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Do Formulas Reduce Political Influence on Intergovernmental Grants? Evidence from Tanzania

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  • Maarten Allers
  • Lewis Ishemoi

Abstract

Sub-national governments usually depend on the central government for a large share of their revenues. Therefore, a fair allocation of intergovernmental grants is essential for financing vital local services like education and healthcare. In Tanzania, and many other countries, regions that are better represented in the national parliament receive significantly more funds than others. Recently, Tanzania replaced the previously existing discretionary method of grant allocation by allocation formulas. We study whether this has reduced the effect of malapportionment on grant allocation. Surprisingly, we find that formula allocation does not significantly change this effect. This has important policy implications.

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  • Maarten Allers & Lewis Ishemoi, 2011. "Do Formulas Reduce Political Influence on Intergovernmental Grants? Evidence from Tanzania," Journal of Development Studies, Taylor & Francis Journals, vol. 47(12), pages 1781-1797.
    • Handle: RePEc:taf:jdevst:v:47:y:2011:i:12:p:1781-1797
    DOI: 10.1080/00220388.2011.598512
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    Cited by:

    1. Takaaki Masaki, 2016. "The impact of intergovernmental transfers on local revenue generation in Africa: Evidence from Tanzania," WIDER Working Paper Series wp-2016-113, World Institute for Development Economic Research (UNU-WIDER).
    2. Masaki, Takaaki, 2018. "The impact of intergovernmental transfers on local revenue generation in Sub-Saharan Africa: Evidence from Tanzania," World Development, Elsevier, vol. 106(C), pages 173-186.
    3. Kayode Taiwo & Linda G. Veiga, 2020. "Is there an “invisible hand” in the formula-based intergovernmental transfers in Nigeria?," NIPE Working Papers 02/2020, NIPE - Universidade do Minho.
    4. Fabio Padovano, 2014. "Distribution of transfers and soft budget spending behaviors: evidence from Italian regions," Public Choice, Springer, vol. 161(1), pages 11-29, October.
    5. Maarten A Allers & Lewis J Ishemoi, 2011. "Equalising Spending Needs of Subnational Governments in a Developing Country: The Case of Tanzania," Environment and Planning C, , vol. 29(3), pages 487-501, June.
    6. Takaaki Masaki, 2016. "The impact of intergovernmental transfers on local revenue generation in Africa: Evidence from Tanzania," WIDER Working Paper Series 113, World Institute for Development Economic Research (UNU-WIDER).

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