Electoral effects of intergovernmental fiscal transfers: An application to local elections in the province of Cordoba, 1995-2011

Abstract

We examine the impact of decentralized public policy in the form of intergovernmental fiscal transfers on local election outcomes –the probability of reelection. We assemble a new and unique dataset recording every local executive election in the period 1995-2011 and examine the electoral effect of various types of intergovernmental fiscal transfers. We find that the odds of reelecting local incumbents are increasing in the incumbency dummies for both major parties. Local governments which receive a positive discretionary transfer from the provincial government have also associated higher odds of being reelected. The probability of reelection is also increasing in the difference in the vote share between the winner and the runner-up in the previous election. Finally, we find evidence that the amount of discretionary transfers per capita affect positively the probability of reelection only in those governments aligned with the provincial government. Our results are robust to controlling for other potential explanatory variables.

Intergovernmental Fiscal Transfers and Decentralization Initiatives in Sub-Saharan Africa: A Case Study of SNGs in Kenya

“…It may also be used to equalize the actual revenues of SNGs in per capita terms. In Spain, the equalization fund is about 1.5 % and is discretionarily spent by selected municipalities and townships (Freille & Capello, 2014).…”

“…In Spain, the transfers are split into 80.5% unconditionally to municipal governments; 3% unconditionally to local townships and other local communities; 12% conditional to the funding of the public health services of the local governments, 1.5 % equalization fund, and 3% discretionary spending in general and infrastructure investment in selected municipalities and townships (Freille & Capello, 2014). In the Philippines, intergovernmental fiscal transfers account for over 95% of the local government revenues (Llanto, 2012).…”

“…In Spain, the conditional transfers are distributed based on several factors that include population, area, relative wealth, and fiscal effort (Bird & Tarasov, 2004) and other redistributive policies (Freille & Capello, 2014). In Ghana, there are four main factors including needs, equity, service pressure and responsiveness have remained constant but their composition and weights have changed many times (Fumey & Egwaikhide, 2018).…”

“…Intergovernmental fiscal transfers have several functions that include: correcting the vertical and the horizontal fiscal balances, compensating or offsetting for the spill-overs or externalities between different jurisdictions, funding national priorities and administrative priorities and capacities of the nation (Bahl et al, 2001). Because of expenditure levels and the specific features of the inter-jurisdictional financial arrangements, sub-national governments in the federal systems exclusively rely on fiscal transfers as their main revenues (Freille & Capello, 2014). In developed countries, governments use conditional transfers to ensure that certain standards of service delivery by the subnational government are met.…”

“…Several countries use formula-based allocation systems and they include Tanzania, Nigeria, Sweden and Senegal (Fumey & Egwaikhide, 2018), India (Smoke, 2017), while the Philipines use several forms that include the formula-backed unconditional grant, a specified share of taxes; and an ad hoc conditional grants (Llanto, 2012) while In Indonesia it consists of four main types: shared tax revenues, shared non-tax revenues (from natural resources), general-purpose grant and specialpurpose grant (Lewis & Smoke, 2017;Lewis, 2013). In Spain, the regional government is mandated by law to transfer to its lower SNGs, 20% of the provincial sales tax, 20% of the housing tax and 20% of the fiscal transfers from the national government (Freille & Capello, 2014).…”