Decentralization And Development Fiscal Federalism In Theory And Practice

Seminar paper from the year 2019 in the subject Economics - Finance, Johannes Gutenberg University Mainz, language: English, abstract: This seminar paper deals with a critical discussion of the economic insight from chapter 8: Decentralization and development of the Handbook on Fiscal Federalism. Decentralization is generally defined as the transfer of certain administrative and fiscal functions or powers of a central authority to several local authorities. The main advantage of local decentralization is that local governments are more efficient at providing certain public services compared to the higher levels of government Oates (1972). The chapter focuses on the type of decentralization in developing and transition economies, on the transfer of political decision-making power to subnational levels of government and cases where local community organizations formally participate in the implementation of funded and centrally directed projects. It’s important to mention that the chapter distinguishes decentralization in the sense of decentralization of political decision-making power from administrative delegation of functions of the central government to the local one. However, the effects of a policy of decentralization may differ sustainably. Like the common case when the central government delegates responsibility for social sector expenditure to local authorities in the form of unfunded mandates, which results in a closure of the social programmes. Decentralization can be used to serve the political power of the central government to dispel some authority, when the central control might be threatened by regional interest. During the apartheid regime in South Africa, decentralization was used as an instrument of central control and racial division. But on the other hand, it also has positive effects where decentralization is the result of the recent transition from authoritarianism to democracy, as in countries such as Brazil or Indonesia.

Over the past few decades, a clear trend has emerged worldwide toward the devolution of spending and, to a lesser extent, revenue-raising responsibilities to state and local levels of government. One view is that the decentralization of spending responsibilities can entail substantial gains in terms of distributed equity and macroeconomic management. The papers in this volume, edited by Teresa Ter-Minassian, examine the validity of these views in light of theoretical considerations, as well as the experience of a number of countries.

This book draws on experiences in developing countries to bridge the gap between the conventional textbook treatment of fiscal decentralization and the actual practice of subnational government finance. The extensive literature about the theory and practice is surveyed and longstanding problems and new questions are addressed. It focuses on the key choices that must be made in decentralizing, on how economic and political factors shape the choices that countries make, and on how, by paying more attention to the need for a more comprehensive approach and the critical connections between different components of decentralization reform, everyone involved might get more for their money.

Intergovernmental transfers, tax, budet, subnational government, Australia, Canada, Germany, Italy, Japan, Switzerland, United Kingdom, United States, Argentina, Bolivia, Brazil, Colombia, Ethiopia, India, Korea, Mexico, Nigeria, Bulgaria, China, Hungary, Russian Federation.

This book comprehensively examines the principles and practices of fiscal federalism based on the accepted theoretical framework and best practices.

'. . . this compilation of articles to fiscal federalism and local finance is of highest quality and a must for each scholar interested in this field. Moreover, it is edited by Wallace Oates who is the father of the analysis of fiscal federalism. Thus, it is no surprise that the book contains the most outstanding classical papers in the field. All in all, this selection of papers is the best that can be drawn from the literature. . . . this volume . . . has been published right in time to set the pace for the future.' - Lars P. Feld, Kyklos This volume presents an authoritative collection of the most significant papers on fiscal federalism and local finance. In addition to some classic papers, it offers clear and insightful presentations of conventional wisdom in the field as well as recent papers which illuminate important issues and point the way to ongoing research. Topics covered include federal tax structure and the division of fiscal functions among levels of government, the effect of local taxes on economic growth, the systems of governmental grants, income redistribution, the theory and practice of local finance and fiscal decentralization in developing countries and transitional economies.

This publication analyzes the impact of fiscal decentralization and the resultant issues and challenges that countries face in practice. It traces the evolution of fiscal decentralization as a significant and consequential global reform that has made subnational governments' key public sector actors in a majority of countries. This note touches upon its various aspects: incidence and presence in the world; foundation in economics; impact of a list of outcomes, including economic growth, macroeconomic stability, poverty and income distribution, and service delivery and political accountability. It confirms the positive overall impact of decentralized systems, especially when they are well designed and implemented with examples from around the world, including those from Asia and the Pacific.

This volume provides comprehensive coverage of fiscal federalism by some of the leading scholars in the field. . . This Handbook is an excellent addition to the present discourse on the role of the state in fiscal matters. This reviewer would recommend this book as a required text for a graduate or senior class on public finance or economic development. Researchers in economic development, public finance, and fiscal policy likewise would find this volume useful. Highly recommended. Upper-division undergraduate through professional collections. J. Raman, Choice This major Handbook addresses fiscal relations between different levels of government under the general rubric of fiscal federalism , providing a review of the latest literature as well as an invaluable guide for practitioners and policy makers seeking informed policy options. The contributors include leading lights in the field, many of whom have themselves made seminal contributions to the literature. Comprehensive and wide in coverage, the issues covered range from federal systems to other forms of intergovernmental relations, such as supra-national constructs namely, the European Union unitary states, regional systems, and more decentralized operations, including community level organizations. The political economy approach emphasizes the importance of institutional arrangements, including the legal, political and administrative aspects, and information flows to ensure that there are appropriate incentives and sanctions to generate good governance. This Handbook also devotes attention to emerging issues, such as environmental protection, the sharing of natural resources among levels of government, corruption and the impact of federalism and decentralization on national unity. It will be a vital reference tool for the area for many years to come.