Diseño institucional e incentivos implicitos en la descentralización Boliviana (1994-2008)
[Institutional design and implicit incentives in Bolivia's decentralization model (1994-2008)]
The second generation fiscal federalism (SGFF) approach is used as a reference to analyze the political and fiscal institutional design of Bolivia’s decentralization model and its evolution. Subnational public finance data up to 2008 is used to verify that decentralization of expenditure was higher than that of revenue, establishing a context of vertical fiscal imbalance that increased due to growing fiscal transfers during the positive external shock (boom) period. Consequently, the subnational fiscal surplus was not a result of internal efficiency but of excess revenues from such transfers. Panel models were estimated to identify and assess the implicit incentives embedded in fiscal institutions of the decentralization model. Findings at the municipal level are: i) misalignment of local spending with local interests due to dominance of transfers over own revenue (dominance of central government development policies); ii) incentive to spend transfers faster than own revenue (flypaper effect); iii) greater marginal contribution of own revenue to positive fiscal balances compared to transfers, thus introducing the seed for a soft budget constraint but hidden by the fiscal surplus; iv) disincentive to generate own revenue (tax and non-tax) due to the size and growth of transfers (disincentive to the culture of contributing to own revenue). Findings at the prefectural level are: i) misalignment with regional interests given the dominance of transfers over own revenue due to absolute lack of tax powers (until 2009); ii) high tendency to a soft budget constraint and, eventually, also fiscal bail-out, hidden by the fiscal surplus; iii) in only two departments collection of national-level taxes were higher, compared to transfers received in the same departments; iv) disincentive to pay the VAT (national-level tax) due to higher royalty transfers received, an effect not extended to other national-level taxes; v) high dependence from hydrocarbon-based transfers, and fiscal risk when this natural resource declines (both in volume and prices) due to volatility of international oil prices. Also, as a result of the decentralization model a positive and significant impact was found on education-coverage indicators, an important development objective of the national government.
|Date of creation:||2012|
|Date of revision:|
|Contact details of provider:|| Postal: |
Web page: http://mpra.ub.uni-muenchen.de
More information through EDIRC
References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Jorge Martinez-Vazquez & Andrey Timofeev, 2009. "Decentralization Measures Revisited," International Center for Public Policy Working Paper Series, at AYSPS, GSU paper0913, International Center for Public Policy, Andrew Young School of Policy Studies, Georgia State University.
- Zhuravskaya, Ekaterina V., 2000.
"Incentives to provide local public goods: fiscal federalism, Russian style,"
Journal of Public Economics,
Elsevier, vol. 76(3), pages 337-368, June.
- Zhuravskaya Ekatherina, 2000. "Incentives to Provide Local Public Goods: Fiscal Federalism, Russian Style," EERC Working Paper Series 99-15e, EERC Research Network, Russia and CIS.
- Ekaterina Zhuravskaya, 2000. "Incentives to provide local public goods: fiscal federalism, Russian style," Working Papers w0001, Center for Economic and Financial Research (CEFIR).
- Rocabado Mejía, Carlos, 2006. "La Asignación Tributaria en Bolivia," Documentos de trabajo 7/2006, Instituto de Investigaciones Socio-Económicas (IISEC), Universidad Católica Boliviana.
- Yingyi Qian & Barry R. Weingast, 1997.
"Federalism as a Commitment to Preserving Market Incentives,"
97042, Stanford University, Department of Economics.
- Yingyi Qian & Barry R. Weingast, 1997. "Federalism as a Commitment to Reserving Market Incentives," Journal of Economic Perspectives, American Economic Association, vol. 11(4), pages 83-92, Fall.
- Wildasin, David E., 2004.
"The Institutions of Federalism: Toward an Analytical Framework,"
National Tax Journal,
National Tax Association, vol. 57(2), pages 247-72, June.
- David E. Wildasin, 2004. "The Institutions of Federalism: Toward an Analytical Framework," Public Economics 0403006, EconWPA.
- Bahl, Roy & Martinez-Vazquez, Jorge & Wallace, Sally, 2002. "State and Local Government Choices in Fiscal Redistribution," National Tax Journal, National Tax Association, vol. 55(4), pages 723-42, December.
