Testing the relationship between fiscal decentralization and economic growth, potentially represents a bond, which we want to discuss and analyze paravësisht if indeed there is such a connection or not. In this part they are analyzed in some detail in this connection correlative, which demonstrate the impact of fiscal decentralization on economic growth.
Is there such a connection?
The first question that arises in this matter is whether there is really such a link, and how is this connection. Oates (1993) argues that decentralization fiskas should be parallel with the dynamics of economic development. But this can also be parallel direction, opposite directions.
First applied in the analysis of this topic, the infrastructure and social sector develops faster local changes, and are more effective in economic development than bureaucratic central governments. For example, the question is how precisely 100 million spent on infrastructure or education of local government will encourage more growth than the cost of the same amount, but the central government. Precisely analyzing the relationship between government spending in various managerial levels, and to assess the effectiveness of each was analyzed by many economists as Oates, John Thornton etc. From a closer look at this argument should be seen in connection economic effect.
Oates (1993) argues that there exists a direct link between fiscal decentralization and economic growth.
“There is a direct connection Amongst fiscal decentralization and economic growth.”
Yet there is indirect link between these two elements. It is what we expect and effectiveness of this most important about the effectiveness of subnational governments, local. Other indirect also have the balance of resource allocation between countries and macroeconomic stability (Guess 1997). Changes in macroeconomic stability and fiscal decentralization reform has an indirect impact on economic growth. The imbalance impact hirizontale indirekti levels of government and require the analysis of macroeconomic instability:
• unequal distribution of resources between levels of government by creating a destabilizing environment
• stability (or not) I come from macroeconomic fiscal decentralization gives impacts on economic growth.
Until now ekzostojnë controversial literature of this relationship. So Tanzi (1996) argues on a negative relationship between decentralization and macroeconomic stability, while Seëell (1996) have raised doubts on this link.
The impact of fiscal decentralization on economic development, for better or for you, I give the right economic and legal local governments, the establishment of their business. As quoted in the section above, one of the elements of the correlation between fiscal decentralization and economic development is the level of corruption.
A fiscal decentralization results in the growth of corruption at local government and gives effects on economic development?
Treisman (1999) argues that it may be more corrupt than the central government because of the size of local government (local governments greater have higher levels of corruption due to the impossibility of full control of factor size) and distribution legjislacionale of levels of government.
But some argumetojnë that decentralization may reduce opportunities for corruption, given that local legislation is more visible and more evident the closer to citizens than those of the central government. This makes control and popular opinion, and be high, as well as the sensitivity of the level of corruption publikutpër.
According to Klitgaard 1988
“Corruption increases the pressure big monopoly power and discretion”
DECENTRALIZATION IMPACT ON CORRUPTION.
QW Marrwdhwnia regression exists between decentralization and corruption shows that decentralization is defined as the causative factor or government closer to the people con fuqizuon thus local governments (LGs), and bring a negative effect on corruption. Strengthening the central government reduces the frequency of bribes and the average probability were given bribes to government officials. Increased decentralization to local governments otherwise would mean expansion of spending and personal income, which reduce the average probability of giving bribes. However, only expenditure decentralization is not sufficient to have a significant impact on corruption within the government, the growth of personal income to the government or tax autonomy and its formula funding based on unconditional transfers.
If a political decentralization is necessary to minimize the level to the corruption that?
Political decentralization is a factor which influences the corruption and fiscal decentralization is controlled by these two elements. Availability of direct democracy mechanism in local governments generally improves incidents of corruption independently as well as in interaction with fiscal decentralization.
But the goal remains un corruption not as factor analysis, as perhaps he could be put out for an economy, but on the question of whether a fiscal decentralization leads to corruption. If so, the effects of economic change in the government are obvious. Initially due to the high level of corruption, the level of the state budget will be smaller, and therefore government transfers, government spending and investment will vary drastically.
TYPE OF DECENTRALIZATION
An empirical analysis on the correlation connection of decentralization and economic development requires a broad analysis of financial results of many countries. But as I have set out in the Introduction, the primary goal of this topic is not conducting such an analysis, but analytics theoretical results from many studies.
Combining the dimensions of the World Bank with the views of other scholars who emphasize the importance of political decentralization, it is possible to advance to catch the features of the fiscal decentralization system with the following variables:
1. Political Structure: Possible measures supranational government, federal state or non-federal state, the number of levels of sub-national government.
2. Intergovernmental Transfer: possible measures to transfer the sub-national government revenues as a percentage of total revenue of sub-national government.
3. Tax Autonomy: Possible measures of tax revenue sub-national government as a percentage of total revenue of sub-national government, that is, their power of taxation.
4. Costs: Possible measures for cost sub-national government as a percentage of total government expenditure.
5.Others income: Possible measures of income sub-national government as a percentage of total government revenue.
6. Borrowing Power: possible measures to determine whether sub-national government has the power to borrow.
7. Decentralization Policy, possible measures of state elections, municipal elections.
8.Kufizimet large budget: possibilities when borrowing activities sub-national government are guaranteed.
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