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Does Fiscal Decentralisation Strengthen Social Capital?: Cross-Country Evidence and the Experiences of Brazil and Indonesia

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  • Luiz de Mello

    (OECD)

Abstract

This paper tests the hypothesis that, by giving people more voice in the government decision-making process, fiscal decentralisation fosters social capital, measured in terms of interpersonal trust. Empirical evidence based on World Values Survey data and seemingly unrelated probit estimations for a cross-section of countries suggests that people living in federal/decentralised countries find it more important to have voice in government decisions than their counterparts living in unitary/centralised countries. Pro-voice attitudes are, in turn, associated with greater social capital. The cross-country estimations are complemented by country-specific regressions for Brazil and Indonesia on account of these countries. experiences with fiscal decentralisation. The results show that the cohorts of individuals that have been exposed to decentralisation are in general more pro-voice (and trustful of strangers in the case of Brazil) than their counterparts that have not been exposed to decentralisation. These findings are not driven by the effects of political liberalisation on people.s attitudes towards the importance of having voice in government decisions and interpersonal trust. La décentralisation budgétaire renforce-t-elle le capital sociétal ? : Données internationales et expérience du Brésil et de l'Indonésie On examine dans ce document l.hypothese selon laquelle en faisant participer davantage les administres a la prise de decision publique, la decentralisation budgetaire accroit le capital societal, mesure a travers la confiance interpersonnelle. Les resultats empiriques obtenus a partir des donnees de l.Etude sur les valeurs mondiales et les estimations probit apparemment non correlees pour un ensemble de pays montrent que les populations des Etats federaux/decentralises jugent plus important d.avoir leur mot a dire dans les decisions publiques que les populations des pays unitaires/centralises. De plus, les attitudes favorables a la participation se traduisent par une augmentation du capital societal. Les estimations internationales sont completees par des regressions specifiquement nationales pour le Bresil et l.Indonesie prenant en compte leur experience de la decentralisation budgetaire. On constate que les cohortes d.individus qui ont connu la decentralisation sont en general plus favorables a une participation (et ont plus confiance dans les etrangers dans le cas du Bresil) que celles qui n.en ont pas beneficie. Ces resultats ne tiennent pas aux effets de la liberalisation politique sur l.attitude des individus a l.egard de l.importance d.une participation aux decisions publiques et sur la confiance interpersonnelle.

Suggested Citation

  • Luiz de Mello, 2010. "Does Fiscal Decentralisation Strengthen Social Capital?: Cross-Country Evidence and the Experiences of Brazil and Indonesia," OECD Economics Department Working Papers 825, OECD Publishing.
  • Handle: RePEc:oec:ecoaaa:825-en
    DOI: 10.1787/5km347ntdnxn-en
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    Cited by:

    1. Luis Diaz‐Serrano & Andrés Rodríguez‐Pose, 2012. "Decentralization, Subjective Well‐Being, and the Perception of Institutions," Kyklos, Wiley Blackwell, vol. 65(2), pages 179-193, May.
    2. Canto, Olga & Ayala, Luis & Paniagua, Milagros & Levy, Horacio & Adiego, Marta, 2012. "Going regional. The effectiveness of different tax-benefit policies in combating child poverty in Spain," EUROMOD Working Papers EM2/12, EUROMOD at the Institute for Social and Economic Research.
    3. Luis Diaz-Serrano & Andrés Rodríguez-Pose, 2015. "Decentralization and the Welfare State: What Do Citizens Perceive?," Social Indicators Research: An International and Interdisciplinary Journal for Quality-of-Life Measurement, Springer, vol. 120(2), pages 411-435, January.
    4. 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.
    5. Liangliang Liu & Donghong Ding & Jun He, 2019. "The welfare effects of fiscal decentralization: a simple model and evidence from China," Quality & Quantity: International Journal of Methodology, Springer, vol. 53(1), pages 417-434, January.
    6. Alberto Batinti & Luca Andriani & Andrea Filippetti, 2019. "Local Government Fiscal Policy, Social Capital and Electoral Payoff: Evidence across Italian Municipalities," Kyklos, Wiley Blackwell, vol. 72(4), pages 503-526, November.
    7. Vassilis Tselios & Andrés Rodríguez-Pose & Andy Pike & John Tomaney & Gianpiero Torrisi, 2012. "Income Inequality, Decentralisation, and Regional Development in Western Europe," Environment and Planning A, , vol. 44(6), pages 1278-1301, June.
    8. Diether W. Beuermann & Maria Amelina, 2018. "Does participatory budgeting improve decentralized public service delivery? Experimental evidence from rural Russia," Economics of Governance, Springer, vol. 19(4), pages 339-379, November.
    9. Luiz de Mello & João Tovar Jalles, 2022. "Decentralisation and the environment: Survey-based and cross-country evidence," Working Papers REM 2022/0215, ISEG - Lisbon School of Economics and Management, REM, Universidade de Lisboa.
    10. Rodríguez-Pose, Andrés & Diaz-Serrano, Luis, 2011. "Decentralization, Happiness, and the Perception of Institutions," CEPR Discussion Papers 8356, C.E.P.R. Discussion Papers.
    11. Sung Hoon Kang & Mark Skidmore, 2018. "The Effects of Natural Disasters on Social Trust: Evidence from South Korea," Sustainability, MDPI, vol. 10(9), pages 1-16, August.
    12. Vassilis Tselios & Andrés Rodríguez-Pose, 2020. "Did Decentralisation Affect Citizens’ Perception of the European Union? The Impact during the Height of Decentralisation in Europe," Economies, MDPI, vol. 8(2), pages 1-26, May.
    13. Andrea Filippetti & Agnese Sacchi, 2016. "Decentralization and economic growth reconsidered: The role of regional authority," Environment and Planning C, , vol. 34(8), pages 1793-1824, December.
    14. Grävingholt, Jörn & von Haldenwang, Christian, 2016. "The promotion of decentralisation and local governance in fragile contexts," IDOS Discussion Papers 20/2016, German Institute of Development and Sustainability (IDOS).
    15. Jose M Alonso & Rhys Andrews, 2019. "Fiscal decentralisation and local government efficiency: Does relative deprivation matter?," Environment and Planning C, , vol. 37(2), pages 360-381, March.

    More about this item

    Keywords

    Brazil; Brésil; capital social; decentralisation; décentralisation; federalism; fédéralisme; Indonesia; Indonésie; social capital;
    All these keywords.

    JEL classification:

    • H11 - Public Economics - - Structure and Scope of Government - - - Structure and Scope of Government
    • H30 - Public Economics - - Fiscal Policies and Behavior of Economic Agents - - - General
    • H77 - Public Economics - - State and Local Government; Intergovernmental Relations - - - Intergovernmental Relations; Federalism

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