The desire is infinite, but the resources are limited. The relationship between fiscal decentralization and long-run economic growth is ambiguous. Several economists have made the case for fiscal decentralization as a means of promoting long-run economic growth based on the view that it leads to better resource allocation and a more productive, and possibly smaller, public sector. Countries have pursued decentralization policies both for political and developmental reasons. Fiscal decentralization, the allocation of tax and spending powers to lower levels of government, currently in vogue is based on notions of economic efficiency criteria. Although it is theoretically expected that decentralization leads to efficient provision of local public services and stimulates economic development, the theoretical underpinnings for this relationship remain largely undeveloped. The absence of an adequate theoretical framework has undermined the validity of the empirical work on this subject. Advocates of fiscal decentralization argue that among other benefits, it can increase the efficiency of delivery of government services. We use data from 23 counties (cities) of the Taiwan province. The empirical findings can be stated as follows. The primary finding is that the estimated coefficient on fiscal decentralization variable is positive and statistically significant . This finding provides evidence that fiscal decentralization contributes to economic growth. This paper is also one of the first to evaluate this claim empirically by looking at the association between expenditure decentralization and the efficiency of local government .We also provide evidence that expenditure (revenue) decentralization is a negative (positive) relation with the efficiency of local government. Further Tobit panel regression of 23 counties (cities) provide robust evidence that more decentralization is not associated with higher efficiency of local governments. Therefore that fiscal decentralization contributes to the efficiency of local governments is ambiguous in the previous period.

Decentralization is a buzzword in current discussions on Public Management and its debate has always been a contentious one. The concept involves the restructuring or reorganization of authority so that there is a system of co-responsibility between institutions of governance at the central, provincial, regional and local levels according to the principle of subsidiary, thus increasing the overall quality and effectiveness of the system of governance, while increasing the authority and capacities of sub-national levels. The dispersal of financial responsibility is a core component of decentralization. Similarly, fiscal aspect is one of the decentralization programs. Moreover, fiscal as a tool is to change from inefficient to efficient public sector functioning and to improve relations between local governments for more efficient in public service. Importantly, decentralization of fiscal responsibilities is envisaged to increase efficiency in service delivery and reduce information and transaction costs associated with the provision of public services. By implication, efficiency in this context means how a country’s public finances are structured and how nation-state that is fragmented holds its finances together in the first place. The concept of “Supply Chain Management” (SCM) is the network of organizations that are involved, through upstream and downstream linkages, in the different processes and activities that produce value in the form of products and services delivered to the ultimate customer. Public sector SCM is seen as an acquisition of goods and service which has broader social, economic and political implications. Effective public sector SCM has potential benefits such as inventory reduction, improved service delivery and cost reduction across supply chain. Despite these benefits, South African (SA) public sector encounters challenges of SCM. In Emfuleni Local Municipality (ELM), these challenges range from a paucity of human resources due to lack of skills and capacity in the implementation and execution of SCM functions, poor implementation of SCM practices, quality of service in the SCM and to poor collaborative planning. Other barriers are lack of fiscal accountability, tight budget constraints and conflict of interest in the awarding of tenders which leads to political elite and bureaucratic corruption which cascades into unethical and unfair procurement dealings. These costly burdens result in ELM’s failure to meet community needs. Due to these challenges, the Fiscal Decentralization of SCM functions currently occupies a centre stage in the financial management reform process at ELM. Evaluating the efficiency of fiscal decentralization within the Supply Chain Management Department of Emfuleni Local Municipality requires an in-depth understanding of criteria. The concepts and principles from an examination of documentary data and analysed by the researcher were applied. In addition, semi-structured interviews, focus group discussion and observation methods were conducted to solicit comments from senior managers, employees and service providers This study reports the results of a full survey among a sample of the municipality-wide customers in the study area. It was found amongst other that: • Fiscal Decentralization as SCM efficiency tool has had only marginal positive effect at ELM • Effective implementation of fiscal decentralization is a function of well trained, qualified personnel crop, an attribute which is only beginning to get at ELM • Fiscal decentralization is best promoted wish performance management, a strategy which is well performed at ELM The study ends with recommendations for management action in committing themselves to take strategic fiscal decisions and actions that hold the key to the success of decentralized decision making. / MA, Public Management and Administration, North-West University, Vaal Triangle Campus, 2011

