IDEAS home Printed from https://ideas.repec.org/a/kap/copoec/v15y2004i1p27-76.html
   My bibliography  Save this article

The Optimal Decentralisation of Government Activity: Normative Recommendations for the European Constitution

Author

Listed:
  • Fritz Breuss
  • Markus Eller

Abstract

This article surveys the research on the efficient assignment of policy tasks to different levels of government and applies the results on the delimitation of competencies within the EU. A precise derivation of an optimal degree of decentralisation is not possible on purely theoretical grounds, it has to be determined case-by-case. Systematic evidence on direct relationships between economic performance and fiscal decentralisation is both scarce and ambiguous. Comparing the actual and prospective delimitation of EU-competencies with the normative recommendations, remarkable discrepancies arise in the fields of agriculture and defence. The establishment of a flexible assignment scheme is an undeniable necessity in order to guarantee reversibility and to cope efficiently with changing conditions. In this respect, the European Convention has delivered insufficient results in its final draft Treaty as of July 2003.

Suggested Citation

  • Fritz Breuss & Markus Eller, 2004. "The Optimal Decentralisation of Government Activity: Normative Recommendations for the European Constitution," Constitutional Political Economy, Springer, vol. 15(1), pages 27-76, March.
    • Handle: RePEc:kap:copoec:v:15:y:2004:i:1:p:27-76
    as

