commission on fiscal imbalance 合集

Also the higher value of r2 for this group of

Info iconThis preview shows page 1. Sign up to view the full content.

View Full Document Right Arrow Icon
This is the end of the preview. Sign up to access the rest of the document.

Unformatted text preview: n African countries have the lowest level of expenditure and revenue shares compared to other regions of the world. As shown in figures 3 and 4, high income OECD countries have the highest degree of decentralization. 156 Commission on Fiscal Imbalance FIGURES 3 AND 4 FIGURE-3: SUB-NATIONAL SHARE OF EXPENDITURES BY REGION FIGURE-4: SUB-NATIONAL SHARE OF REVENUES BY REGION 60% 35% 50% 30% 40% 25% 30% 20% 15% 20% 10% 10% 5% 0% Sub-Saharan Africa (4) East Asia and the Pacific (4) Latin America and the Caribbean (9) Europe and Central Asia (13) High Income, OECD (18) 0% Sub-Saharan Africa (5) East Asia and the Pacific (7) Latin America and the Caribbean (13) Europe and Central Asia (15) High Income, OECD (21) Middle East and Northern Africa (1) Note: Simple average of most recent observations in available countries. Numbers in parenthesis indicate number of countries represented. Source: International Monetary Fund. Government Finance Statistics Year Book 1998, Country Tables. Figures 5, 6, and 7 present the association between country size and decentralization for federal and unitary countries 15 separately . The regression line in Figure 5 suggests that GDP per capita is positively associated with higher decentralization in both groups. The positive association is stronger for unitary countries. The steeper regression line for unitary countries implies that the increase in income levels has a stronger effect on subnational governments' expenditure levels in unitary countries than it has in federal countries. Also, the higher value of R2 for this group of countries indicates that regression analysis has a stronger explanatory power than federal countries. Overall, the positive association of decentralization and GDP per capita suggests that an increase in income increases expenditure levels for subnational governments in both groups. Figure 6 presents the association between population and fiscal decentralization for the same group of countries. It appears that population is positively associated with higher level of subnational governments spending in both groups also. Unlike GDP per capita, the positive association of population and decentralization is stronger for federal countries than unitary countries. The stronger association of population with fiscal decentralization in federal countries is consistent with the argument that as country size gets bigger, subnational governments are expected to play an important role in delivering public services. Figure 7 shows the relationship between the third size variable and decentralization. The positive slope of regression line suggests that land area is positively associated with higher decentralization. The magnitude of the impact of land area on fiscal decentralization is stronger for unitary countries than federal countries. The estimation results suggest that size variables have a reasonable level of explanatory power in analyzing the differences in the degree of decentralization across countries. Among the size variables, GDP per capita and population have the strongest effect on...
View Full Document

This note was uploaded on 03/06/2013 for the course ECON 220 taught by Professor Paulo during the Spring '13 term at University of Liverpool.

Ask a homework question - tutors are online