The aim of this thesis was to quantify and asset the degree of fiscal decentralization and its development in the Czech Republic. We managed to quantify the measure of fiscal decentralization and its development in the Czech Republic from 2000 to 2006 through indicators of tax decentralization, expenditure decentralization, revenue decentralization, financial and tax autonomy. The figures for ČR were compared with other countries.

Chapter 1 revisits the relationship between fiscal decentralization and economic growth by addressing the endogeneity. We use an instrumental variable approach based on two geography variables, namely a Geographic Fragmentation Index (GFI) and country size. We find that both instruments are strong and valid in the first stage regression and that a ten percent increase in decentralization measured by the expenditure or revenue share of subnational government in total government expenditures or revenues increases GDP per capita growth by approximately 0.4 percentage points. Moreover, we find that the results are more pronounced in the case of developed countries with a higher magnitude of the impact of revenue decentralization and lower impact of expenditure decentralization, while for a sample of developing countries both decentralization measures are insignificant. Chapter 2 explores the role of the tax structure and its key elements on the volatility of output growth. We account for both embedded automatic stabilizers measured by progressivity of the tax system and discretionary policy by accounting for the actual levels of revenue and its composition measured by tax mix ratio or the ratio of direct taxes to indirect taxes. We find that higher reliance on direct taxes versus indirect taxes is a significant stabilizing factor for output volatility for the whole sample of all countries and the subsample of lower income countries. For the subsample of high-income countries, we find a significant stabilizing impact of progressivity in the income tax structure, especially when there is higher reliance on personal income tax revenue. Chapter 3 reexamines the causal link between institutional quality and economic development using "Malaria Endemicity" as an instrument for institutions. This instrument is superior to the previously used instruments in the literature which suffered from measurement error. Because the Malaria Endemicity measure captures the malaria environment before the discovery that mosquitoes transmit the disease and before the successful eradication efforts that followed, it is exogenous to both institutional quality and economic development. We find Malaria Endemicity a valid strong instrument which yields larger significant effects of institutions on economic development than those obtained in the previous literature.

Canadian fiscal federalism is a set of complex relations on both federal and interprovincial levels. As each province faces different geographic, economic or demographic situation, federal government runs equalization program that aims to diminish potential economic gaps. Despite vaguely defined purpose, the transfers are unconditional - provinces could use them for any purpose they find appropriate. That could possibly cause distorted incentives such as flypaper effect in which politicians tend to adjust spending behavior according to source of income. Equalization payments are distributed based on potential capacity of each province to raise revenue. As Quebec has been the largest recipient of equalization grants with slow, if existent, convergence to the rest of provinces, it is subject of the analysis in the period from the year 1981, which marks breaking points in both Quebec and equalization system history, to 2016. Quebec tends to be blamed for taking advantage of the system by deliberately undervaluing its fiscal capacity through subsidized prices of electricity and by boosting its social expenditures. By incorporating descriptive statistics and discussion, this thesis concludes that Quebec's policymakers likely deliberately implement fiscal policies that in turn undervalue its fiscal...

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This thesis investigates federalism and civil conflict. Past work linking federalism and civil conflict has investigated the factors that pacify or aggravate conflict, but most such studies have examined the effect of decentralization on conflict onset, as opposed to the form federalism takes (such as congruent vs incongruent forms, for example). I collect data on civil conflict, the institutional characteristics of federalist states and fiscal decentralization. My theoretical expectations are that federations who treat federal subjects differently than others, most commonly in an ethnically based manner, are likely to experience greater levels of conflict incidence and more severe conflict. I find support for these expectations, suggesting more ethnically based federations are a detriment to peace preservation. I close with case studies that outline three different paths federations have taken with regards to their federal subunits.

