The Impact of Fiscal Decentralization. Jorge Martinez-Vazquez
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Название: The Impact of Fiscal Decentralization
Автор: Jorge Martinez-Vazquez
Издательство: Ingram
Жанр: Юриспруденция, право
isbn: 9789290923237
isbn:
Classical federalism and the Tiebout hypothesis (addressing the competition among local governments and the mobility of individuals to find their preferred package of services) play major roles in the theory of local public finance.3 Unlike the case of pure Samuelson goods (in which the addition of individuals does not diminish the amount available to others and no one can be excluded from its consumption), the efficient decentralized provision of local goods (with crowding in consumption and some excludability) is possible via the mechanism of mobility of households (i.e., “voting with their feet”—that is, moving—and sorting into homogenous communities). This concept is important to the understanding of decentralization in the United States (i.e., increased efficiency in the public sector), but it is not necessary to justify the advantage of fiscal decentralization in delivering more efficient outcomes in the delivery of public services. In fact, household mobility across local jurisdictions, like in the United States, hardly exists elsewhere.
The classical principles for decentralization design are well traveled across countries and over time. Hundreds of decentralization programs proposed by the Asian Development Bank, the International Monetary Fund, the World Bank, bilateral donors, and policy advisors have been inspired by these principles. After certain design issues have been addressed (e.g., hard budget constraints), the classical framework has been quite successful.
But decentralization is not an automatic remedy. The dangers of decentralization have been listed by many, and include a lack of capacity causing macro instability (Prud’homme 1995, Tanzi 1995). Others have tracked the diversion of funds in decentralized settings (Reinikka and Svensson 2004) while still others have warned of the dangers of capture by local elites (Bardhan and Mookherjee 2000).
Thus, is uniform central provision the right counterfactual for decentralization? It may not be if central governments are able to diversify and customize the provision of public services similarly to dentralized governments. However, further questions are raised regarding whether deconcentration can be as efficient as decentralization because of the lack of information and the lack of interest in diversifying the provision of public services. Further, it is questionable how diversity, complexity, proximity of local officials, political constraints, accountability, incentives, corruption, and state capture by local elites affect the success of decentralization.
Until recently, hard quantitative evidence has been scarce on the impact of decentralization, as it is difficult to isolate its effect from other processes in society and institutional changes in the public sector. The econometric issue of the endogeneity issue is also a key factor. Thus, there is need to evaluate whether decentralization is the cause of certain outcomes or simply the effect of other ongoing processes, such as democratization or economic growth, and statistical studies need to control for the possible presence of reverse causation.
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