IDEAS home Printed from https://ideas.repec.org/p/pra/mprapa/120847.html
   My bibliography  Save this paper

The impact of Fiscal decentralization on regional development

Author

Listed:
  • Elezi, Shiret

Abstract

Fiscal decentralization of power from the central to the local level in North Macedonia officially began on July 1st, 2005, and after 20 years there are some changes but in general more than 50% of LGSUs gets transfers from the central government financing were the institutions are located and not real competences for local services, the capital grants don’t follow the municipal development, migration from rural area to urban is more and more evident, this mean that the system from start creates misbalanced financing of LGSUs. The main issue is fiscal decentralization and balanced regional development are closely related instruments and there is a need when making policies for one of these instruments of economic progress to take into account the both of them. RNM, on the one hand, does not have success in the balanced regional development, and on the other hand, there is a need expressed by the Government and other stakeholders for advancing of decentralization. So far, researches are prepared about balanced regional development and fiscal decentralization, but those researches are thematic and concern either regional development or decentralization separately as separate phenomena and do not go into the interactions and impact of fiscal decentralization on the balanced regional development in RNM. This analysis aims to fill that research gap because these phenomena in real life do not act separately from each other and certainly have mutual influence. This is important for policy makers to know that in the advancing of fiscal decentralization laws and policies, those policies and laws cannot separate these two instruments as separate instruments for achieving national goals. For RNM, in addition to the relatively high unbalanced in regional development, it is even more worrying that this, measured by the coefficient of variation of GDP per capita for the regions, is increasing in the period from 2011 to 2022.

Suggested Citation

  • Elezi, Shiret, 2024. "The impact of Fiscal decentralization on regional development," MPRA Paper 120847, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:120847
    as

    Download full text from publisher

    File URL: https://mpra.ub.uni-muenchen.de/120847/3/MPRA_paper_120847.pdf
    File Function: original version
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Yingyi Qian & Barry R. Weingast, 1997. "Federalism as a Commitment to Reserving Market Incentives," Journal of Economic Perspectives, American Economic Association, vol. 11(4), pages 83-92, Fall.
    2. Andreas P. Kyriacou & Leonel Muinelo-Gallo & Oriol Roca-Sagalés, 2015. "Fiscal decentralization and regional disparities: The importance of good governance," Papers in Regional Science, Wiley Blackwell, vol. 94(1), pages 89-107, March.
    3. Davies, Sara & Hallet, Martin, 2002. "Interactions between national and regional development," HWWA Discussion Papers 207, Hamburg Institute of International Economics (HWWA).
    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. Diego Puga, 2002. "European regional policies in light of recent location theories," Journal of Economic Geography, Oxford University Press, vol. 2(4), pages 373-406, October.
    6. Costas Megir & Danny Quah, 1996. "Regional Convergence Clusters Across Europe," CEP Discussion Papers dp0274, Centre for Economic Performance, LSE.
    7. Raffaele Paci, 1997. "More similar and less equal: Economic growth in the European regions," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol. 133(4), pages 609-634, December.
    8. Akai, Nobuo & Sakata, Masayo, 2002. "Fiscal decentralization contributes to economic growth: evidence from state-level cross-section data for the United States," Journal of Urban Economics, Elsevier, vol. 52(1), pages 93-108, July.
    9. Quah, Danny, 1996. "Regional Convergence Clusters Across Europe," CEPR Discussion Papers 1286, C.E.P.R. Discussion Papers.
    10. Wallace E. Oates & Wallace E. Oates, 2004. "Fiscal Decentralization and Economic Development," Chapters, in: Environmental Policy and Fiscal Federalism, chapter 21, pages 377-383, Edward Elgar Publishing.
    11. Jin, Jing & Zou, Heng-fu, 2002. "How does fiscal decentralization affect aggregate, national, and subnational government size?," Journal of Urban Economics, Elsevier, vol. 52(2), pages 270-293, September.
    12. Davies, Sara & Hallet, Martin, 2002. "Interactions between National and Regional Development," Discussion Paper Series 26187, Hamburg Institute of International Economics.
    13. Enrique López‐Bazo & Esther Vayá & Manuel Artís, 2004. "Regional Externalities And Growth: Evidence From European Regions," Journal of Regional Science, Wiley Blackwell, vol. 44(1), pages 43-73, February.
    14. Krugman, Paul, 1998. "What's New about the New Economic Geography?," Oxford Review of Economic Policy, Oxford University Press and Oxford Review of Economic Policy Limited, vol. 14(2), pages 7-17, Summer.
    15. Robert J. Barro & Xavier Sala-i-Martin, 1991. "Convergence across States and Regions," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 22(1), pages 107-182.
    16. Harry H. Kelejian & Dennis P. Robinson, 1997. "Infrastructure Productivity Estimation And Its Underlying Econometric Specifications: A Sensitivity Analysis," Papers in Regional Science, Wiley Blackwell, vol. 76(1), pages 115-131, January.
    17. McKinnon, Ronald I., 1995. "Intergovernmental competition in Europe with and without a common currency," Journal of Policy Modeling, Elsevier, vol. 17(5), pages 463-478, October.
    18. Oates, Wallace E., 1993. "Fiscal Decentralization and Economic Development," National Tax Journal, National Tax Association, vol. 46(2), pages 237-43, June.
    19. Arellano, M, 1987. "Computing Robust Standard Errors for Within-Groups Estimators," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 49(4), pages 431-434, November.
    20. Ebel, Robert D. & Yilmaz, Serdar, 2002. "On the measurement and impact of fiscal decentralization," Policy Research Working Paper Series 2809, The World Bank.
    21. George Petrakos & Andrés Rodríguez-Pose & Antonis Rovolis, 2005. "Growth, Integration, and Regional Disparities in the European Union," Environment and Planning A, , vol. 37(10), pages 1837-1855, October.
    22. Barro, Robert J & Sala-i-Martin, Xavier, 1992. "Convergence," Journal of Political Economy, University of Chicago Press, vol. 100(2), pages 223-251, April.
    Full references (including those not matched with items on IDEAS)

