Constitutions, Regulations, and Taxes: Contradictions of Different Aspects of Decentralization

The paper confronts different aspects of decentralization: fiscal decentralization, post-constitutional regulatory decentralization, and constitutional decentralization – using a single dataset from Russian Federation of the Yeltsin period as a politically asymmetric country. It finds virtually no correlation between different decentralization aspects; moreover, three processes of devolution appearing in the same country at the same time seem to be driven by different (though partly overlapping) forces. Hence, a specific aspect of decentralization is hardly able to serve as a proxy for another one or for the overall decentralization process.constitutions; deregulation; decentralization; fiscal decentralization; administrative decentralization; devolution

Fiscal descentralization and the quality of government: evidence from panel data

In this paper we focus on the relationship between fiscal decentralization and government quality. In a sample of 29 developing and developed countries over the period 1984-1997, fiscal decentralization has a positive effect on institutional quality but this effect diminishes as countries become wealthier. Moreover, the positive effect of fiscal decentralization on government quality is reduced by electoral and decision-making decentralization in poor and medium income countries whereas these forms of decentralization seem to improve the impact of fiscal decentralization on government quality in rich countries.Quality of government, fiscal decentralization, political decentralization, panel data

Constitutions, regulations, and taxes: Contradictions of different aspects of decentralization

The paper confronts different aspects of decentralization: fiscal decentralization, postconstitutional regulatory decentralization, and constitutional decentralization - using a single dataset from Russian Federation of the Yeltsin period as a politically asymmetric country and a variety of indicators. It finds no robust correlation between different decentralization aspects; moreover, three processes of devolution appearing in the same country at the same time seem to be driven by different (though partly overlapping) forces. Hence, a specific aspect of decentralization is hardly able to serve as a proxy for another one or for the overall decentralization process. --Regulatory decentralization,fiscal decentralization,determinants of decentralization

Decentralization and good governance: The case of Indonesia

Indonesia began a process of rapid government decentralization in 1999 from a formerly strong centralized government structure. I review the history of decentralization in Indonesia and assess how Indonesia has fared in pursuing a decentralization policy since 1999. I illustrate how Indonesia meets several criteria of successful decentralization and how it is fails the criteria in principle in other areas. Finally, I indicate the likely future challenges faced by Indonesia as it implements decentralization and provide some recommendations to improve the ongoing decentralization process.government; decentralization; Indonesia

Constitutional Impediments to Decentralization in the World\u27s Largest Federal Country

Decentralization is often advocated as a means of improving local democracy and enhancing what economists call allocative efficiency. In federal countries, where power is already divided between national and state governments, decentralization involves the devolution of power from state to local governments. The world’s largest federal country, India, took an unusual step to advance decentralization: it passed the 74th Constitutional Amendment Act to confer constitutional status on municipalities. However, India’s efforts to promote the devolution of power through a national urban renewal scheme have not succeeded for three reasons. The first is that India’s decentralization process is incomplete. Political decentralization has been stymied by the language of the constitutional amendment itself; administrative decentralization has been hampered by the comparative advantage of entrenched state-level institutions; and fiscal decentralization has not occurred because financial responsibility—but not significant revenue—has been devolved. The second reason is that decentralization has been undertaken in a top-down manner, which has exacerbated Center-state relations and mitigated the goal of allocative efficiency. Third is the relative weakness of local governance structures, which has created a Catch-22 situation: as long as the local governments lack significant capacity, the states are reluctant to devolve power to them. Additional effort needs to be directed towards an effective model of cooperative federalism. With Prime Minister Narendra Modi poised to create “smart cities” and promote urban renewal, it is critical to understand why India’s prior decentralization efforts have largely failed. The lessons learned over the past decade are an important guide to the future of cities in India as well as in other federal countrie

Decentralization and Foreign Aid Effectiveness: Do Aid Modality and Federal Design Matter in Poverty Alleviation?

This paper empirically studies the impact of decentralization on foreign aid effectiveness. For this purpose, we examine a commonly used empirical growth model, considering aid modality as well as different measures of political and fiscal decentralization. Our panel estimations reveal that fiscal decentralization negatively impacts aid effectiveness, while measures of political decentralization have no significant effect or even a positive one. This result is robust for grants and overall ODA, while the growth impact of other aid types is not generally conditional on decentralization. We therefore conclude that donor countries should carefully consider how both anti-poverty instruments - foreign assistance and decentralization - work together.foreign aid, growth, decentralization

Fiscal decentralization, macrostability and growth

This paper examines how fiscal decentralization may influence economic growth. Previous research on this question has primarily focused on the potential direct relationship between decentralization and growth. In this paper, we also examine the potential indirect influence of decentralization on growth through its impact on macroeconomic stability. We find that decentralization may positively influence price stability in developed countries, though this impact is much less clear in developing and transitional countries. We also find some evidence suggesting that decentralization may directly and negatively affect economic growth in higher-income countries but that this effect is reduced through the indirect positive impact of decentralization on growth through macroeconomic stability.Fiscal Decentralization, Economic Growth, and Macroeconomic Stability.