    Download full text from publisher

    File URL: http://journals.kluweronline.com/issn/1043-4062/contents
    Download Restriction: Access to the full text of the articles in this series is restricted.
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Oates, Wallace E, 1985. "Searching for Leviathan: An Empirical Study," American Economic Review, American Economic Association, vol. 75(4), pages 748-757, September.
    2. Bruni S. Frey, 1999. "The New Democratic Federalism For Europe," Books, Edward Elgar Publishing, number 1679 edited by Reiner Eichenberger.
    3. Fisman, Raymond & Gatti, Roberta, 2002. "Decentralization and corruption: evidence across countries," Journal of Public Economics, Elsevier, vol. 83(3), pages 325-345, March.
    4. Davoodi, Hamid & Zou, Heng-fu, 1998. "Fiscal Decentralization and Economic Growth: A Cross-Country Study," Journal of Urban Economics, Elsevier, vol. 43(2), pages 244-257, March.
    5. Alberto Alesina & Ignazio Angeloni & Ludger Schuknecht, 2005. "What does the European Union do?," Public Choice, Springer, vol. 123(3), pages 275-319, June.
    6. Baldwin, Richard E. & Krugman, Paul, 2004. "Agglomeration, integration and tax harmonisation," European Economic Review, Elsevier, vol. 48(1), pages 1-23, February.
    7. Inman, Robert P. & Rubinfeld, Daniel L., 1992. "Fiscal federalism in Europe : Lessons from the United States experience," European Economic Review, Elsevier, vol. 36(2-3), pages 654-660, April.
    8. Bureau, Dominique & Champsaur, Paul, 1992. "Fiscal Federalism and European Economic Unification," American Economic Review, American Economic Association, vol. 82(2), pages 88-92, May.
    9. Sinn, Hans-Werner, 1994. "How Much Europe? Subsidiarity, Centralization and Fiscal Competition," Scottish Journal of Political Economy, Scottish Economic Society, vol. 41(1), pages 85-107, February.
    10. Cremer, Jaques & Estache, Antonio & Seabright, Paul & DEC, 1994. "The decentralization of public services : lessons from the theory of the firm," Policy Research Working Paper Series 1345, The World Bank.
    11. Rigmar Osterkamp & Markus Eller, 2003. "How Decentralised Is Government Activity?," ifo DICE Report, ifo Institute - Leibniz Institute for Economic Research at the University of Munich, vol. 1(1), pages 32-35, 02.
    12. Vaubel, Roland, 2002. "Die Politische Ökonomie des Europäischen Verfassungskonvents," Wirtschaftsdienst – Zeitschrift für Wirtschaftspolitik (1949 - 2007), ZBW - Leibniz Information Centre for Economics, vol. 82(10), pages 636-640.
    13. Friedrich Schneider & Alexander Wagner, 2000. "Korporatismus im europäischen Vergleich: Förderung makroökonomischer Rahmenbedingungen?," Economics working papers 2000-15, Department of Economics, Johannes Kepler University Linz, Austria.
    14. Fuest, Clemens & Huber, Bernd, 2001. "Tax Competition and Tax Coordination in a Median Voter Model," Public Choice, Springer, vol. 107(1-2), pages 97-113, April.
    15. Goodspeed, Timothy J., 2002. "Tax competition and tax structure in open federal economies: Evidence from OECD countries with implications for the European Union," European Economic Review, Elsevier, vol. 46(2), pages 357-374, February.
    16. Rigmar Osterkamp & Markus Eller, 2003. "Functional Decentralisation of Government Activity," ifo DICE Report, ifo Institute - Leibniz Institute for Economic Research at the University of Munich, vol. 1(3), pages 36-42, 02.
    17. Torsten Persson & Gerard Roland & Guido Tabellini, "undated". "The Theory of Fiscal Federalism: What Does it Mean for Europe?," Working Papers 101, IGIER (Innocenzo Gasparini Institute for Economic Research), Bocconi University.
    18. Sinn, Hans-Werner, . "The New Systems Competition: YRJÖ Jahnsson Lectures," Monographs in Economics, University of Munich, Department of Economics, number 19614, November.
    19. Brennan,Geoffrey & Buchanan,James M., 2006. "The Power to Tax," Cambridge Books, Cambridge University Press, number 9780521027922, January.
    20. Casella, Alessandra & Frey, Bruno, 1992. "Federalism and clubs : Towards an economic theory of overlapping political jurisdictions," European Economic Review, Elsevier, vol. 36(2-3), pages 639-646, April.
    21. Nelson, Michael A, 1987. "Searching for Leviathan: Comment and Extension," American Economic Review, American Economic Association, vol. 77(1), pages 198-204, March.
    22. Roubini, Nouriel & Sachs, Jeffrey D., 1989. "Political and economic determinants of budget deficits in the industrial democracies," European Economic Review, Elsevier, vol. 33(5), pages 903-933, May.
    23. Olson, Mancur, Jr, 1969. "The Principle of "Fiscal Equivalence": The Division of Responsibilities among Different Levels of Government," American Economic Review, American Economic Association, vol. 59(2), pages 479-487, May.