- Ajwad, Mohamed Ihsan & Wodon, Quentin, 2007. "Do local Governments maximize access rates to public services across areas?: A test based on marginal benefit incidence analysis," The Quarterly Review of Economics and Finance, Elsevier, vol. 47(2), pages 242-260, May.
- Laffont, Jean-Jacques, 2000.
"Incentives and Political Economy,"
Oxford University Press, number 9780198294245, March.
- Fernando Aragon, 2009.
"The flypaper effect revisited,"
LSE Research Online Documents on Economics
58199, London School of Economics and Political Science, LSE Library.
- Fernando Aragon, 2009. "The Flypaper Effect Revisited," STICERD - Economic Organisation and Public Policy Discussion Papers Series 004, Suntory and Toyota International Centres for Economics and Related Disciplines, LSE.
- Gustavo Canavire-Bacarreza & Jorge Martinez-Vazquez & Cristian Sepúlveda, 2012.
"Sub-national Revenue Mobilization in Peru,"
International Center for Public Policy Working Paper Series, at AYSPS, GSU
paper1209, International Center for Public Policy, Andrew Young School of Policy Studies, Georgia State University.
- Gustavo Canavire-Bacarreza & Jorge Martínez-Vázquez & Cristián Sepúlveda, 2012. "Sub-national Revenue Mobilization in Peru," IDB Publications (Working Papers) 65358, Inter-American Development Bank.
- Gustavo Canavire-Bacarreza & Jorge Martinez-Vazquez & Cristian Sepulveda, 2012. "Sub-national Revenue Mobilization in Peru," Research Department Publications 4768, Inter-American Development Bank, Research Department.
- Kornai, Janos, 1986.
"The Soft Budget Constraint,"
Wiley Blackwell, vol. 39(1), pages 3-30.
- Cristian F Sepulveda & Jorge Martinez-Vazquez, 2011.
"The consequences of fiscal decentralization on poverty and income equality,"
Environment and Planning C: Government and Policy,
Pion Ltd, London, vol. 29(2), pages 321-343, April.
- Cristian Sepúlveda & Jorge Martinez-Vazquez, 2010. "The Consequences of Fiscal Decentralization on Poverty and Income Inequality," International Center for Public Policy Working Paper Series, at AYSPS, GSU paper1002, International Center for Public Policy, Andrew Young School of Policy Studies, Georgia State University.
- 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.
- Weingast, Barry R, 1995. "The Economic Role of Political Institutions: Market-Preserving Federalism and Economic Development," Journal of Law, Economics and Organization, Oxford University Press, vol. 11(1), pages 1-31, April.
- Hehui Jin & Yingyi Qian & Barry Weingast, 1999.
"Regional Decentralization and Fiscal Incentives: Federalism, Chinese Style,"
99013, Stanford University, Department of Economics.
- Jin, Hehui & Qian, Yingyi & Weingast, Barry R., 2005. "Regional decentralization and fiscal incentives: Federalism, Chinese style," Journal of Public Economics, Elsevier, vol. 89(9-10), pages 1719-1742, September.
- Bird, Richard M., 1993. "Threading the Fiscal Labyrinth: Some Issues in Fiscal Decentralization," National Tax Journal, National Tax Association, vol. 46(2), pages 207-27, June.
- Faguet, Jean-Paul, 2004. "Does decentralization increase government responsiveness to local needs?: Evidence from Bolivia," Journal of Public Economics, Elsevier, vol. 88(3-4), pages 867-893, March.
- Grootaert, Christiaan & Narayan, Deepa, 2004. "Local Institutions, Poverty and Household Welfare in Bolivia," World Development, Elsevier, vol. 32(7), pages 1179-1198, July.
- Oates, Wallace E., 1993. "Fiscal Decentralization and Economic Development," National Tax Journal, National Tax Association, vol. 46(2), pages 237-43, June.
When requesting a correction, please mention this item's handle: RePEc:pra:mprapa:48598. 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: (Ekkehart Schlicht)
If references are entirely missing, you can add them using this form.