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The Typology Of Fiscal Decentralisation System: A Cluster Analysis Approach

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  • Louis Chih‐hung Liu

Abstract

SUMMARY The article suggests a novel theoretical framework for empirical measurement of fiscal decentralisation by taking the viewpoint that fiscal decentralisation should be regarded as a system. Then, we review in detail several institutional arrangements regarding fiscally decentralised systems including the following: federal versus unitary state, numbers of tiers of governments, taxing power, borrowing power and independence of local officials. After identifying these institutional arrangements, we can group different countries with similar institutionally fiscal decentralisation systems together in broad categories by using cluster analysis. This analysis reveals a typology of fiscally decentralised systems (FDS): high expenditure/revenue assignment FDS, low expenditure/revenue assignment FDS, revenue transfer FDS, most complete FDS, politically centralised FDS and unitary state FDS. We then employ regression analysis to examine the performance for each type of fiscal decentralisation system. Our empirical findings suggest that most complete FDS is positively associated with selective economic performance as well as various public governance indicators. Copyright © 2011 John Wiley & Sons, Ltd.

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  • Louis Chih‐hung Liu, 2011. "The Typology Of Fiscal Decentralisation System: A Cluster Analysis Approach," Public Administration & Development, Blackwell Publishing, vol. 31(5), pages 363-376, December.
    • Handle: RePEc:wly:padxxx:v:31:y:2011:i:5:p:363-376
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    Cited by:

    1. Wang, Zhiguo & Ma, Liang, 2012. "New Development of Fiscal Decentralization in China," MPRA Paper 36918, University Library of Munich, Germany.
    2. Zhiguo Wang & Liang Ma, 2014. "Fiscal Decentralization in China: A Literature Review," Annals of Economics and Finance, Society for AEF, vol. 15(1), pages 51-65, May.

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