scholarly journals Does Fiscal Decentralization Encourage Corruption in Local Governments? Evidence from Indonesia

2019 ◽  
Vol 12 (3) ◽  
pp. 118 ◽  
Author(s):  
Anisah Alfada
Keyword(s):  
Adverse Effects ◽  
Local Governments ◽  
Central Government ◽  
Fiscal Decentralization ◽  
Empirical Studies ◽  
Generalized Method Of Moments ◽  
Political Stability ◽  
Tax Revenue ◽  
Policy Recommendations ◽  
Level Government

This study examines the effects of fiscal decentralization on corruption by analyzing whether the degree of fiscal decentralization facilitates or mitigates the number of corruption cases in Indonesia’s local governments. The research utilizes a panel data model and a system Generalized Method of Moments (GMM) estimator to assess the degree of fiscal decentralization on corruption in 19 provinces for the period between 2004 and 2014. The estimation results reveal that the degree of fiscal decentralization, both expenditure and tax revenue sides, drives a growing number of corruption cases in local governments. A lack of human capital capacity, low transparency and accountability, and a higher dependency on intergovernmental grants from the central government may worsen the adverse effects of corruption. Our results suggest that a more heterogeneous population and higher political stability mitigate the adverse effects of corruption. Furthermore, this is the first corruption study in Indonesia to create corruption measures from the number of corruption cases investigated by the Indonesia Corruption Eradication Commission as well as extensive, provincial-level government financial data. As a result of using these different datasets, this research advances existing empirical studies and makes policy recommendations for the local governments in Indonesia.

Fiscal decentralization in Korea

2018 ◽  
Vol 7 (3) ◽  
pp. 279-290 ◽  
Author(s):  
Im Gon Cho
Keyword(s):  
Local Governments ◽  
Central Government ◽  
Fiscal Decentralization ◽  
National Government ◽  
Policy Recommendations ◽  
Content Type ◽  
Low Level ◽  
Local Taxes ◽  
Local Municipalities ◽  
High Level

Purpose The purpose of this paper is to make policy recommendations for the current fiscal decentralization discussion by examining the operating mechanisms of local taxes, unconditional grants, and conditional grants within the fiscal relationships between the national government and local governments in Korea. Design/methodology/approach After examining the current fiscal relationships between the national government and the local governments, this paper analyzes trends of local taxes, unconditional grants from both national and high-level local governments, and conditional grants from both national and high-level (or provincial level) local governments between 2002 and 2015. Local governments are classified into high-level local governments, and three types of low-level local governments are: si, kun, and ku. Findings Since the structure of local government finances in Korea is very complicatedly intertwined, the present decentralization discussion regarding increasing the share of local tax revenues may not achieve its purpose of fiscal decentralization. The authorities in charge of revenue allocation should be first decentralized at high-level local governments; high-level local governments should then arrange unconditional and conditional grants from high-level local governments to low-level local governments while taking into consideration unconditional and conditional grants from the national government to low-level governments. Originality/value The dichotomy between the central government and local municipalities has been utilized in the existing discussion regarding fiscal decentralization in Korea, but this study highlights the important resource allocation roles of high-level local governments.

scholarly journals Spatial Analysis over the Impact of Fiscal Decentralization on the Mortality Rate in Iranian Provinces

2019 ◽  
Author(s):  
Abolghasem Golkhandan
Keyword(s):  
Mortality Rate ◽  
Local Governments ◽  
Central Government ◽  
Fiscal Decentralization ◽  
Empirical Studies ◽  
Spatial Proximity ◽  
Spatial Effects ◽  
Health Measurement ◽  
Major Purpose ◽  
The Impact

