Decentralization or fiscal autonomy ? What does really matter ? effects on growth and public sector size in European transition countries
This paper examines the importance of fiscal autonomy in the analysis of decentralization. Using new data published by the OECD (2001 and 2002), it reproduces several indicators and proposes new measures of decentralization that take into consideration su-bnational governments'autonomy over their revenues. Two models are reproduced: Davoodi and Zou (1998) on decentralization and economic growth,and Oates (1985), on decentralization and public sector size. Some evidence suggests that fiscal autonomy positively affects economic growth. Also, it seems to affect the size of the state, but evidence on this relation is limited. Despite some statistical weaknesses, there are sufficient indications to argue that sub-national governments'fiscal autonomy should be a major concern when measuring decentralization.
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| Date of creation: | 01 Mar 2004 |
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| Handle: | RePEc:wbk:wbrwps:3254 |
| Contact details of provider: | Postal: 1818 H Street, N.W., Washington, DC 20433 Phone: (202) 477-1234 Web page: http://www.worldbank.org/ Email: More information through EDIRC
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References listed on IDEAS
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paper9901, International Center for Public Policy, Andrew Young School of Policy Studies, Georgia State University.
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CEMA Working Papers
98, China Economics and Management Academy, Central University of Finance and Economics.
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- Era Dabla-Norris & Paul R Wade, 2002. "The Challenge of Fiscal Decentralization in Transition Countries," IMF Working Papers 02/103, International Monetary Fund.
- Pranab Bardhan, 2002. "Decentralization of Governance and Development," Journal of Economic Perspectives, American Economic Association, vol. 16(4), pages 185-205, Fall.
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