowledge, public choice school, and principal–agent approaches provide a theoretical framework for this relationship. This study used both theoretical and empirical approaches. First, the fiscal decentralization–growth relationship was theoretically investigated and then the OECD countries were analyzed using panel data for the period 1995–2012. As a result, we found that different decentralization measurement criteria and different empirical methods have different effects on growth

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  • Göcen, Serdar & Bayhanay, Alp & Göktaş, Nilüfer, 2017. "Fiscal Decentralization and Economic Growth: Theory and Application," MPRA Paper 84523, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:84523
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    4. Norman Gemmell & Richard Kneller & Ismael Sanz, 2013. "Fiscal Decentralization And Economic Growth: Spending Versus Revenue Decentralization," Economic Inquiry, Western Economic Association International, vol. 51(4), pages 1915-1931, October.
    5. Brennan,Geoffrey & Buchanan,James M., 2006. "The Power to Tax," Cambridge Books, Cambridge University Press, number 9780521027922.
    6. Jorge Martinez-Vazquez & Santiago Lago-Peñas & Agnese Sacchi, 2017. "The Impact Of Fiscal Decentralization: A Survey," Journal of Economic Surveys, Wiley Blackwell, vol. 31(4), pages 1095-1129, September.
    7. Akai, Nobuo & Sakata, Masayo, 2002. "Fiscal decentralization contributes to economic growth: evidence from state-level cross-section data for the United States," Journal of Urban Economics, Elsevier, vol. 52(1), pages 93-108, July.
    8. Lozano, Ignacio & Julio, Juan Manuel, 2016. "Fiscal decentralization and economic growth in Colombia: evidence from regional-level panel data," Revista CEPAL, Naciones Unidas Comisión Económica para América Latina y el Caribe (CEPAL), August.
    9. -, 2016. "CEPAL Review no. 119," Revista CEPAL, Naciones Unidas Comisión Económica para América Latina y el Caribe (CEPAL), August.
    10. Thushyanthan Baskaran & Lars P. Feld & Jan Schnellenbach, 2016. "Fiscal Federalism, Decentralization, And Economic Growth: A Meta-Analysis," Economic Inquiry, Western Economic Association International, vol. 54(3), pages 1445-1463, July.
    11. Whitney Buser, 2011. "The impact of fiscal decentralization on economics performance in high-income OECD nations: an institutional approach," Public Choice, Springer, vol. 149(1), pages 31-48, October.
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    Cited by:

    1. Imran Hanif & Sally Wallace & Pilar Gago-de-Santos, 2020. "Economic Growth by Means of Fiscal Decentralization: An Empirical Study for Federal Developing Countries," SAGE Open, , vol. 10(4), pages 21582440209, October.
    2. Alexander Deryigin & Irina Filippova & Igor Arlashkin, 2021. "Impact of intraregional tax decentralization on the development of the income base of the regions [Влияние Внутрирегиональной Налоговой Децентрализации На Развитие Доходной Базы Регионов]," Ekonomicheskaya Politika / Economic Policy, Russian Presidential Academy of National Economy and Public Administration, vol. 2, pages 8-33, April.
    3. Pedro Jorge Holanda Figueiredo Alves & Jevuks Matheus Araujo & Ana Karolina Acris Melo, 2023. "Fiscal decentralization and economic growth: evidence from Brazilian states," Public Sector Economics, Institute of Public Finance, vol. 47(2), pages 255-280.
    4. Igor Yu. Arlashkin, 2020. "Intergovernmental Fiscal Instruments for Stimulating Regional Economic Growth in Russia," Finansovyj žhurnal — Financial Journal, Financial Research Institute, Moscow 125375, Russia, issue 6, pages 54-68, December.
    5. Cong Minh Huynh & Hoai Nam Tran, 2021. "Moderating effects of corruption and informality on the fiscal decentralization—economic growth nexus: Insights from OECD countries," Annals of Public and Cooperative Economics, Wiley Blackwell, vol. 92(2), pages 355-373, June.

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    More about this item

    Keywords

    fiscal decentralization; economic growth;

    JEL classification:

    • O11 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Macroeconomic Analyses of Economic Development

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