Background: Many previous empirical studies indicated appropriate implementation of the fiscal decentralization and transfer of resources and expenses from the central government to local governments was an important factor to improve health outcomes in developing countries. Accordingly, the major purpose of this study was to evaluate the impact of fiscal decentralization indicators on the mortality rate (as an indicators of health measurement) in Iranian provinces. Methods: This study uses the statistical data of variables affecting the mortality rate in provinces of Iran to study the spatial effects of fiscal decentralization indicators on the mortality rate during 2006-2015. To this end, the spatial econometric approach was used. Furthermore, the statistical analyses were performed using the Matlab software. Results: Findings of the model's estimation indicate that indicators of the fiscal decentralization and mortality rate had a negative and significant relationship. In this regard, 1 % increase in fiscal decentralization indicators of income and expenditure decreased  the mortality rate by 0.19 % and 0.10 % in provinces of Iran, respectively. Other results showed that the spatial proximity effect between provinces of Iran had a positive and significant effect on the mortality rate. Conclusion: By providing the necessary conditions for expansion of fiscal decentralization, the health level can be promoted in provinces of Iran.

scholarly journals Game Theory-Based Analysis of Local Governments’ Behavioral Dissimilation in the Third-Party Soil Pollution Control under Chinese-Style Fiscal Decentralization

Land ◽  
2021 ◽  
Vol 10 (4) ◽  
pp. 389
Author(s):  
Caihua Zhou
Keyword(s):  
Local Government ◽  
Soil Pollution ◽  
Pollution Control ◽  
Local Governments ◽  
Central Government ◽  
Fiscal Decentralization ◽  
Third Party ◽  
The Third ◽  
Party Control ◽  
The Third Party

The participation of a third party of the environmental service enterprise theoretically increases the level and efficiency of soil pollution control in China. However, Chinese-style fiscal decentralization may have a negative impact on the behaviors of participants, especially the local government. First, this paper conducts a positioning analysis on participants of the third-party soil pollution control in China and discusses the behavioral dissimilation of the local government under fiscal decentralization. Second, taking the government’s third-party soil pollution control as a case, a two-party game model of the central government and the local government is established around the principal-agent relationship, and a tripartite game model of the central government, the local government, and the third-party enterprise is designed around the collusion between the local government and the third-party enterprise. The results show that Chinese-style fiscal decentralization may lead to the behavioral dissimilation of local governments, that is, they may choose not to implement or passively implement the third-party control, and choose to conspire with third-party enterprises. Improving the benefits from implementing the third-party control of local governments and third-party enterprises, enhancing the central government’s supervision probability and capacity, and strengthening the central government’s punishment for behavioral dissimilation are conducive to the implementation of the third-party soil pollution control. Finally, this study puts forward policy suggestions on dividing the administrative powers between the central and local government in third-party control, building appraisal systems for the local government’s environmental protection performance, constructing environmental regulation mechanisms involving the government, market and society, and formulating the incentive and restraint policies for the participants in the third-party soil pollution control.

scholarly journals ANALISIS TINGKAT KEPATUHAN WAJIB PAJAK DALAM MEMBAYAR PAJAK BUMI DAN BANGUNAN DI KANTOR PAJAK PRATAMA MANADO

2013 ◽  
Vol 8 (4) ◽  
Author(s):  
Javier Sondakh ◽  
Jenny Morasa ◽  
Heince Wokas
Keyword(s):  
Local Governments ◽  
Central Government ◽  
Local Development ◽  
Tax Compliance ◽  
Secondary Data ◽  
Tax Revenue ◽  
Small Community ◽  
Finance Minister ◽  
Tax Payments ◽  
Primary Service

In accordance with the decision of the finance minister 34/PMK.03/2005 UN taxation philosophy about sharing property tax revenues between the central government and local governments that receive the proceeds of land and building tax is directed for the purpose of public interest, then the proceeds from the PBB constitutes acceptance of the State which must be shared between the central government and local governments. The purpose of this study was to determine the level of tax compliance in Target and Realization of Land and Building Tax payments. Sources of data used in this study is secondary data is data that comes from the Tax Office Primary service Manado. The results showed that the Land and Building Tax Revenue in theperiod of four years from 2008-2011 continued to increase except in the year 2009. In general, most people are aware of their obligations as citizens of Indonesia are good and they are aware that taxes are a form of public participation in local development to better developed and developing countries. Also there is a small community is not aware of its obligations as a taxpayer PBB.

