In fact, household mobility across local jurisdictions, like in the united states, hardly exists elsewhere. The classical principles for decentralization design are well traveled across countries and over time. In economics, tacit and dispersed knowledge, public choice school, and principalagent. First, regional or local governments are in a position to adapt. Brazil, which moved in this direction after their constitutional reform of 1988. The last decade has seen a renewed interest in the concept of fiscal decentralization or fiscal federalism.
Fiscal decentralization is the devolution by the central government to local governments states, regions, municipalities of specific functions with the administrative authority and fiscal revenue to perform those functions. This is the principle oates 1972 called decentralisation theorem and it is the basis for what may be referred to as the first generation theory fgt of fiscal federalism oates, 2006a. Ifir working papers contain o riginal resear ch contribu ted by scholars affiliated with the. A normative approach may take the political structure as given and then see what economic consequences result. This comes after a halfcentury of fiscal centralization in most developed and. Traditionally, the economic aspect of decentralization is analyzed through theory of federalism. An economic theory of fiscal decentralization charles m. Oates the traditional theory of public finance has made a strong case for a major role for fiscal decentralization.
This case is based on an improved allocation of resources in the public sector. An economic theory of fiscal decentralization nber. On the theory and practice of fiscal decentralization, wallace e. This paper examines the theory behind fiscal decentralization and suggests the reasons for its renewed popularity. Oates and others published on the theory and practice of fiscal decentralization find, read and cite all the. E7 department of economic and social affairs division for public economics and public administration decentralization. In the theory of economics, hidden and dispersed knowledge theory, public choice school. There is no unique and wellaccepted theory to be tested regarding the.
This pdf is a selection from an outofprint volume from the national. It is a set of policy reforms aimed at transferring responsibilities, resources, or authority from higher to lower levels of government. Pdf on the theory and practice of fiscal decentralization. Section iv concludes with the main policy recommendations. Fiscal decentralization and regional economic growth. The classical theory of fiscal federalism considers three ney goals of the public sector. The proper distribution of tax authority and expenditure responsibility is an. On the theory and practice of fiscal decentralization wallace e. Decentralization of governance and development pranab bardhan a ll around the world in matters of governance, decentralization is the rage. On the theory and practice of fiscal decentralization.
It specifically addresses the reform of the system of expenditure. Fiscal decentralization and the efficiency of public service delivery. The theory of federalism and fiscal decentralization. Fiscal decentralization refers to the public finance dimension of intergovernmental relations.