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Decentralisation in Africa and Fiscal Competition Evidence from Benin

Listed author(s):
  • Emilie Caldeira
  • Martial Foucault
  • Grégoire Rota-Graziosi

Without denying particular dimensions of the decentralisation in Sub-Saharan countries, this paper applies standard reasoning from the fiscal federalism literature to a developing country and tests the existence of strategic interactions among local Beninese governments, called communes'. We first propose a two-jurisdiction model of public expenditure interactions, considering a constrained Nash equilibrium to capture the extreme poverty of some communes. We show that spillovers among jurisdictions involve strategic behaviours of local officials who have sufficient levels of fiscal resources. Second, by estimating a spatial lag model, our analysis provides evidence for the presence of strategic interactions in Benin, contingent on communes' fiscal autonomy. Such interactions arise among communes which are geographically or ethnically close. We also highlight both an opportunistic behaviour of local governments before local elections and an effect of partisan affiliations. This African democracy appears to be as concerned as developed democracies with strategic fiscal interactions. Cet article applique la théorie du fédéralisme budgétaire à l'analyse du processus de décentralisation d'un pays en développement (le Bénin) et teste l'existence d'interactions stratégiques parmi les juridictions locales du Bénin. À partir d'un modèle de concurrence budgétaire à 2 juridictions, nous définissons les conditions d'un équilibre de Nash contraint pour capturer les effets d'extrême pauvreté de certaines communes. Nous montrons que des externalités entre communes impliquent des comportements stratégiques des décideurs publics locaux pour ceux disposant de ressources budgétaires suffisantes. Ensuite, en estimant un modèle d'interactions spatiales, nous montrons la présence d'interactions stratégiques pour les communes du Bénin, contingentes à leur autonomie budgétaire. De telles interactions émergent parmi les communes géographiquement et ethniquement proches. Par ailleurs, ces interactions surviennent dans le cadre d'un cycle électoral opportuniste de dépenses publiques et sont sensibles à l'affiliation partisane des maires. En conclusion, le Bénin apparaît aussi touché que les démocraties développées par des comportements stratégiques en dépenses publiques locales.

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Paper provided by CIRANO in its series CIRANO Working Papers with number 2010s-35.

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Length: 36 pages
Date of creation: 01 Aug 2010
Handle: RePEc:cir:cirwor:2010s-35
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