تمرکز زدایی و نهادهای سیاسی

Does fiscal decentralization lead to more efficient governance, better public goods, and higher economic growth? This paper tests Riker's [Riker, W. (1964) “Federalism: Origins, Operation, Significance,” Little, Brown and Co, Boston, MA.] theory that the results of fiscal decentralization depend on the level of countries' political centralization. We analyze cross-section and panel data from up to 75 developing and transition countries for 25 years. Two of Riker's predictions about the role of political institutions in disciplining fiscally-autonomous local politicians are confirmed by the data. 1) Strength of national political parties significantly improves outcomes of fiscal decentralization such as economic growth, quality of government, and public goods provision. 2) In contrast, administrative subordination (i.e., appointing local politicians rather than electing them) does not improve the results of fiscal decentralization.

Political incentives of public officials determine whether fiscal decentralization is beneficial for public goods provision. We define fiscal decentralization as devolution of authority over public revenue and expenditure to lower-level government and use this term interchangeably with federalism. The three classic channels which make fiscal decentralization beneficial – inter-jurisdictional competition (Tiebout, 1956), informational advantages (Hayek, 1948), and higher preference homogeneity (Oates, 1972) – all rely on the premise that local politicians have political incentives to respond to the needs of local population. A classic cost of federalism – regionalist policies in the presence of inter-jurisdictional spillovers (Musgrave, 1969 and Oates, 1972) – relies on the premise that political incentives of local politicians make them cater to their own constituency but ignore preferences of populations in other jurisdictions of the country. This logic gives rise to a trade-off between national and local preferences in political incentives of local officials in a federation. On the one hand, to realize the benefits of federalism, local politicians should have sufficiently high weight placed on the preferences of the population of their own jurisdiction. On the other hand, to minimize inter-jurisdictional externalities, local politicians should place some weight on voter preferences in other jurisdictions of the country. Henceforth, we refer to the latter side of this trade-off, i.e., to having local political incentives aligned with national interests, as political centralization. Since political incentives are shaped by political institutions, a fiscally decentralized country needs political institutions that strike a balance between the interests of local and national populations.

Our key finding is that political institutions play an important role in determining the results of fiscal decentralization. In line with the predictions of Riker (1964), we find that a strong national party system is a very effective way of aligning political incentives of local politicians with national objectives, while preserving their accountability to local constituencies, which is necessary for efficient decentralization. In developing and transition countries, an older and more stable party system as well as lower fractionalization of government parties is associated with the better effect of fiscal decentralization on economic growth, government quality, and public goods. Our findings also confirm Riker's skepticism about administrative subordination as a mechanism of ensuring efficient political incentives for the local governments in decentralized states: we find that appointing state and municipal officials does not help the results of fiscal decentralization. Therefore, a remedy to poor governance in large inherently decentralized countries is building strong national political parties whenever possible. Strong parties help to provide elected local officials with efficient political incentives, because their chances of reelection depend both on national party support and the satisfaction of the local constituency. This allows the striking of a balance between national objectives and local accountability.