IDEAS home Printed from https://ideas.repec.org/p/oec/ecoaaa/824-en.html
   My bibliography  Save this paper

Fiscal Decentralisation and Public Investment: The Experience of Latin America

Author

Listed:
  • Luiz de Mello

    (OECD)

Abstract

Despite large differences across countries, Latin America’s average investment-to-GDP ratio and the overall quality of infrastructure in the region are relatively low by international comparison. Empirical evidence on the effects of fiscal decentralisation on investment based on a panel of Latin American countries since the late 1990 suggests that fiscal decentralisation discourages Latin American subnational governments from investing (acquiring fixed assets) and that lower subnational spending on investment is associated with lower economy-wide gross fixed capital formation. Latin American countries will therefore need to face a double challenge of revisiting the current arrangements for decentralised provision that discourage subnational governments from investing, while making the most of decentralisation as a policy lever to raise private investment. Décentralisation budgétaire et investissement public : L'expérience de l'Amérique latine Malgré des différences très marquées d’un pays à l’autre, le taux moyen d’investissement par rapport au PIB et la qualité globale des infrastructures de la région sont relativement faibles par comparaison internationale. Les données empiriques concernant les effets de la décentralisation budgétaire sur l’investissement pour un groupe de pays d’Amérique latine depuis la fin des années 90 montrent que la décentralisation budgétaire décourage les administrations infranationales de ces pays d’investir (c’est-à-dire d’acquérir des actifs immobilisés) et que de plus faibles dépenses d’investissement au niveau infranational se répercutent négativement sur la formation brute de capital fixe dans l’ensemble de l’économie. Les pays d’Amérique latine seront donc confrontés à un double défi : revoir les dispositifs actuels de décentralisation qui découragent les investissements des administrations infranationales et tirer le meilleur parti de la décentralisation comme moyen d’action pour accroître l’investissement privé.

Suggested Citation

  • Luiz de Mello, 2010. "Fiscal Decentralisation and Public Investment: The Experience of Latin America," OECD Economics Department Working Papers 824, OECD Publishing.
  • Handle: RePEc:oec:ecoaaa:824-en
    as

    Download full text from publisher

    File URL: http://dx.doi.org/10.1787/5km347r2hhbp-en
    Download Restriction: no

    More about this item

    Keywords

    Amérique latine; decentralisation; décentralisation; investissement public; Latin America; public investment;

    JEL classification:

    • H54 - Public Economics - - National Government Expenditures and Related Policies - - - Infrastructures
    • H77 - Public Economics - - State and Local Government; Intergovernmental Relations - - - Intergovernmental Relations; Federalism
    • O54 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - Latin America; Caribbean

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:oec:ecoaaa:824-en. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (). General contact details of provider: http://edirc.repec.org/data/edoecfr.html .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.