This thesis presents three core chapters examining different aspects of the relationship between natural resources and economic development. While addressing different questions they share several features in common: a concern with causal inference; overcoming the challenges of endogeneity between resource abundance and other characteristics of developing countries; and the use of new and novel datasets with spatially identified units of analysis. The work contributes to a rich and growing empirical literature seeking to deepen our understanding of the underlying mechanisms affecting the fortunes of resource-abundant countries. In the introductory chapter I discuss the extensive literature on this topic and in particular focus on the new generation of well-identified within-country studies, seeking to understand the empirical relationship between resources and economic development. Countries typically welcome the news of a resource discovery with joy and indeed, resource discoveries hold great economic potential. But what determines whether a country is resource rich or not? Is it more than just a chance finding, or good geology? In Chapter 2, entitled Institutions and the Location of Oil Exploration I present an investigation into this question. I examine the relationship between governance and choices of where to drill for oil. This work utilises a new dataset on exploration wells and looks at the distribution of drilling close to national borders. This allows me to identify estimates for the effect of differences in governance between neighbours. Two times out of three, investors choose to drill on the side of borders that are better governed, all other things being equal. This suggests that resource-wealth itself may be contingent on factors beyond geology, and indeed may be endogenous to the process of development. In Chapter 3, entitled The Local Effects of Resource Extraction, I turn my attention to the local economic consequences of industrial mining in Indonesia. I present a simple three-sector general equilibrium model to generate predictions for the local labour market, akin to the Corden-Neary Dutch disease model of the macroeconomy. I test the predicted effects in response to an exogenous resource sector shock by looking at mine opening or mine expansion events across three hundred mines. I test the predictions of the model, first by estimating the economic footprint from industrial mining; found to be an average of fifteen kilometre radius. I then examine the response of reported labour market activity from households surveyed in nearby communities. Here I find no evidence for a shift of local labour into the mining sector. I do find however a notable movement of labour from the traded sectors (agriculture and manufacturing) to the non-traded service sector, with a strong effect for foreign-owned mines versus domestic ones. Chapter 4, entitled Disentangling the Effects of Resource Extraction: Local Government and Investment Multipliers, examines the oil and gas boom in Indonesia from 1999-2009. Here I deploy a variety of identification strategies to attempt to disentangle the regional effects of the boom, measured in terms of district GDP. I estimate effects arising from transfers of revenue to local government. Using an instrumental variable approach I isolate the fiscal channel from resource projects. I find a positive and significant effect of increased local government revenues on district GDP over the boom decade. I then examine the spillovers from resource projects, isolating them from fiscal transfers. For districts neighbouring resource rich districts I find evidence for a modest positive effect arising from project investments, rather than fiscal transfers. In Chapter 5 I present concluding thoughts and discuss a future research agenda. I also summarise the burgeoning landscape of resource data available for within country and spatially identified studies and offer some thoughts on how this might evolve.

