Fiscal federalism and foreign transfers: does inter-jurisdictional competition increase foreign aid effectiveness?
AbstractThis paper empirically studies the impact of decentralization and inter-jurisdictional competition on foreign aid effectiveness. For this purpose we examine a commonly used empirical growth model, considering different measures of fiscal decentralization. Our panel estimations reveal that expenditure decentralization and inter-jurisdictional competition - reflected by the degree of tax revenue decentralization - negatively impact aid effectiveness. We therefore conclude that donor countries should carefully consider how both anti-poverty instruments - foreign assistance and decentralization - work together. --
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Bibliographic InfoPaper provided by Dresden University of Technology, Faculty of Business and Economics, Department of Economics in its series Dresden Discussion Paper Series in Economics with number 10/10.
Date of creation: 2010
Date of revision:
Foreign Aid; Growth; Interjurisdictional Competition;
Find related papers by JEL classification:
- O1 - Economic Development, Technological Change, and Growth - - Economic Development
- O2 - Economic Development, Technological Change, and Growth - - Development Planning and Policy
- O4 - Economic Development, Technological Change, and Growth - - Economic Growth and Aggregate Productivity
- H7 - Public Economics - - State and Local Government; Intergovernmental Relations
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