scholarly journals THE ROLE OF LOCAL GOVERNMENTS IN REGIONAL FINANCIAL MANAGEMENT FOR THE HANDLING OF THE COVID-19 PANDEMIC

Yurispruden ◽  
2021 ◽  
Vol 4 (2) ◽  
pp. 208
Author(s):  
Fahrul Abrori
Keyword(s):  
Local Government ◽  
Research Methods ◽  
Financial Management ◽  
Local Governments ◽  
Central Government ◽  
Fiscal Decentralization ◽  
The Government ◽  
The Stability ◽  
The Relationship

 ABSTRAKPandemi Covid-19 yang terjadi di Indonesia membuat pemerintah membuat kebijakan-kebijakan sebagai stimulus untuk menjaga kestabilan masyarakat dan perekonomian. Pemerintah pusat memberikan kewenangan kepada pemerintah daerah untuk mengelola keuangan daerah untuk menangani covid-19 di daerah masing-masing. Hal ini disebabkan karena pemerintah daerah lebih memahami kebutuhan daerahnya. Permasalahan yang diangkat Pertama, bagaimana hubungan Pemerintah Pusat dan Pemerintah Daerah dalam pengelolaan keuangan untuk penanganan pandemi Covid-19? Kedua, Apa peran Pemerintah Daerah dalam pengelolaan keuangan daerah untuk penanganan pandemi Covid-19? Menggunakan metode penelitian yuridis normatif dengan pendekatan perundang-undangan dan pendekatan konsep. Hubungan Pemerintah Pusat dan Pemerintah Daerah dalam Pengelolaan Keuangan untuk Penanganan Pandemi Covid-19 yaitu desentralisasi fiskal yang mana. Peran Pemerintah Daerah dalam Pengelolaan Keuangan Daerah untuk Penanganan Pandemi Covid-19 yaitu dengan melakukan refocusing kegiatan, realokasi anggaran, dan Penggunaan Anggaran Pendapatan dan Belanja Daerah.Kata kunci: Pemerintah Daerah, Pengelolaan Keuangan Daerah, Pandemi Covid-19 ABSTRACTThe Covid-19 pandemic in Indonesia led the government to make policies as a stimulus to maintain the stability of society and the economy. The central government authorizes local governments to manage local finances to deal with covid-19 in their respective regions. This is because the local government better understands the needs of the region. The issue raised first, how is the relationship between the Central Government and Local Government in financial management for the handling of the Covid-19 pandemic? Second, What is the role of local governments in regional financial management for the handling of the Covid-19 pandemic? Using normative juridical research methods with statutory approaches and concept approaches. The relationship between the Central Government and Local Government in Financial Management for the Handling of the Covid-19 Pandemic is fiscal decentralization. The role of local governments in regional financial management for the handling of the Covid-19 pandemic is by refocusing activities, reallocating budgets, and using regional budgets.Keywords: Local Government, Regional Financial Management, Covid-19 Pandemic

scholarly journals Will Third-Party Treatment Effectively Solve Issues Related to Industrial Pollution in China?

2020 ◽  
Vol 12 (18) ◽  
pp. 7685
Author(s):  
Qiao Peng ◽  
Yao Xiao
Keyword(s):  
Local Governments ◽  
Industrial Pollution ◽  
Central Government ◽  
Replicator Dynamics ◽  
Evolutionary Game ◽  
Third Party ◽  
Environmental Services ◽  
Policy Recommendations ◽  
Trial Basis ◽  
Local Levels

