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Does Fiscal Decentralisation Strengthen Social Capital?: Cross-Country Evidence and the Experiences of Brazil and Indonesia

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  • Luiz de Mello

    (OECD)

Abstract

This paper tests the hypothesis that, by giving people more voice in the government decision-making process, fiscal decentralisation fosters social capital, measured in terms of interpersonal trust. Empirical evidence based on World Values Survey data and seemingly unrelated probit estimations for a cross-section of countries suggests that people living in federal/decentralised countries find it more important to have voice in government decisions than their counterparts living in unitary/centralised countries. Pro-voice attitudes are, in turn, associated with greater social capital. The cross-country estimations are complemented by country-specific regressions for Brazil and Indonesia on account of these countries. experiences with fiscal decentralisation. The results show that the cohorts of individuals that have been exposed to decentralisation are in general more pro-voice (and trustful of strangers in the case of Brazil) than their counterparts that have not been exposed to decentralisation. These findings are not driven by the effects of political liberalisation on people.s attitudes towards the importance of having voice in government decisions and interpersonal trust. La décentralisation budgétaire renforce-t-elle le capital sociétal ? : Données internationales et expérience du Brésil et de l'Indonésie On examine dans ce document l.hypothese selon laquelle en faisant participer davantage les administres a la prise de decision publique, la decentralisation budgetaire accroit le capital societal, mesure a travers la confiance interpersonnelle. Les resultats empiriques obtenus a partir des donnees de l.Etude sur les valeurs mondiales et les estimations probit apparemment non correlees pour un ensemble de pays montrent que les populations des Etats federaux/decentralises jugent plus important d.avoir leur mot a dire dans les decisions publiques que les populations des pays unitaires/centralises. De plus, les attitudes favorables a la participation se traduisent par une augmentation du capital societal. Les estimations internationales sont completees par des regressions specifiquement nationales pour le Bresil et l.Indonesie prenant en compte leur experience de la decentralisation budgetaire. On constate que les cohortes d.individus qui ont connu la decentralisation sont en general plus favorables a une participation (et ont plus confiance dans les etrangers dans le cas du Bresil) que celles qui n.en ont pas beneficie. Ces resultats ne tiennent pas aux effets de la liberalisation politique sur l.attitude des individus a l.egard de l.importance d.une participation aux decisions publiques et sur la confiance interpersonnelle.

Suggested Citation

  • Luiz de Mello, 2010. "Does Fiscal Decentralisation Strengthen Social Capital?: Cross-Country Evidence and the Experiences of Brazil and Indonesia," OECD Economics Department Working Papers 825, OECD Publishing.
  • Handle: RePEc:oec:ecoaaa:825-en
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    File URL: http://dx.doi.org/10.1787/5km347ntdnxn-en
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    References listed on IDEAS

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    1. Dani Rodrik, 2007. "Introductiion to One Economics, Many Recipes: Globalization, Institutions, and Economic Growth," Introductory Chapters,in: One Economics, Many Recipes: Globalization, Institutions, and Economic Growth Princeton University Press.
    2. Martin Schindler, 2009. "The Italian Labor Market; Recent Trends, Institutions, and Reform Options," IMF Working Papers 09/47, International Monetary Fund.
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    Cited by:

    1. Diaz-Serrano, Luis & Rodriguez-Pose, Andres, 2011. "Decentralization, Happiness, and the Perception of Institutions," CEPR Discussion Papers 8356, C.E.P.R. Discussion Papers.
    2. Ligthart, Jenny E. & van Oudheusden, Peter, 2015. "In government we trust: The role of fiscal decentralization," European Journal of Political Economy, Elsevier, vol. 37(C), pages 116-128.
    3. Canto, Olga & Adiego, Marta & Ayala, Luis & Levy, Horacio & Paniagua, Milagros, 2012. "Going regional. The effectiveness of different tax-benefit policies in combating child poverty in Spain," EUROMOD Working Papers EM2/12, EUROMOD at the Institute for Social and Economic Research.

    More about this item

    Keywords

    Brazil; Brésil; capital social; decentralisation; décentralisation; federalism; fédéralisme; Indonesia; Indonésie; social capital;

    JEL classification:

    • H11 - Public Economics - - Structure and Scope of Government - - - Structure and Scope of Government
    • H30 - Public Economics - - Fiscal Policies and Behavior of Economic Agents - - - General
    • H77 - Public Economics - - State and Local Government; Intergovernmental Relations - - - Intergovernmental Relations; Federalism

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