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Political Determinants of Regional Financing: The Case of Spain

Author

Listed:
  • Juan Luis Gómez Reino

    (Asian Development Bank, Manila, Philippines)

  • Ana Herrero Alcalde

    (Departamento de Economía Aplicada y Gestión Pública, Universidad Nacional de Educación a Distancia, Madrid, Spain)

Abstract

We contribute to the literature on the political determinants of regional financing by analyzing the case of Spain, a largely decentralized country. Using a dynamic panel data model, we argue that the rise in relative bargaining power of regional parties in Spain can partly explain the increase in budgetary allocations to regions observed during the period 1986–2006. In particular, our results show that the rise in parliamentary representation of the nationalist Catalonian party, measured by the Banzhaf voting power index, has been a significant factor in ensuring increasing financial resources to regional governments. In addition, the traditional hypotheses of the political economy literature on legislative apportionment are tested for the case of Spain, with no significant results observed. The overall distribution of regional financing in Spain seems to be in general well aligned with the basic economic principles of efficiency and equity recommended for such a system.

Suggested Citation

  • Juan Luis Gómez Reino & Ana Herrero Alcalde, 2011. "Political Determinants of Regional Financing: The Case of Spain," Environment and Planning C, , vol. 29(5), pages 802-820, October.
    • Handle: RePEc:sae:envirc:v:29:y:2011:i:5:p:802-820
    DOI: 10.1068/c1058r
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    References listed on IDEAS

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    1. Solé-Ollé, Albert & Sorribas-Navarro, Pilar, 2008. "The effects of partisan alignment on the allocation of intergovernmental transfers. Differences-in-differences estimates for Spain," Journal of Public Economics, Elsevier, vol. 92(12), pages 2302-2319, December.
    2. Robin Boadway & Anwar Shah, 2007. "Intergovernmental Fiscal Transfers : Principles and Practice," World Bank Publications - Books, The World Bank Group, number 7171.
    3. Roy Bahl & Musharraf Cyan, 2011. "Tax Assignment: Does the Practice Match the Theory?," Environment and Planning C, , vol. 29(2), pages 264-280, April.
    4. Fabio Padovano, 2007. "The Politics and Economics of Regional Transfers," Books, Edward Elgar Publishing, number 4058.
    5. Jorge Martinez-Vazquez & Bob Searle, 2007. "Challenges in the Design of Fiscal Equalization and Intergovernmental Transfers," Springer Books, in: Jorge Martinez-Vazquez & Bob Searle (ed.), Fiscal Equalization, chapter 0, pages 3-10, Springer.
    6. Manuel Arellano & Stephen Bond, 1991. "Some Tests of Specification for Panel Data: Monte Carlo Evidence and an Application to Employment Equations," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 58(2), pages 277-297.
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    Cited by:

    1. Andrés Rodríguez-Pose & Yannis Psycharis & Vassilis Tselios, 2016. "Politics and Investment: Examining the Territorial Allocation of Public Investment in Greece," Regional Studies, Taylor & Francis Journals, vol. 50(7), pages 1097-1112, July.
    2. Daniel Aparicio-Pérez & Maria Teresa Balaguer-Coll & Emili Tortosa-Ausina, 2021. "Politics against Economics: The Case of Spanish Regional Financing," Working Papers 2021/15, Economics Department, Universitat Jaume I, Castellón (Spain).
    3. Yannis Psycharis & Stavroula Iliopoulou & Maria Zoi & Panagiotis Pantazis, 2021. "Beyond the socio‐economic use of fiscal transfers: The role of political factors in Greek intergovernmental grant allocations," Regional Science Policy & Practice, Wiley Blackwell, vol. 13(3), pages 982-1008, June.

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