China expanded the application of the third-party treatment model (TPTM) in 2017 for effectively tackling the issues related to industrial pollution on a trial basis, and the model could diversify the government’s toolbox for addressing industrial pollution. With multiple players such as local governments, polluters, and environmental services providers (ESP) involved in the TPTM, appropriate guidance and coordination among the three players are critical to the success of the TPTM. This study constructs an evolutionary game model for the three players to capture their interaction mechanisms and simulates the three-player evolutionary game dynamics with the replicator dynamics equation. The simulation results show that heavier penalties for pollution and lower regulatory costs incurred by local governments could effectively improve the performance of the TPTM. Moreover, although environmental incentives provided by the central government to local levels do not affect the ultimate performance of the TPTM, they do shorten the time needed for the effect of the TPTM to emerge. The study concludes by proposing policy recommendations based on these results.

scholarly journals Dampak Desentralisasi Fiskal terhadap Volatilitas Belanja Pemerintah Kabupaten/Kota di Indonesia

2019 ◽  
Vol 19 (1) ◽  
pp. 118-138
Author(s):  
Benedictus Raksaka Mahi ◽  
Syarah Siti Supriyanti
Keyword(s):  
Local Government ◽  
Government Spending ◽  
Local Governments ◽  
Central Government ◽  
Fiscal Decentralization ◽  
Government Transparency ◽  
Before And After

The volatility of expenditures sub-local derived from central government transparency in transfers to local governments may aggravate sublocal economy. This study aims to analyze the eect of fiscal decentralization to the level of volatility of local government spending in 230 sub-local in Indonesia. We use two periods, before and after the implementation of Law No. 28 Year 2009. The regression results indicate that the volatility of local government spending may decrease if the degree of fiscal decentralization increases, especially at the time when districts implement that law. As responsive taxation can provide incentives for smooth spending for sub-local government. ================================= Volatilitas belanja pemerintah kabupaten/kota yang berasal dari ketidakpastian transfer pemerintah pusat kepada pemerintah daerah dapat memperburuk perekonomian kabupaten/kota. Penelitian ini bertujuan menganalisis pengaruh desentralisasi fiskal terhadap tingkat volatilitas belanja riil pemerintah pada 230 kabupaten/kota di Indonesia serta membandingkan data sebelum dan sesudah implementasi UU No. 28 Tahun 2009. Hasil menunjukkan semakin tinggi derajat desentralisasi fiskal, cenderung menurunkan volatilitas belanja riil pemerintah kabupaten/kota karena kemampuan fiskal kabupaten/kota cenderung meningkat setelah implementasi UU tersebut. Pajak properti merupakan sumber penerimaan daerah yang dapat diprediksi sehingga pemerintah kabupaten/kota dapat mengelola belanja daerahnya dengan lebih pasti dan terukur.

No taxation, no representation: An investigation of the relationship between natural resources and fiscal decentralization

2018 ◽  
Vol 36 (7) ◽  
pp. 1234-1255
Author(s):  
Mohammad Arzaghi ◽  
Andrew Balthrop
Keyword(s):  
Natural Resources ◽  
Natural Resource ◽  
Local Governments ◽  
Central Government ◽  
Fiscal Decentralization ◽  
Government Expenditures ◽  
Government Control ◽  
Resource Rents ◽  
Natural Resource Rents ◽  
The Relationship

Rents from natural resources can alter the relationship between central and local governments by providing a new source of government financing. We develop a model to explore the relationship between fiscal decentralization and resource abundance. Our model indicates that natural resource rents can detach central government expenditures from the tax base so that the central government can spend more to persuade a fractious periphery to remain under central government control. Thus, other things being equal, higher natural resource rents can result in less decentralized government expenditures. We empirically explore the relationship between fiscal decentralization and natural resource rents using a panel of 60 countries over the past 40 years. Empirical results support our economic model: A 1% increase in natural resource rents as a fraction of gross domestic product results in government expenditures that are 0.53% less decentralized.

scholarly journals Economic Growth by Means of Fiscal Decentralization: An Empirical Study for Federal Developing Countries