    24. Mueller, Dennis C, 1997. "Federalism and the European Union: A Constitutional Perspective," Public Choice, Springer, vol. 90(1-4), pages 255-280, March.
    25. Ulrich Thießen, 2003. "Fiscal Decentralisation and Economic Growth in High-Income OECD Countries," Fiscal Studies, Institute for Fiscal Studies, vol. 24(3), pages 237-274, September.
    26. Huther, Jeff & Shah, Anwar, 1998. "Applying a simple measure of good governance to the debate on fiscal decentralization," Policy Research Working Paper Series 1894, The World Bank.
    27. Hooghe, Liesbet & Marks, Gary, 2001. "Types of Multi-Level Governance," European Integration online Papers (EIoP), European Community Studies Association Austria (ECSA-A), vol. 5, October.
    28. Ulrich Thießen, 2000. "Fiscal Federalism in Western European and Selected Other Countries: Centralization or Decentralization? What Is Better for Economic Growth?," Discussion Papers of DIW Berlin 224, DIW Berlin, German Institute for Economic Research.
    29. Ms. Era Dabla-Norris & Mr. Paul R Wade, 2002. "The Challenge of Fiscal Decentralization in Transition Countries," IMF Working Papers 2002/103, International Monetary Fund.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Fritz Breuss & Markus Eller, 2004. "Decentralising the public sector: Fiscal Decentralisation and Economic Growth: Is there Really a Link?," ifo DICE Report, ifo Institute - Leibniz Institute for Economic Research at the University of Munich, vol. 2(1), pages 3-9, October.
    2. Petrick, Martin, 2008. "Theoretical and methodological topics in the institutional economics of European agriculture. With applications to farm organisation and rural credit arrangements," Studies on the Agricultural and Food Sector in Transition Economies, Leibniz Institute of Agricultural Development in Transition Economies (IAMO), volume 45, number 92318.
    3. Paul Hallwood & Ronald MacDonald, 2008. "A Review of the Empirical Evidence on the Effects of Fiscal Decentralization on Economic Efficiency: With Comments on Tax Devolution to Scotland," Working papers 2008-46, University of Connecticut, Department of Economics.
    4. repec:ces:ifodic:v:2:y:2004:i:1:p:14567688 is not listed on IDEAS
    5. Fritz Breuss, 2006. "Teilstudie 4: Europäische Wirtschaftspolitik: Binnenmarkt, WWU, Lissabon, Erweiterung," WIFO Studies, WIFO, number 27443.
    6. Biesenbender, Jan, 2011. "The Dynamics of Treaty Change – Measuring the Distribution of Power in the European Union," European Integration online Papers (EIoP), European Community Studies Association Austria (ECSA-A), vol. 15, October.
    7. Jerome Schafer, 2014. "European Commission Officials' Policy Attitudes," Journal of Common Market Studies, Wiley Blackwell, vol. 52(4), pages 911-927, July.
    8. Marco Montanari, 2006. "Between European integration and regional autonomy: the case of Italy from an economic perspective," Constitutional Political Economy, Springer, vol. 17(4), pages 277-301, December.
    9. Franz Sinabell & Hans Pitlik & Erwin Schmid, 2009. "Zukunft der Finanzierung und Ausgaben der Gemeinsamen Agrarpolitik," WIFO Studies, WIFO, number 36165.
    10. Fritz Breuss, 2009. "Mangelnde "Europäisierung" der nationalen Konjunkturzyklen als Risiko für den Euro-Raum," WIFO Monatsberichte (monthly reports), WIFO, vol. 82(2), pages 125-138, February.
    11. Veshi Denard, 2020. "The EU Regulatory Competition in Asylum Law," Central European Journal of Public Policy, Sciendo, vol. 14(1), pages 19-30, June.
    12. Fritz Breuss, 2009. "Lacking "Europeanisation" of National Business Cycles as a Risk for the Euro Area," Austrian Economic Quarterly, WIFO, vol. 14(2), pages 91-104, June.
    13. Sinabell, Franz & Schmid, Erwin & Pitlik, Hans, 2009. "Farm Payments in the EU – their Distribution and Justification," 2009 Conference, August 16-22, 2009, Beijing, China 51800, International Association of Agricultural Economists.
    14. Schmidtchen, Dieter, 2004. "Demokratiedefizit in Europa? Über Dichtung und Wahrheit in der europäischen Verfassungsdebatte," CSLE Discussion Paper Series 2004-08, Saarland University, CSLE - Center for the Study of Law and Economics.
    15. Philipp Paulus, 2004. "The fiscal stability impact of monetary unions - looking beneath the Stability Pact debate," Otto-Wolff-Institut Discussion Paper Series 05/2004, Otto-Wolff-Institut für Wirtschaftsordnung, Köln, Deutschland.
    16. Fritz Breuss & Markus Eller, 2004. "Decentralising the public sector: Fiscal Decentralisation and Economic Growth: Is there Really a Link?," ifo DICE Report, ifo Institute - Leibniz Institute for Economic Research at the University of Munich, vol. 2(01), pages 3-9, October.
