Regional Decentralization and Fiscal Incentives: Federalism, Chinese Style

How Reform Worked in China ◽

10.7551/mitpress/9780262534246.003.0010 ◽

2017 ◽

Author(s):

Yingyi Qian

Keyword(s):

Local Governments ◽

Fiscal Decentralization ◽

Retention Rate ◽

Provincial Government ◽

Market Development ◽

State Sector ◽

Ex Post ◽

Fiscal Incentives ◽

Ex Ante ◽

Faster Development

Aligning the interests of local governments with market development is an important issue for developing and transition economies. Using a panel data set from China, we investigate the relationship between provincial government’s fiscal incentives and provincial market development. We report three empirical findings. First, we find that during the period of “fiscal contracting system” the discrepancy between ex ante contracts and ex post implementation was relatively small, suggesting that the fiscal contracts were credible. Second, we find a much higher correlation, about four times, between the provincial government’s budgetary revenue and its expenditure during 1980s and 1990s as compared to 1970s, demonstrating that provincial governments faced much stronger ex post fiscal incentives after reform. Third, we find that stronger ex ante fiscal incentives, measured by the contractual marginal retention rate of the provincial government in its budgetary revenue, are associated with faster development of the non-state sector as well as more reforms in the state sector in the provincial economy. This holds even when we control for the conventional measure of fiscal decentralization. Finally, we compare federalism, Chinese style, to federalism, Russian style.

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Delegation of Taxation Authority and Multipolicy Commitment in a Decentralized Leadership Model

Public Finance Review ◽

10.1177/1091142120930389 ◽

2020 ◽

Vol 48 (4) ◽

pp. 505-537

Author(s):

Nobuo Akai ◽

Takahiro Watanabe

Keyword(s):

Local Governments ◽

Central Government ◽

Leadership Model ◽

Tax Rate ◽

Interregional Transfers ◽

Ex Post ◽

Ex Ante ◽

Taxation Authority ◽

Decentralized Leadership ◽

Level Government

This article examines to what extent taxation authority should be delegated to local or lower-level government. Delegation of taxation authority can be regarded as a commitment to the local tax rate ex ante in a decentralized leadership model, in which local governments set policies ex ante and the central government decides transfer policies ex post. Previous papers point out that ex post interregional transfers of the central government distort ex ante regional policies of local governments. However, Silva clarify the case where efficient expenditure by local governments is achieved. This article examines the delegation of taxation authority by extending Silva’s model to include commitment to taxation and generally derives the conditions when efficient public expenditure by local governments can be achieved in relation to the delegation of taxation authority. The model adopted in this article allows various levels of spillovers of local public goods and various types of multipolicy commitments of taxation and/or expenditure.

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Do professional sport franchise owners overpromise and underdeliver the public? Lessons from Brooklyn’s Barclays Center

International Journal of Public Sector Management ◽

10.1108/ijpsm-01-2018-0002 ◽

2019 ◽

Vol 32 (1) ◽

pp. 80-101 ◽

Cited By ~ 1

Author(s):

Geoffrey Propheter

Keyword(s):

Public Sector ◽

Local Governments ◽

Financial Incentive ◽

Content Type ◽

The Public ◽

Public Benefits ◽

Ex Post ◽

Ex Ante ◽

The Usa

Purpose The purpose of this paper is to evaluate a number of promises typically made by owners of professional sports franchises in the USA that are also typically ignored or underevaluated by public bureaus and their elected principals using the Barclays Center in Brooklyn, New York as a case study. Ex post subsidy outcomes are evaluated against ex ante subsidy promises in order to draw lessons that can inform and improve subsidy debates elsewhere. Design/methodology/approach The case study adopts a pre-post strategy drawing on data from multiple sources over a period of up to ten years in order to triangulate the narrative and build credibility. The franchise owner’s ex ante promises and financial projections were obtained from various media including newspaper, video and interviews between December 2003, when the arena was publicly announced, and September 2012, when the arena opened. Data on ex post outputs were obtained from financial documents and government records covering periods from September 2011 through June 2016. Findings The franchise owner is found to have exaggerated the arena’s financial condition, under-delivered on its employment promises, and exaggerated the scope and timeliness of ancillary real estate development. Only promises of event frequency and attendance levels, measures of the public’s demand for the facility, have been met during the first three years. Research limitations/implications Because the evaluation is a case study, causal conclusions cannot be drawn and some aspects of the Barclays Center context may not be applicable in other jurisdictions or subsidy debates. In addition, the case study does not evaluate an exhaustive list of the promises franchise owners make. Practical implications Franchise owners have a financial incentive to overpromise public benefits, since subsidy levels are tied to what the public is perceived to receive in return. This case study demonstrates that the public sector should not take owners’ promises and projections of public benefits at face value. Moreover, the case study reveals that the public sector should put more effort into ensuring ex post policy and data transparency in order to facilitate benefit-cost analyses of such subsidies. Originality/value The data required to evaluate promises, other than economic development ones, made by franchise owners are not systematically collected across state and local governments in the USA, making large-n studies impossible. Case studies are underutilized approaches in this area of public affairs, and this paper illustrates their usefulness. By focusing on a single facility, an evaluation of the franchise owner’s less acknowledged and arguably more important promises about the facility and its local impact is possible.