SAGE Open ◽  
2020 ◽  
Vol 10 (4) ◽  
pp. 215824402096808
Author(s):  
Imran Hanif ◽  
Sally Wallace ◽  
Pilar Gago-de-Santos
Keyword(s):  
Economic Growth ◽  
Developing Countries ◽  
Fiscal Federalism ◽  
Fiscal Decentralization ◽  
Positive Impact ◽  
Generalized Method Of Moments ◽  
Estimation Method ◽  
Tax Revenue ◽  
Weak Institutions ◽  
The Impact

The impact of fiscal federalism on economic performance has largely been studied in the developed world since the seminal work of Oates. In this article, we focus on a particular set of developing countries considered to be federal (Forum of Federations), to examine how fiscal decentralization has impacted their economic growth. In this context, we study the impact of tax revenue and expenditure decentralization on economic growth in developing federations. For this purpose, a panel data of 15 developing federations from 2000 to 2015 are analyzed by using a two-step system Generalized Method of Moments (GMM) estimation method. The results show that in federal developing countries, both tax revenue and expenditure decentralization have a significant, positive impact on economic growth. What is more, our findings show that the impact of fiscal decentralization on economic growth depends upon the level of perceived corruption and on the quality of the country’s institutions. Thus, empirical evidence depicts that the positive effect of fiscal decentralization on economic growth is tempered if the country is plagued with corruption, if it has weak institutions, and/or if it suffers from political instability. By contrast, a relatively corruption-free country featuring healthy institutions and a stable political environment could take fuller advantage of the effects of fiscal decentralization to improve economic growth.

Fiscal decentralization, preference for government innovation and city innovation

2020 ◽  
Vol 14 (2) ◽  
pp. 391-409 ◽  
Author(s):  
Siying Yang ◽  
Zheng Li ◽  
Jian Li
Keyword(s):  
Development Strategy ◽  
Local Governments ◽  
Central Government ◽  
Fiscal Decentralization ◽  
Negative Impact ◽  
Moderating Effects ◽  
Content Type ◽  
Effect Model ◽  
Fiscal Expenditure ◽  
Government Innovation

Purpose The purpose of this paper is to examine whether fiscal decentralization has impacts on city innovation level and to examine the moderating effects of the preference for government innovation in China. Design/methodology/approach Using a panel data of China’s 278 cities from 2003 to 2016, the authors first use fixed-effect model and quantile regression to analyze the impact of fiscal decentralization on city innovation level and the variations of impacts conditional on different innovation levels, followed by a mediating effect model to test the moderating effects of the preference for government innovation and its temporal and spatial heterogeneity. Findings The paper finds that fiscal decentralization significantly inhibited city innovation, and with the improvement of city innovation level, the inhibition demonstrated characteristics of “V” type variation. When the degree of fiscal decentralization is between 0.377 and 0.600, the inhibition of fiscal decentralization on city innovation level is the weakest. We further show that fiscal decentralization also inhibits the government's preference for innovation, reduces the proportion of fiscal expenditure on innovation and has a negative impact on city innovation. In addition, the influence of fiscal decentralization on city innovation present clear heterogeneity in space and in time. On one hand, the inhibition of fiscal decentralization on city innovation level in eastern China is significantly weaker than that in central and Western China; on the other hand, after the implementation of China’s innovation-driven development strategy in 2013, the negative impact of fiscal decentralization on city innovation disappeared. Research limitations/implications The research findings have certain policy implications. That is, in the process of decentralization reform, on the one hand, the central government should strengthen the supervision over the fiscal expenditure of local governments and ensure that the central government can play a leading role in the local development strategy, on the other hand, the central government should guard against the distortion of fiscal decentralization on local governments' fiscal expenditure behavior. In addition, the central government should also focus on the heterogeneity of the impacts of fiscal decentralization on cities under different strategic backgrounds and different levels of innovation. Originality/value This paper extends prior research by bringing the decentralization system reform into the study of city innovation system and analyzing its mechanism and its temporal and spatial heterogeneity.

Sign in / Sign up

Export Citation Format

Share Document