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Sub-national Revenue Mobilization in Latin America and Caribbean Countries: The Case of Venezuela

Author

Listed:
  • Germán Ríos
  • Federico Ortega
  • J. Sebastián Scrofina

Abstract

This paper analyzes the high fiscal dependence of Venezuelan states and municipalities on the central government and the political economy process embedded in the interaction between the central government and sub-national entities. Also explored is whether there is scope to increase sub-national governments' revenues, improve the current intergovernmental transfer system, and reduce horizontal imbalances; of particular importance is analyzing the impact of current transfer mechanisms on sub-national governments' revenues volatility. Following a presentation of Venezuela's economic background, public sector and fiscal variables, the paper describes the process of decentralization, inter-governmental transfer mechanisms and revenue volatility, and local governments' own revenues. Subsequently presented are sub-national governments' fiscal dependence and its determinants, followed by options for revenue mobilization and improving the transfer mechanism. The paper concludes with a summary and policy recommendations.

Suggested Citation

  • Germán Ríos & Federico Ortega & J. Sebastián Scrofina, 2012. "Sub-national Revenue Mobilization in Latin America and Caribbean Countries: The Case of Venezuela," IDB Publications (Working Papers) 4052, Inter-American Development Bank.
  • Handle: RePEc:idb:brikps:4052
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    File URL: http://publications.iadb.org/bitstream/handle/11319/4052/Sub-national%20Revenue%20Mobilization%20in%20Latin%20America%20and%20Caribbean%20Countries%3a%20The%20Case%20of%20Venezuela.pdf?sequence=1
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    References listed on IDEAS

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    1. Kahn, Charles M & Silva, Emilson C D & Ziliak, James P, 2001. "Performance-Based Wages in Tax Collection: The Brazilian Tax Collection Reform and Its Effects," Economic Journal, Royal Economic Society, vol. 111(468), pages 188-205, January.
    2. Charles M. Tiebout, 1956. "A Pure Theory of Local Expenditures," Journal of Political Economy, University of Chicago Press, vol. 64, pages 416-416.
    3. Richard M. Bird & Roy Bahl, 2008. "Subnational Taxes in Developing Countries: The Way Forward," Working Papers Series 16, Rotman Institute for International Business, Joseph L. Rotman School of Management, University of Toronto, revised Aug 2008.
    4. Gonzalez, Christian Y. & Rosenblatt, David & Webb, Steven B., 2002. "Stabilizing intergovernmental transfers in Latin America : a complement to national/subnational fiscal rules?," Policy Research Working Paper Series 2869, The World Bank.
    5. Battese, George E. & Corra, Greg S., 1977. "Estimation Of A Production Frontier Model: With Application To The Pastoral Zone Of Eastern Australia," Australian Journal of Agricultural Economics, Australian Agricultural and Resource Economics Society, vol. 21(03), December.
    6. repec:idb:idbbks:6725 is not listed on IDEAS
    7. Knoop, Joachim, 1994. "Descentralización fiscal en Venezuela," Series Históricas 60, Naciones Unidas Comisión Económica para América Latina y el Caribe (CEPAL).
    8. George E. Battese & Greg S. Corra, 1977. "Estimation Of A Production Frontier Model: With Application To The Pastoral Zone Of Eastern Australia," Australian Journal of Agricultural and Resource Economics, Australian Agricultural and Resource Economics Society, vol. 21(3), pages 169-179, December.
    9. repec:idb:brikps:40358 is not listed on IDEAS
    10. Weingast, Barry R., 2009. "Second generation fiscal federalism: The implications of fiscal incentives," Journal of Urban Economics, Elsevier, vol. 65(3), pages 279-293, May.
    11. Carlos Scartascini & Ernesto H. Stein & Emmanuel Abuelafia & Sergio Berensztein & Miguel Braun & Luciano Di Gresia & Lee J. Alston & Marcus André Melo & Bernardo Mueller & Carlos Pereira & Mauricio Cá, 2009. "Who Decides the Budget? A Political Economy Analysis of the Budget Process in Latin America," IDB Publications (Books), Inter-American Development Bank, number 87294 edited by Mark Hallerberg & Carlos Scartascini & Ernesto H. Stein, February.
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    1. repec:idb:idbbks:6883 is not listed on IDEAS
    2. repec:idb:idbbks:6829 is not listed on IDEAS

    More about this item

    Keywords

    Fiscal Policy; Decentralization; Sub-national revenues; Intergovernmental transfers; Decentralization; Fiscal dependence; Revenue mobilization;

    JEL classification:

    • H70 - Public Economics - - State and Local Government; Intergovernmental Relations - - - General
    • H72 - Public Economics - - State and Local Government; Intergovernmental Relations - - - State and Local Budget and Expenditures
    • H77 - Public Economics - - State and Local Government; Intergovernmental Relations - - - Intergovernmental Relations; Federalism

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