Fiscal Decentralization and Governance: A Cross-Country Analysis

May 1, 2001

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Fiscal Decentralization and Governance: A Cross-Country Analysis, (USA: International Monetary Fund, 2001) accessed December 28, 2024

Disclaimer: This Working Paper should not be reported as representing the views of the IMF.The views expressed in this Working Paper are those of the author(s) and do not necessarily represent those of the IMF or IMF policy. Working Papers describe research in progress by the author(s) and are published to elicit comments and to further debate

Summary

Based on cross-country data for up to 78 countries, this paper shows that fiscal decentralization-the assignment of expenditure and revenue mobilization functions to subnational levels of government-is associated with various indicators of governance, such as corruption, rule of law, and government effectiveness. Unlike previous studies in the decentralization/governance literature, which focus primarily on expenditure-based measures of decentralization, the results reported in this paper show that the relationship between decentralization and governance depends on how subnational expenditures are financed. The higher the share in total subnational revenues of nontax revenues and grants and transfers from higher levels of government, the stronger the association between decentralization and governance.

Subject: Corruption, Crime, Expenditure, Fiscal federalism, Fiscal policy, Revenue administration, Revenue mobilization

Keywords: Corruption, Fiscal decentralization, Fiscal federalism, Governance, Governance index, Governance indicator, Governance indices, Governance outcome, Governance score, Governance track record, Government effectiveness, Macroeconomic governance, OECD country dummy, Revenue, Revenue mobilization, Share indicator, Th governance indicator, WP

Publication Details

Pages:

30
Volume:

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DOI:

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Issue:

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Series:

Working Paper No. 2001/071
Stock No:

WPIEA0712001
ISBN:

9781451849240
ISSN:

1018-5941

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