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Fiscal Federalism and Financial Resources for Regional Development - Co-operative and Competitive Models: The International Experience - an Example for Russia?

Author

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  • Bernhard Seidel
  • Mechthild Schrooten

Abstract

In Western economies, the concrete design of fiscal federalism is determined by the status the federation grants to regionally comparable economic and social conditions, and to what extent this status is anchored in the constitution. If the political and social acceptance of regional differences is high, the significance of regional equalisation is low and vice versa. In the case of great regional differences fiscal equalisation could be overburdened by the task of reducing fiscal strength. Moreover, if the political and social acceptance is lacking, regional policy interventions of the federal level is appropriate to support the regional economic convergence rather than fiscal equalisation. However, in high-performing economies organized as federations, comparably weak institutions such as those in Russia are largely unknown. In this sense, international experience makes it clear that strong and well-designed institutional arrangements between the different governmental levels are an important precondition for a high-performing fiscal system. In other words, to take advantage of the potential efficiency gains offered by fiscal federalism, the vertical co-ordination of revenue and expenditure responsibilities between the different governmental levels should be clarified. Problems of destruction and enforcement should be eliminated and replaced by harmonization and co-operation.

Suggested Citation

  • Bernhard Seidel & Mechthild Schrooten, 2000. "Fiscal Federalism and Financial Resources for Regional Development - Co-operative and Competitive Models: The International Experience - an Example for Russia?," Discussion Papers of DIW Berlin 220, DIW Berlin, German Institute for Economic Research.
  • Handle: RePEc:diw:diwwpp:dp220
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    File URL: http://www.diw.de/documents/publikationen/73/diw_01.c.38493.de/dp220.pdf
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    References listed on IDEAS

    as
    1. Friedrich Schneider & Dominik Enste, 1999. "Shadow Economies Around the World - Size, Causes, and Consequences," CESifo Working Paper Series 196, CESifo Group Munich.
    2. Bernhard Seidel & Dieter Vesper, 1999. "Fiscal Federalism - an International Comparison," Vierteljahrshefte zur Wirtschaftsforschung / Quarterly Journal of Economic Research, DIW Berlin, German Institute for Economic Research, vol. 68(3), pages 449-472.
    3. Wallace E. Oates, 1999. "An Essay on Fiscal Federalism," Journal of Economic Literature, American Economic Association, vol. 37(3), pages 1120-1149, September.
    4. Claudia M. Buch & Ralph P. Heinrich & Lusine Lusinyan & Mechthild Schrooten, 2000. "Russia's Debt Crisis and the Unofficial Economy," Discussion Papers of DIW Berlin 208, DIW Berlin, German Institute for Economic Research.
    5. Kaufmann, Daniel & Kaliberda, Aleksander, 1996. "Integrating the unofficial economy into the dynamics of post-socialist economies : a framework of analysis and evidence," Policy Research Working Paper Series 1691, The World Bank.
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    Citations

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    Cited by:

    1. Mechthild SCHROOTEN, 2003. "Fiscal Federalism And Regional Development In Russia," Region et Developpement, Region et Developpement, LEAD, Universite du Sud - Toulon Var, vol. 18, pages 53-72.

    More about this item

    Keywords

    Fiscal federalism; Russia; regional policy; fiscal equalisation; tax policy;

    JEL classification:

    • E60 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - General
    • E62 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Fiscal Policy
    • H1 - Public Economics - - Structure and Scope of Government
    • H7 - Public Economics - - State and Local Government; Intergovernmental Relations
    • R58 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Regional Government Analysis - - - Regional Development Planning and Policy

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