IDEAS home Printed from https://ideas.repec.org/p/unu/wpaper/wp-2016-113.html
   My bibliography  Save this paper

The impact of intergovernmental transfers on local revenue generation in Africa: Evidence from Tanzania

Author

Listed:
  • Takaaki Masaki

Abstract

Do intergovernmental transfers reduce revenues collected by local government authorities (LGAs) There is already a well-established body of literature in public finance, which argues that intergovernmental grants 'crowd out' local revenues. Most existing studies, however, explore the fiscal implications of intergovernmental transfers in high-income countries where sound fiscal systems are taken for granted.

Suggested Citation

  • 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).
  • Handle: RePEc:unu:wpaper:wp-2016-113
    as

    Download full text from publisher

    File URL: https://www.wider.unu.edu/sites/default/files/wp2016-113.pdf
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Emilie Caldeira & Grégoire Rota-Graziosi, 2014. "The Crowding-in Effect of Simple Unconditional Central Grants on Local Own-Source Revenue: The Case of Benin," Journal of African Economies, Centre for the Study of African Economies, vol. 23(3), pages 361-387.
    2. Fabrice Murtin & Romain Wacziarg, 2014. "The democratic transition," Journal of Economic Growth, Springer, vol. 19(2), pages 141-181, June.
    3. Zhuravskaya, Ekaterina V., 2000. "Incentives to provide local public goods: fiscal federalism, Russian style," Journal of Public Economics, Elsevier, vol. 76(3), pages 337-368, June.
    4. Nyange, David & Tschirley, David & Nassoro, Hussein & Gaspar, Abeid, 2014. "Agricultural Produce Cess In Tanzania: Policy Options For Fiscal Reforms," Miscellaneous Publications 198744, Michigan State University, Department of Agricultural, Food, and Resource Economics.
    5. Fjeldstad, Odd-helge & Semboja, Joseph, 2001. "Why People Pay Taxes: The Case of the Development Levy in Tanzania," World Development, Elsevier, vol. 29(12), pages 2059-2074, December.
    6. Fernanda Brollo & Tommaso Nannicini & Roberto Perotti & Guido Tabellini, 2013. "The Political Resource Curse," American Economic Review, American Economic Association, vol. 103(5), pages 1759-1796, August.
    7. David Roodman, 2009. "How to do xtabond2: An introduction to difference and system GMM in Stata," Stata Journal, StataCorp LP, vol. 9(1), pages 86-136, March.
    8. Sanoh, Aly, 2015. "Rainfall Shocks, Local Revenues, and Intergovernmental Transfer in Mali," World Development, Elsevier, vol. 66(C), pages 359-370.
    9. E. Caldeira & Grégoire Rota-Graziosi, 2014. "The Crowding-in Effect of Simple Unconditional Central Grants on Local Own-Source Revenue: The Case of Benin," Post-Print hal-01998449, HAL.
    10. Keele, Luke & Kelly, Nathan J., 2006. "Dynamic Models for Dynamic Theories: The Ins and Outs of Lagged Dependent Variables," Political Analysis, Cambridge University Press, vol. 14(2), pages 186-205, April.
    11. Hahn, Jinyong & Hausman, Jerry, 2002. "Notes on bias in estimators for simultaneous equation models," Economics Letters, Elsevier, vol. 75(2), pages 237-241, April.
    12. Bodea, Cristina & Lebas, Adrienne, 2016. "The Origins of Voluntary Compliance: Attitudes toward Taxation in Urban Nigeria – CORRIGENDUM," British Journal of Political Science, Cambridge University Press, vol. 46(1), pages 239-240, January.
    13. Kasara, Kimuli, 2007. "Tax Me If You Can: Ethnic Geography, Democracy, and the Taxation of Agriculture in Africa," American Political Science Review, Cambridge University Press, vol. 101(1), pages 159-172, February.
    14. Blundell, Richard & Bond, Stephen, 1998. "Initial conditions and moment restrictions in dynamic panel data models," Journal of Econometrics, Elsevier, vol. 87(1), pages 115-143, August.
    15. Bernard Dafflon & Thierry Madiès, 2013. "The Political Economy of Decentralization in Sub-Saharan Africa : A New Implementation Model in Burkina Faso, Ghana, Kenya, and Senegal," World Bank Publications - Books, The World Bank Group, number 12235.
    16. Gina M. S. Lambright, 2014. "Opposition Politics and Urban Service Delivery in Kampala, Uganda," Development Policy Review, Overseas Development Institute, vol. 32(s1), pages 39-60, July.
    17. Mr. Roger Nord & Mr. Yuri V Sobolev & Mr. David G. Dunn & Alejandro Hajdenberg & Mr. Niko A Hobdari & Samar Maziad & Mr. Stephane Roudet, 2009. "Tanzania: The Story of an African Transition," IMF Departmental Papers / Policy Papers 2009/002, International Monetary Fund.
