Fiscal Decentralization, Economic Growth, and Democratic Governance

Jorge Martinez-Vazquez () and Robert McNab ()

International Center for Public Policy Working Paper Series, at AYSPS, GSU from International Center for Public Policy, Andrew Young School of Policy Studies, Georgia State University

Abstract: The goal of this paper is to review the state of our knowledge in the economics literature on the causal relationship between fiscal decentralization and economic growth and democratic governance, whether these relationships are uni-directional or bi-directional, and to what extent there appear to exist synergies or pre-conditions between fiscal decentralization, on the one hand, and economic growth and democratic governance, on the other.Little systematic empirical research has been dedicated to testing the strength of the bi-directional links between fiscal decentralization and democratic governance. At the present time, we have little knowledge about whether fiscal decentralization is preceded by the emergence of democratic institutions, whether fiscal decentralization encourages the establishment of local democratic institutions, or whether fiscal decentralization and subnational democratic governance occur at the same time. What we know about these issues is based on case studies and conjectures and observations from particular country experiences. The information base on decentralization and governance has been limited because case studies of the fiscal decentralization systems in particular countries often pay little attention to governance issues.There are strong reasons a priori to argue that there should be a symbiotic relationship between fiscal decentralization and democratic governance. Explicitly, and more often implicitly, democratic governance is widely acknowledged in the economics literature as a necessary condition for effective fiscal decentralization. But clearly, there is wide consensus that the relationship also works the other way. Greater fiscal decentralization, especially the devolution or delegation of tax and financing and spending powers to subnational governments promotes democratic governance through representation and accountability.

Keywords: Fiscal Decentralization; Economic Growth; Democratic Governance (search for similar items in EconPapers)
Pages: 43 pages
Date: 1997-10-01
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (20)

Downloads: (external link)
http://ayspsrd.gsu.edu/ays/ispwps/ispwp9707.pdf (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:ays:ispwps:paper9707

Access Statistics for this paper

More papers in International Center for Public Policy Working Paper Series, at AYSPS, GSU from International Center for Public Policy, Andrew Young School of Policy Studies, Georgia State University Contact information at EDIRC.
Bibliographic data for series maintained by Paul Benson ().