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Fiscal Decentralization Level In Albania

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  • Fran Brahimi
  • Mariel Frroku
  • Monika Brahimi

Abstract

This study analyzes Albania's fiscal decentralization level, taking into consideration fiscal decentralization measures using both combined and separate indicators, vertical imbalances, dependency ratios, etc. The study highlights fiscal decentralization data from various European countries and analyzes Albania's fiscal decentralization from 2014 to 2023. This analysis investigates the impact of fiscal decentralization measures and reforms undertaken in Albania, particularly following the administrative-territorial reform, on the enhancement and improvement of local government revenues and expenditures. Additionally, the study explores and analyzes the evolving relationship between central and local governments and their dynamics since 2014. Based on the analysis carried out through statistical and comparative methods, it has been observed that while autonomous revenue for local governments has increased, there has been a parallel rise in transfers and grants from the central government. Local expenditures have grown at a rate consistent with the overall budgetary expenditures and GDP, significantly contributing to the local deficit. The study also examined various associations between decentralization indices and different variables. It is recommended that in the future, the types and size of taxes be determined through cooperation between local self-government units and business communities. This will help increase the pace of local revenue collection. As a result, it will contribute to the reduction of the local fiscal deficit and will simultaneously affect the reduction of the financial gap between the transfer of functions and powers to the local government and the financial resources required to exercise them.

Suggested Citation

  • Fran Brahimi & Mariel Frroku & Monika Brahimi, 2024. "Fiscal Decentralization Level In Albania," Economy & Business Journal, International Scientific Publications, Bulgaria, vol. 18(1), pages 273-288.
  • Handle: RePEc:isp:journl:v:18:y:2024:i:1:p:273-288
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    References listed on IDEAS

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    1. Cândida Ferreira, 2009. "Fiscal Behaviour in the European Union: Rules, Fiscal Decentralization and Government Indebtedness," Working Papers Department of Economics 2009/23, ISEG - Lisbon School of Economics and Management, Department of Economics, Universidade de Lisboa.
    2. 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.
    3. Justin Yifu Lin & Zhiqiang Liu, 2000. "Fiscal Decentralization and Economic Growth in China," Economic Development and Cultural Change, University of Chicago Press, vol. 49(1), pages 1-21.
    4. Dan Stegarescu, 2005. "Public sector decentralisation: measurement concepts and recent international trends," Fiscal Studies, Institute for Fiscal Studies, vol. 26(3), pages 301-333, September.
    5. 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.
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    More about this item

    Keywords

    local taxes; local revenues; fiscal decentralization index; fiscal autonomy; gross domestic product; local expenditure;
    All these keywords.

    JEL classification:

    • A - General Economics and Teaching

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