    18. Yener AltunbaÅŸ & John Thornton, 2012. "Fiscal Decentralization and Governance," Public Finance Review, , vol. 40(1), pages 66-85, January.
    19. Skidmore, Mark, 1999. "Tax and Expenditure Limitations and the Fiscal Relationships between State and Local Governments," Public Choice, Springer, vol. 99(1-2), pages 77-102, April.
    20. Timothy Besley & Torsten Persson, 2013. "Taxation and Development," STICERD - Economic Organisation and Public Policy Discussion Papers Series 041, Suntory and Toyota International Centres for Economics and Related Disciplines, LSE.
    21. 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.
    22. Benjamin A. Olken, 2007. "Monitoring Corruption: Evidence from a Field Experiment in Indonesia," Journal of Political Economy, University of Chicago Press, vol. 115(2), pages 200-249.
    23. Majumdar, Sumon & Mani, Anandi & Mukand, Sharun W., 2004. "Politics, information and the urban bias," Journal of Development Economics, Elsevier, vol. 75(1), pages 137-165, October.
    24. Todd Moss & Gunilla Pettersson & Nicolas van de Walle, 2006. "An Aid-Institutions Paradox? A Review Essay on Aid Dependency and State Building in Sub-Saharan Africa," Working Papers 74, Center for Global Development.
    25. Gisselquist, Rachel M. & Leiderer, Stefan & Niño-Zarazúa, Miguel, 2016. "Ethnic Heterogeneity and Public Goods Provision in Zambia: Evidence of a Subnational “Diversity Dividend”," World Development, Elsevier, vol. 78(C), pages 308-323.
    26. Marshall Burke & Erick Gong & Kelly Jones, 2015. "Income Shocks and HIV in Africa," Economic Journal, Royal Economic Society, vol. 125(585), pages 1157-1189, June.
    27. Danielle Resnick, 2014. "Urban Governance and Service Delivery in African Cities: The Role of Politics and Policies," Development Policy Review, Overseas Development Institute, vol. 32(s1), pages 3-17, July.
    28. Buettner, Thiess & Wildasin, David E., 2006. "The dynamics of municipal fiscal adjustment," Journal of Public Economics, Elsevier, vol. 90(6-7), pages 1115-1132, August.
    29. David Stasavage, 2005. "Democracy and Education Spending in Africa," American Journal of Political Science, John Wiley & Sons, vol. 49(2), pages 343-358, April.
    30. repec:cep:stieop:41 is not listed on IDEAS
    31. Mogues, Tewodaj & Benin, Samuel, 2012. "Do External Grants to District Governments Discourage Own Revenue Generation? A Look at Local Public Finance Dynamics in Ghana," World Development, Elsevier, vol. 40(5), pages 1054-1067.
    32. Anja Shortland & Katerina Christopoulou & Charalampos Makatsoris, 2013. "War and famine, peace and light? The economic dynamics of conflict in Somalia 1993–2009," Journal of Peace Research, Peace Research Institute Oslo, vol. 50(5), pages 545-561, September.
    33. Varsha Venugopal & Serdar Yilmaz, 2010. "Decentralization in Tanzania: An assessment of local government discretion and accountability," Public Administration & Development, Blackwell Publishing, vol. 30(3), pages 215-231, August.
    34. David Roodman, 2009. "A Note on the Theme of Too Many Instruments," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 71(1), pages 135-158, February.
    35. Ritva Reinikka & Jakob Svensson, 2005. "Fighting Corruption to Improve Schooling: Evidence from a Newspaper Campaign in Uganda," Journal of the European Economic Association, MIT Press, vol. 3(2-3), pages 259-267, 04/05.
    36. Bodea, Cristina & LeBas, Adrienne, 2016. "The Origins of Voluntary Compliance: Attitudes toward Taxation in Urban Nigeria," British Journal of Political Science, Cambridge University Press, vol. 46(1), pages 215-238, January.
    37. repec:wly:soecon:v:81:2:y:2014:p:435-456 is not listed on IDEAS
    38. 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.
    39. repec:hal:spmain:info:hdl:2441/5m0od0o9jn9pqbdmos7fpt28hg is not listed on IDEAS
    40. Windmeijer, Frank, 2005. "A finite sample correction for the variance of linear efficient two-step GMM estimators," Journal of Econometrics, Elsevier, vol. 126(1), pages 25-51, May.
    41. James R. Hines & Richard H. Thaler, 1995. "The Flypaper Effect," Journal of Economic Perspectives, American Economic Association, vol. 9(4), pages 217-226, Fall.
    42. Jameson Boex & Jorge Martinez-Vazquez, 2006. "Local Government Finance Reform in Developing Countries," Palgrave Macmillan Books, Palgrave Macmillan, number 978-0-230-59949-9, December.
    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. 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).
