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Why countries are fiscally decentralizing

Arzaghi, Mohammed and Henderson, J. Vernon (2005) Why countries are fiscally decentralizing. Journal of Public Economics, 89 (7). pp. 1157-1189. ISSN 0047-2727

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Identification Number: 10.1016/j.jpubeco.2003.10.009


This paper models and empirically investigates underlying forces that promote governmental decentralization, or effective federalism, in the world over the last 25 years. A move to a federal system is based on the demand by hinterland regions for local autonomy, which increases with national income growth, greater relative hinterland population, and increasing national population. It is influenced as well by the degree of democratization nationally and locally. Decentralization is measured by both institutional indices indicating greater devolution of power to local governments and the share of local governments in national government consumption. Empirically, the paper finds that decentralization changes in ways predicted, in particular it increases with economic growth, country size, and population. Institutional structures based on colonial experience and initial constitutional provisions also matter.

Item Type: Article
Official URL:
Additional Information: © 2004 Elsevier B.V.
Divisions: Geography & Environment
Subjects: G Geography. Anthropology. Recreation > G Geography (General)
H Social Sciences > HB Economic Theory
H Social Sciences > HJ Public Finance
JEL classification: R - Urban, Rural, and Regional Economics > R0 - General
Date Deposited: 04 Dec 2014 11:45
Last Modified: 08 Jul 2024 07:24

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