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Developing sustainable arrangements for “proactive” disaster risk financing in Java, Indonesia

International Journal of Disaster Resilience in the Built Environment ◽

10.1108/ijdrbe-01-2020-0006 ◽

2020 ◽

Vol 11 (3) ◽

pp. 435-451

Author(s):

Robby Soetanto ◽

Ferry Hermawan ◽

Alistair Milne ◽

Jati Utomo Dwi Hatmoko ◽

Sholihin As'ad ◽

...

Keyword(s):

Developing Countries ◽

Low Income ◽

Local Governments ◽

Disaster Risk ◽

Local Context ◽

Content Type ◽

Ex Post ◽

Ex Ante ◽

Emerging Issues ◽

Disaster Risk Financing

Purpose Recent years saw a paradigm shift from ex post (reactive) to ex ante (proactive) approaches (e.g. insurance) to disaster risk financing for building resilience of communities in developing countries. To facilitate adoption, the approaches should be adapted so that they can be technically feasible and culturally desirable to the local context. This paper aims to report an exploratory study to elaborate the existing arrangements to deal with the impacts of disaster and the potential to shift to a more proactive disaster risk financing in Indonesia. Design/methodology/approach A series of stakeholder engagement activities in Semarang and Solo, Indonesia was conducted to ascertain the existing arrangements for disaster risk financing at local government level, the challenges/barriers to the adoption of insurance, education and policies to facilitate the transformation from reactive to proactive process. Thematic analysis was applied to transcribed conversations during interviews, focus groups and workshops. Identification of emerging issues/themes was also guided by the researchers’ notes during the events, and facilitated by qualitative analysis software, Atlas Ti®. This was complemented by an analysis of regulations and documents provided by the local stakeholders. Findings The local governments heavily rely on contingency fund, which is not enough and often significantly delayed to fund recovery and reconstruction of public infrastructure. The use of insurance is limited in both public and private sectors, particularly in the majority of low-income communities. Various barriers and challenges were identified under several categories, namely, institutional, cultural, affordability, lack of awareness and knowledge, insurance arrangement process and lack of trust. The findings also suggest that improving insurance education should involve multiple stakeholders, and both formal and informal routes should be pursued. Originality/value The research fills the gap of knowledge in disaster risk financing in the context of developing countries, specifically in local governments and communities in Indonesia. The findings may be replicable for other developing countries with low adoption of ex ante financial instruments for dealing with the impacts of disaster.

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Dynamic Commitment and the Soft Budget Constraint: An Empirical Test

American Economic Journal Economic Policy ◽

10.1257/pol.2.3.154 ◽

2010 ◽

Vol 2 (3) ◽

pp. 154-179 ◽

Cited By ~ 37

Author(s):

Per Pettersson-Lidbom

Keyword(s):

Local Governments ◽

Central Government ◽

Empirical Test ◽

Budget Constraint ◽

Soft Budget Constraint ◽

Fiscal Transfers ◽

Ex Post ◽

Ex Ante ◽

Commitment Problem ◽

Empirical Framework

This paper develops an empirical framework for the problem of soft budgets which is explicitly based on a dynamic commitment problem, i.e., the inability of a supporting organization to commit itself not to extend more resources ex post to a budget-constrained organization than it was prepared to provide ex ante. Swedish local governments are used as a testing ground since the central government distributed a large number of fiscal transfers. The estimated soft-budget effect is economically significant: on average, a local government increases its debt by more than 20 percent by going from a hard to a soft budget constraint. (JEL D82, G32, L32)

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Fiscal Decentralization in Transition Economies

Voprosy Ekonomiki ◽

10.32609/0042-8736-2004-11-126-141 ◽

2004 ◽

pp. 126-141

Author(s):

A. Chernyavsky ◽

K. Vartapetov

Keyword(s):

Public Finance ◽

Transition Economies ◽

Local Governments ◽

Fiscal Decentralization ◽

Government Control ◽

Finance Reform ◽

Fiscal Transfers ◽

Fiscal Autonomy ◽

Subnational Government ◽

Tax Autonomy

By employing the methodology developed by the OECD the paper assesses the degree of revenue decentralization in Russia in comparison with other post-communist European countries. The paper provides theoretical arguments underpinning fiscal decentralization, analyzes the composition of subnational government revenues, the level of regional and local tax autonomy and types of intergovernmental fiscal transfers. The analysis presents the composition of revenues depending on the degree of subnational and local government control. In comparison with other transition countries fiscal decentralization in Russia is relatively low. It is concluded that Russia's public finance reform has not progressed towards providing greater fiscal autonomy for regional and local governments.

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