    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, 2022. "Intergovernmental Transfers and Own Revenues of Subnational Governments in Nigeria," Hacienda Pública Española / Review of Public Economics, IEF, vol. 240(1), pages 31-59, March.
    4. Jorge Pablo Puig & Alberto Porto, 2021. "On the interaction between own revenues and intergovernmental transfers. Evidence from Argentinean local governments," Asociación Argentina de Economía Política: Working Papers 4508, Asociación Argentina de Economía Política.
    5. Manuel E. Lago & Santiago Lago-Peñas & Jorge Martinez-Vazquez, 2024. "On the effects of intergovernmental grants: a survey," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 31(3), pages 856-908, June.
    6. Jorge Puig & Alberto Porto, 2022. "On the fiscal behavior of subnational governments. A long-term vision for Argentina," Asociación Argentina de Economía Política: Working Papers 4588, Asociación Argentina de Economía Política.
    7. Jean Raoul NKOUDOU BENGONO & Boniface EPO NGAH & Simon Pierre ONANA, 2023. "Effets des transferts intergouvernementaux sur la mobilisation des recettes publiques locales : cas des communes camerounaises," Region et Developpement, Region et Developpement, LEAD, Universite du Sud - Toulon Var, vol. 58, pages 83-101.
    8. Tahir Yousaf & Qurat ul Ain & Yasmeen Akhtar & Wasi Ul Hassan Shah, 2022. "The Crowding in (out) Effect of Intergovernmental Transfers on Local Government Revenue Generation: Evidence from Pakistan," Hacienda Pública Española / Review of Public Economics, IEF, vol. 242(3), pages 3-28, September.
    9. Oyarzo, Mauricio & Paredes, Dusan, 2019. "Revisiting the link between resource windfalls and subnational crowding out for local mining economies in Chile," Resources Policy, Elsevier, vol. 64(C).
    10. Jooste, Charl & Liu, Guangling (Dave) & Naraidoo, Ruthira, 2013. "Analysing the effects of fiscal policy shocks in the South African economy," Economic Modelling, Elsevier, vol. 32(C), pages 215-224.
    11. Fabrice Murtin & Romain Wacziarg, 2014. "The democratic transition," Journal of Economic Growth, Springer, vol. 19(2), pages 141-181, June.
    12. Chacko Jacob & Jijo Lukose P.J., 2018. "Institutional Ownership and Dividend Payout in Emerging Markets: Evidence from India," Journal of Emerging Market Finance, Institute for Financial Management and Research, vol. 17(1_suppl), pages 54-82, April.
    13. repec:spo:wpmain:info:hdl:2441/5m0od0o9jn9pqbdmos7fpt28hg is not listed on IDEAS
    14. Fambeu, Ariel Herbert & Yomi, Patricia Tchawa, 2023. "Is democracy pro poor in Sub-Saharan Africa?," Journal of Policy Modeling, Elsevier, vol. 45(1), pages 10-30.
    15. Nouha Bougharriou & Walid Benayed & Foued Badr Gabsi, 2019. "Education and democracy in the Arab world," Economic Change and Restructuring, Springer, vol. 52(2), pages 139-155, May.
    16. Gründler, Klaus & Krieger, Tommy, 2016. "Democracy and growth: Evidence from a machine learning indicator," European Journal of Political Economy, Elsevier, vol. 45(S), pages 85-107.
    17. repec:hal:spmain:info:hdl:2441/5m0od0o9jn9pqbdmos7fpt28hg is not listed on IDEAS
    18. Manoel Bittencourt, 2012. "Yet Another Look at the Modernisation Hypothesis: Evidence from Latin America," Working Papers 201205, University of Pretoria, Department of Economics.
    19. Zheng, Xinye & Li, Fanghua & Song, Shunfeng & Yu, Yihua, 2013. "Central government's infrastructure investment across Chinese regions: A dynamic spatial panel data approach," China Economic Review, Elsevier, vol. 27(C), pages 264-276.
    20. Piccoli, Luca & Tiezzi, Silvia, 2021. "Rational addiction and time-consistency: An empirical test," Journal of Health Economics, Elsevier, vol. 80(C).
    21. Tadadjeu, Sosson & Njangang, Henri & Asongu, Simplice A. & Kamguia, Brice, 2023. "Natural resources, child mortality and governance quality in African countries," Resources Policy, Elsevier, vol. 83(C).
    22. Jing Li & Tsun Se Cheong & Jianfa Shen & Dahai Fu, 2019. "Urbanization And Rural–Urban Consumption Disparity: Evidence From China," The Singapore Economic Review (SER), World Scientific Publishing Co. Pte. Ltd., vol. 64(04), pages 983-996, September.

    More about this item

    Keywords

    Public finance;

    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:unu:wpaper:wp-2016-113. 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: Siméon Rapin (email available below). General contact details of provider: https://edirc.repec.org/data/widerfi.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.