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The effects of economic and political integration on fiscal decentralization: evidence from OECD countries

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  • Dan Stegarescu

Abstract

This paper examines the impact of economic and political integration on the vertical government structure. It argues that, by increasing the market size and the benefits of decentralized provision of public goods, integration triggered the recent process of decentralization in OECD countries. A panel analysis relates the degree of fiscal decentralization to economic and European integration, controlling for interregional heterogeneity, economies of scale, and institutions. The results mostly support a decentralizing effect of economic integration in general and of European integration in particular for heterogeneous EU countries, whereas participation of subnational governments in national decision‐making is associated with more centralization. Ce texte examine l'impact de l'intégration politique et sociale sur la structure verticale de gouvernement. On suggère que, en accroissant la taille du marché et les avantages d'une fourniture décentralisée de biens publics, l'intégration a déclenché le récent processus de décentralisation dans les pays de l'OCDE. Une analyse de panel relie le degré de décentralisation fiscale au degré d'intégration économique et europeenne, en normalisant pour tenir compte de l'hétérogénéité interrégionale, des économies d'échelle, et des institutions. Les résultats supportent l'effet de décentralisation de l'intégration économique en général, et de l'intégration européenne en particulier pour les pays hétérogènes de l'Union européenne, alors que la participation des gouvernements sub‐nationaux à la prise de décision est associée à une plus grande centralisation.

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  • Dan Stegarescu, 2009. "The effects of economic and political integration on fiscal decentralization: evidence from OECD countries," Canadian Journal of Economics/Revue canadienne d'économique, John Wiley & Sons, vol. 42(2), pages 694-718, May.
  • Handle: RePEc:wly:canjec:v:42:y:2009:i:2:p:694-718
    DOI: 10.1111/j.1540-5982.2009.01524.x
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    Cited by:

    1. Antonio Nicolás Bojanic, 2020. "The empirical evidence on the determinants of fiscal decentralization," Revista Finanzas y Politica Economica, Universidad Católica de Colombia, vol. 12(1), pages 271-302, June.
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    3. Mario Jametti & Marcelin Joanis, 2020. "Elections and de facto expenditure decentralization in Canada," Economics of Governance, Springer, vol. 21(3), pages 275-297, September.
    4. Bellofatto, Antonio Andrés & Besfamille, Martín, 2021. "Tax decentralization notwithstanding regional disparities," Journal of Urban Economics, Elsevier, vol. 123(C).

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