<p>While competition among companies tends to be beneficial for the general public, this is not necessarily the case for competition among governments. Key in the fiscal competition theory is that the mobility of firms and households yields incentives for governments to aim to improve their relative position through successive undercutting of tax rates and welfare state arrangements. This mechanism has the potential to work as a disciplining device because it ensures that no jurisdiction is allowed to be grossly inefficient, because if it were grossly inefficient, mobile factors of production would move away. The main concern in the theoretical fiscal competition literature, however, has been that fiscal competition lowers government spending below their efficient levels. Another concern related to fiscal competition is that household mobility is likely to undermine attempts by governments to redistribute income. Empirical evaluation of both the existence and consequences of fiscal competition is the central topic of the thesis “An Empirical Analysis of Decentralization, Fiscal Competition and Welfare Policy”. </p><p>A particular focus of this thesis is on fiscal competition in welfare policy. With decentralized responsibility for the welfare benefit system in Norway, theory predicts that local governments will behave strategically in setting their welfare policy in order to avoid becoming ‘welfare magnets’. The key finding in Chapter 2 of this thesis is that Norwegian local governments in fact engage in such a ‘welfare game’. A local government will respond with reducing their welfare benefits when neighboring local governments reduce their welfare benefits. Encouraged by the finding in Chapter 2, Chapter 3 seeks to answer the question: Does Welfare Policy Affect Residential Choices? The analysis shows that Norwegian welfare recipients respond to changes in welfare policy by migrating. Local politicians concern about being to generous compared to their peers seem warranted. The analysis in Chapter 4 evaluates whether strategic interaction among Norwegian local governments in property tax decisions occurs. With limited mobility of the tax base and politically highly visible decisions, we interpret the strategic interaction found to be driven by yardstick competition, rather than competition for a mobile tax base. The final chapter differs from the rest in that it utilizes data from 18 OECD countries. The essay analyzes the effects of decentralization of government on the size and composition of government spending. Since jurisdictions with limited geographic scope (such as local governments) are, in general, more likely to face greater competitive pressures than larger ones (such as countries), it follows that the more fiscally decentralized countries are expected to experience stronger fiscal competition. One of the key findings is that decentralization of taxing powers is associated with less transfer spending, but unrelated to government consumption.</p> / Paper I reprinted with kind permission of Elsevier, Sciencedirect.com

While competition among companies tends to be beneficial for the general public, this is not necessarily the case for competition among governments. Key in the fiscal competition theory is that the mobility of firms and households yields incentives for governments to aim to improve their relative position through successive undercutting of tax rates and welfare state arrangements. This mechanism has the potential to work as a disciplining device because it ensures that no jurisdiction is allowed to be grossly inefficient, because if it were grossly inefficient, mobile factors of production would move away. The main concern in the theoretical fiscal competition literature, however, has been that fiscal competition lowers government spending below their efficient levels. Another concern related to fiscal competition is that household mobility is likely to undermine attempts by governments to redistribute income. Empirical evaluation of both the existence and consequences of fiscal competition is the central topic of the thesis “An Empirical Analysis of Decentralization, Fiscal Competition and Welfare Policy”. A particular focus of this thesis is on fiscal competition in welfare policy. With decentralized responsibility for the welfare benefit system in Norway, theory predicts that local governments will behave strategically in setting their welfare policy in order to avoid becoming ‘welfare magnets’. The key finding in Chapter 2 of this thesis is that Norwegian local governments in fact engage in such a ‘welfare game’. A local government will respond with reducing their welfare benefits when neighboring local governments reduce their welfare benefits. Encouraged by the finding in Chapter 2, Chapter 3 seeks to answer the question: Does Welfare Policy Affect Residential Choices? The analysis shows that Norwegian welfare recipients respond to changes in welfare policy by migrating. Local politicians concern about being to generous compared to their peers seem warranted. The analysis in Chapter 4 evaluates whether strategic interaction among Norwegian local governments in property tax decisions occurs. With limited mobility of the tax base and politically highly visible decisions, we interpret the strategic interaction found to be driven by yardstick competition, rather than competition for a mobile tax base. The final chapter differs from the rest in that it utilizes data from 18 OECD countries. The essay analyzes the effects of decentralization of government on the size and composition of government spending. Since jurisdictions with limited geographic scope (such as local governments) are, in general, more likely to face greater competitive pressures than larger ones (such as countries), it follows that the more fiscally decentralized countries are expected to experience stronger fiscal competition. One of the key findings is that decentralization of taxing powers is associated with less transfer spending, but unrelated to government consumption. / Paper I reprinted with kind permission of Elsevier, Sciencedirect.com