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.
| Identifer | oai:union.ndltd.org:NSYSU/oai:NSYSU:etd-0711109-234030 |
| Date | 11 July 2009 |
| Creators | Peng, Huan-shun |
| Contributors | Jian-Rong Su, Yi-Chung Hsu, Chun-Chieh Wang, Ming-Shenq Hwang, Wai-cho Tsui, Jia-Hsi Weng |
| Publisher | NSYSU |
| Source Sets | NSYSU Electronic Thesis and Dissertation Archive |
| Language | Cholon |
| Detected Language | English |
| Type | text |
| Format | application/pdf |
| Source | http://etd.lib.nsysu.edu.tw/ETD-db/ETD-search/view_etd?URN=etd-0711109-234030 |
| Rights | withheld, Copyright information available at source archive |
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