    17. Hans Pitlik, 2007. "Spending Priorities in the EU Budget 2007–2013: The Perspective of Fiscal Federalism," Austrian Economic Quarterly, WIFO, vol. 12(1), pages 11-24, March.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Jorge Martinez-Vazquez & Santiago Lago-Peñas & Agnese Sacchi, 2017. "The Impact Of Fiscal Decentralization: A Survey," Journal of Economic Surveys, Wiley Blackwell, vol. 31(4), pages 1095-1129, September.
    2. Reingewertz, Yaniv, 2014. "Fiscal Decentralization - a Survey of the Empirical Literature," MPRA Paper 59889, University Library of Munich, Germany.
    3. Wallace Oates, 2005. "Toward A Second-Generation Theory of Fiscal Federalism," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 12(4), pages 349-373, August.
    4. Martinez-Vazquez, Jorge & McNab, Robert M., 2003. "Fiscal Decentralization and Economic Growth," World Development, Elsevier, vol. 31(9), pages 1597-1616, September.
    5. Lars P. Feld & Gebhard Kirchgässner & Christoph A. Schaltegger, 2004. "Fiscal Federalism and Economic Performance: Evidence from Swiss Cantons," Marburg Working Papers on Economics 200420, Philipps-Universität Marburg, Faculty of Business Administration and Economics, Department of Economics (Volkswirtschaftliche Abteilung).
    6. Lars P. Feld & Horst Zimmermann & Thomas Döring, 2004. "Federalism, Decentralization, and Economic Growth," Marburg Working Papers on Economics 200430, Philipps-Universität Marburg, Faculty of Business Administration and Economics, Department of Economics (Volkswirtschaftliche Abteilung).
    7. Stefan Voigt & Lorenz Blume, 2012. "The economic effects of federalism and decentralization—a cross-country assessment," Public Choice, Springer, vol. 151(1), pages 229-254, April.
    8. Christian Leßmann, 2006. "Fiscal Decentralization and Regional Disparity: A Panel Data Approach for OECD Countries," ifo Working Paper Series 25, ifo Institute - Leibniz Institute for Economic Research at the University of Munich.
    9. Stephen Billings & Thomas Thibodeau, 2011. "Intrametropolitan Decentralization: Is Government Structure Capitalized in Residential Property Values?," The Journal of Real Estate Finance and Economics, Springer, vol. 42(4), pages 416-450, May.
    10. Wallace E. Oates & Wallace E. Oates, 2004. "Fiscal Competition and European Union: Contrasting Perspectives," Chapters, in: Environmental Policy and Fiscal Federalism, chapter 10, pages 182-194, Edward Elgar Publishing.
    11. Lars P. Feld & Horst Zimmermann & Thomas Döring, 2003. "Föderalismus, Dezentralität und Wirtschaftswachstum," Vierteljahrshefte zur Wirtschaftsforschung / Quarterly Journal of Economic Research, DIW Berlin, German Institute for Economic Research, vol. 72(3), pages 361-377.
    12. Whitney Buser, 2011. "The impact of fiscal decentralization on economics performance in high-income OECD nations: an institutional approach," Public Choice, Springer, vol. 149(1), pages 31-48, October.
    13. Ligthart, Jenny E. & van Oudheusden, Peter, 2015. "In government we trust: The role of fiscal decentralization," European Journal of Political Economy, Elsevier, vol. 37(C), pages 116-128.
    14. Liesbet Hooghe, Gary Marks, 2002. "Types of Multi-Level Governance," Les Cahiers européens de Sciences Po 3, Centre d'études européennes (CEE) at Sciences Po, Paris.
    15. Soko Aida, 2018. "(Dis)Advantages af Decentralization Models Driven by Non-Economic Reasons: The Case of Bosnia and Herzegovina," South East European Journal of Economics and Business, Sciendo, vol. 13(1), pages 81-92, June.
    16. Smith, Heidi Jane M. & Revell, Keith D., 2016. "Micro-Incentives and Municipal Behavior: Political Decentralization and Fiscal Federalism in Argentina and Mexico," World Development, Elsevier, vol. 77(C), pages 231-248.
    17. G. Gulsun Arikan, 2004. "Fiscal Decentralization: A Remedy for Corruption?," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 11(2), pages 175-195, March.
    18. Kellermann, Kersten & Schlag, Carsten-Henning, 2012. "Small, Smart, Special: Der Mikrostaat Liechtenstein und sein Budget," KOFL Working Papers 13, Konjunkturforschungsstelle Liechtenstein (KOFL), Vaduz.
    19. Lkhagvadorj, Ariunaa, 2010. "Fiscal Federalism and Decentralization in Mongolia," MPRA Paper 28758, University Library of Munich, Germany, revised Mar 2010.
    20. Gebhard Kirchgassner, 2002. "The effects of fiscal institutions on public finance: a survey of the empirical evidence," Chapters, in: Stanley L. Winer & Hirofumi Shibata (ed.), Political Economy and Public Finance, chapter 9, Edward Elgar Publishing.

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:kap:copoec:v:15:y:2004:i:1:p:27-76. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Sonal Shukla or Springer Nature Abstracting and Indexing (email available below). General contact details of provider: http://www.springer.com .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.