The relationship between decentralization and economic growth across regimes

Aray, Henry; Pedauga, Luis Enrique

doi:10.1007/s00168-022-01187-x

Cited by 3 publications

(4 citation statements)

References 53 publications

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“…In terms of fiscal sustainability, revenue decentralization could make a nation's fiscal system vulnerable. In fact, the greater transfer of tax revenues to regional governments, associated with a greater devolution of power, has generated greater dependency of fiscal performance on the economic cycle (Argimón and de Cos 2012). It is also known that local governments respond to budgetary shocks asymmetrically: Positive shocks hardly affect the income tax rate, whereas negative shocks induce higher tax rates, indicating the presence of a bias toward expansion (Rattsø and Tovmo 2002).…”

Section: Literature Reviewmentioning

confidence: 99%

“…However, on the other hand, the opposite mechanism occurs when local governments engage in tax competition for corporate taxes, which could distort capital accumulation. In fact, several studies have found that revenue decentralization is negatively associated with economic growth (Aray and Pedauga 2022; Baskaran and Feld 2013; Rodríguez-Pose and Ezcurra 2011). Tax competition and the lack of tax coordination are likely to result in insufficient lower tax revenues, leading to fiscal unsustainability.…”

Section: Literature Reviewmentioning

confidence: 99%

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Revenue Decentralization and the Probability of a Fiscal Crisis: Is There a Tipping Point for Adverse Effects?

Nakatani

2023

Public Finance Review

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Does government revenue decentralization affect the probability of a fiscal crisis? Is there a tipping point where revenue decentralization worsens the probability of a fiscal crisis? To answer these questions, we use cross-country panel data on 66 countries from 1982 to 2019. The binary choice models show that revenue decentralization is positively associated with crisis probability when countries exceed a certain threshold of decentralization. When more than approximately 16 percent of general government revenue is decentralized to local governments, this adverse effect of revenue decentralization occurs. This is consistent with the recent theoretical prediction that tax revenue collection efforts weaken as the government decentralizes revenue more. The adverse effects of revenue decentralization are large in low-income countries. Our finding implies the benefits of revenue centralization, such as economies of scale for revenue agencies, eliminating externalities due to tax competition, and the intergovernmental insurance role of federal transfers against local shocks.

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Section: Literature Reviewmentioning

confidence: 99%

Section: Literature Reviewmentioning

confidence: 99%

Revenue Decentralization and the Probability of a Fiscal Crisis: Is There a Tipping Point for Adverse Effects?

Nakatani

2023

Public Finance Review

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“…The cash budget is also able to create regional cash planning so that the amount of cash in the cash account is manageable, which indicates that there is a large amount of idle cash. Likewise, on the other hand, the amount of cash is manageable, which, of course, will disrupt the running of government operations as the party that provides services to the public (Aray & Pedauga, 2022).…”

Section: Impact Of the Covid-19 Pandemicmentioning

confidence: 99%

“…In addition to regulating the balance between funding and financing in each SKPD, the cash budget also plays a role in encouraging the realization of activities according to planning. Automatically, the role of regional governments as public servants is expected to be optimal, with all planning carried out by regional policies (Aray & Pedauga, 2022).…”

Section: Introductionmentioning

confidence: 99%

Cash Budget as Internal Control in Regional Cash Financial Management

Lovita,

Luthfia,

Noormansyah

2023

TPF

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The case study was conducted at the Pandeglang Regency Government, where an urgent need arose when central government transfer funds experienced changes in distribution. The research aims to explain the function of the cash budget in the public sector to achieve efficiency and effectiveness in regional cash management, especially in APBD planning and decision-making regarding the availability of regional government finances. The research method used is qualitative and comparative, namely analyzing certain situations, cases, or groups. The financial management situation of regional cash was analyzed by comparing the before and after implementation of the cash budget as internal control in cash management in Pandeglang Regency. The research results show that the role of the cash budget as an internal control can improve activity planning, cash administration, and activity reporting. The cash budget has also been proven to increase the efficiency and effectiveness of regional cash management, as can be seen from the significant reduction in excess financing. Implementing the cash budget allows the Pandeglang Regency Government to calculate minimum cash and invest the funds to obtain deposits, optimizing the use of funds.

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Modernization of Strategic Industries of the National Economy in the Conditions of Decentralization

Kushnirenko

2023

HESU

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The key role of industrial modernization in ensuring the sustainability of the national economy highlights the problem of a scientifically based choice of tools that working effectively in a decentralized environment. In this study, strategic sectors of the national economy include those that are provided with their own resource, production, scientific and educational base and have prospects for integration into global value chains, namely: ferrous metallurgy; mechanical engineering; industries for the extraction of critical raw materials. The article summarizes the world practices of cluster movement and activities of industrial parks, which have become a prerequisite for sustainable industrial development on a high-tech basis. The results of the survey of participants of industrial parks are given. The key obstacles hindering the development of industrial parks have been identified and directions of joint efforts have been proposed, namely, involvement in the global trend of sustainable development of the EU and the vector of carbon neutrality within the framework of the European Green Deal; creation of a Development Fund that will provide financial, technical and consulting assistance to participants in industrial parks; creation of a digital platform for potential foreign investors, where investment projects and opportunities in Ukraine will be announced; strengthening cooperation between the participants of industrial parks to attract grant funds for the development of their own ecosystem and the formation of a consolidated position on strategic development with state and regional authorities. Additional effects conducive to the modernization of strategic industries, namely the promotion of innovative development and areas of research and development (DiR); Improving production efficiency through more efficient use of resources; development of innovative infrastructure, support for small and medium-sized businesses.

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The relationship between decentralization and economic growth across regimes

Cited by 3 publications

References 53 publications

Revenue Decentralization and the Probability of a Fiscal Crisis: Is There a Tipping Point for Adverse Effects?

Revenue Decentralization and the Probability of a Fiscal Crisis: Is There a Tipping Point for Adverse Effects?

Cash Budget as Internal Control in Regional Cash Financial Management

Modernization of Strategic Industries of the National Economy in the Conditions of Decentralization

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