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THE IMPACT OF FISCAL DECENTRALIZATION: A SURVEY |
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| Authors: | Jorge Martinez-Vazquez Santiago Lago-Peñas Agnese Sacchi |
| Institution: | 1. International Center for Public Policy (Georgia State University)
Governance and Economics research Network (GEN);2. Governance and Economics research Network (GEN) University of Vigo;3. Governance and Economics research Network (GEN) |
| Abstract: | In this paper, we offer a comprehensive and updated review of the impact of fiscal decentralization on the economy, society and politics. Our first target is the examination of two crucial and yet unsolved issues in the empirical literature on decentralization: the proper measurement of decentralization itself and its potential endogeneity in econometric estimates. Then, we discuss the main existing findings on the effects of decentralization on a relevant list of socio-economic issues. The impact of fiscal decentralization reforms on political institutions and public policies is also considered. Complete answers on the impact of fiscal decentralization are not likely to be certain but, overall, there are reasons to be optimistic about the net positive result. Our survey by necessity has to be selective but it presents a balanced view of what is known and what is not yet known opening room for further research and practice on fiscal decentralization. |
| Keywords: | Corruption Economic growth Politics Fiscal federalism Income inequality Macroeconomic stability Political decentralization Service delivery Sub-national governments Tax morale |