    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. Roberto Ezcurra & Pedro Pascual, 2008. "Fiscal Decentralization and Regional Disparities: Evidence from Several European Union Countries," Environment and Planning A, , vol. 40(5), pages 1185-1201, May.
    2. Andrés Rodríguez-Pose & Roberto Ezcurra, 2010. "Does decentralization matter for regional disparities? A cross-country analysis," Journal of Economic Geography, Oxford University Press, vol. 10(5), pages 619-644, September.
    3. Łukasz Piętak, 2022. "Regional disparities, transmission channels and country's economic growth," Journal of Regional Science, Wiley Blackwell, vol. 62(1), pages 270-306, January.
    4. 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.
    5. Roberto Ezcurra & Pedro Pascual, 2007. "Regional Polarisation and National Development in the European Union," Urban Studies, Urban Studies Journal Limited, vol. 44(1), pages 99-122, January.
    6. Carlos Gil Canaleta & Pedro Pascual Arzoz & Manuel Rapun Garate, 2004. "Regional Economic Disparities and Decentralisation," Urban Studies, Urban Studies Journal Limited, vol. 41(1), pages 71-94, January.
    7. Jin, Jing & Zou, Heng-fu, 2005. "Fiscal decentralization, revenue and expenditure assignments, and growth in China," Journal of Asian Economics, Elsevier, vol. 16(6), pages 1047-1064, December.
    8. Roberto Ezcurra, 2009. "Does Income Polarization Affect Economic Growth? The Case of the European Regions," Regional Studies, Taylor & Francis Journals, vol. 43(2), pages 267-285.
    9. Roberto Ezcurra, 2007. "Is Income Inequality Harmful for Regional Growth? Evidence from the European Union," Urban Studies, Urban Studies Journal Limited, vol. 44(10), pages 1953-1971, September.
    10. Bibek Adhikari & Saroj Dhital, 2021. "Decentralization and regional convergence: Evidence from night‐time lights data," Economic Inquiry, Western Economic Association International, vol. 59(3), pages 1066-1088, July.
    11. Aristovnik, Aleksander, 2012. "Fiscal decentralization in Eastern Europe: a twenty-year perspective," MPRA Paper 39316, University Library of Munich, Germany.
    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. Maria Carmen Cuerva, 2011. "Dynamics of European agricultural productivity: An analysis of regional convergence," Review of Agricultural and Environmental Studies - Revue d'Etudes en Agriculture et Environnement, INRA Department of Economics, vol. 92(3), pages 237-258.
    14. Andrés Rodríguez-Pose & Roberto Ezcurra, 2011. "Is fiscal decentralization harmful for economic growth? Evidence from the OECD countries," Journal of Economic Geography, Oxford University Press, vol. 11(4), pages 619-643, July.
    15. Ahmad, Ehtisham & Brosio, Giorgio, 2009. "Decentralization and local service provision: what do we know?," LSE Research Online Documents on Economics 38347, London School of Economics and Political Science, LSE Library.
    16. Guerva, Maria Carmen, 2011. "Dynamics of European agricultural productivity: An analysis of regional convergence," Review of Agricultural and Environmental Studies - Revue d'Etudes en Agriculture et Environnement (RAEStud), Institut National de la Recherche Agronomique (INRA), vol. 92(3).
    17. Novotný, JOSEF, 2011. "Convergence and divergence in living standards among regions of the enlarged European Union (1992-2006)," MPRA Paper 34145, University Library of Munich, Germany.
    18. Andrés Rodríguez‐Pose & Ugo Fratesi, 2007. "Regional Business Cycles and the Emergence of Sheltered Economies in the Southern Periphery of Europe," Growth and Change, Wiley Blackwell, vol. 38(4), pages 621-648, December.
    19. Julie Le Gallo & Sandy Dall'erba, 2008. "Spatial and sectoral productivity convergence between European regions, 1975–2000," Papers in Regional Science, Wiley Blackwell, vol. 87(4), pages 505-525, November.
    20. Christian Lessmann, 2009. "Fiscal Decentralization and Regional Disparity: Evidence from Cross-Section and Panel Data," Environment and Planning A, , vol. 41(10), pages 2455-2473, October.

    More about this item

    Keywords

    fiscal decentralization; balanced regional development; GDP; inequality; local revenues; GINI coefficient;
    All these keywords.

    JEL classification:

    • H70 - Public Economics - - State and Local Government; Intergovernmental Relations - - - General
    • H71 - Public Economics - - State and Local Government; Intergovernmental Relations - - - State and Local Taxation, Subsidies, and Revenue
    • H72 - Public Economics - - State and Local Government; Intergovernmental Relations - - - State and Local Budget and Expenditures
    • H76 - Public Economics - - State and Local Government; Intergovernmental Relations - - - Other Expenditure Categories
    • H77 - Public Economics - - State and Local Government; Intergovernmental Relations - - - Intergovernmental Relations; Federalism

    NEP fields

    This paper has been announced in the following NEP Reports:

    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:pra:mprapa:120847. 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: Joachim Winter (email available below). General contact details of provider: https://edirc.repec.org/data/vfmunde.html .

    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.