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We measure the contribution of fiscal decentralization to trust in government. Using repeated cross-country survey data of individuals on several measures of trust in government over the 1994{2007 period, we estimate an ordered response model of the government trust and fiscal decentralization nexus. We control for unobserved country characteristics, macroeconòmic determinants, and individual characteristics. Our main finding is that fiscal decentralization increases trust in government. More specifically, a one percentage point increase in fiscal decentralization causes roughly a four-fifths of a percentage point increase in government trust. The beneficial effect of fiscal decentralization on trust in government is neither limited to nor necessarily large for relatively decentralized countries.

1. Introduction; 2. The political process; 3. Administrative efficiency; 4. Competition among governments; 5. Fiscal policy and redistribution; 6. Fiscal coordination and incentives; 7. Citizens and government; 8. Checks, balances, and freedom; 9. Acquiring and using knowledge; 10. Ethnic conflict and secession; 11. Data to the rescue?; 12. Conclusion: rethinking decentralization.

AbstractA large part of the decentralization literature is fragmented along political, fiscal, or administrative lines. In this article we employ a diagnostic framework to draw these dimensions together in a coherent manner to focus on analyzing local government discretion and accountability in Tanzania. Tanzania seems to have a deconcentrated local government system with central appointees having large powers at the local level. Centrally‐funded mandates—such as constructing secondary schools—dominate local government plans and budgets. Central control over administrative functions has ensured that administrative decentralization is yet to occur. In the fiscal sphere, progress has been made in transparency and harmonization of transfers in the last 5 years but local governments still have some way to go in raising own revenues, being less reliant on transfers, and ensuring downward accountability. Copyright © 2010 John Wiley & Sons, Ltd.

AbstractThis paper examines the mediating effect of democracy in explaining the relationship between decentralization and government size for the period 1970–2013. We proxy decentralization by fiscal decentralization, use total spending as our primary measure of government size and adopt the V‐Dem high‐level democracy indices as measures of democracy. Our main finding is that the relationship between fiscal decentralization and government spending differs under different types of democracy. From the interaction term, the negative effect of fiscal decentralization diminishes as the democracy level gets higher, particularly for participatory democracy irrespective of whether government size is measured by spending‐to‐GDP or employment.

Adding to the literature on the effects of government decentralization, this paper uses a large sample of individual responses from more than a hundred countries about public's perceptions of government's performance along various dimensions to study the relative influences of different types of decentralization, including fiscal decentralization, administrative decentralization, federalism, and aggregate decentralization. Our results show that fiscal and administrative decentralization are qualitatively alike in that greater decentralization in each case improves perceptions of the government performance. Federalist states' performance and overall decentralization are viewed somewhat differently. With regard to tax administration particularly, fiscal and administrative forms of government decentralization result in better outcomes than overall decentralization. Finally, service industries and large firms, ceteris paribus, perceived government performance differently.

[eng]This article analyses Spanish Mayors' perceptions on three areas of possible reforms that are currently on the local government agenda: re-scaling, amalgamations and metropolitanization. This study shows two main features: On the one hand, a relative homogeneity regarding mayors' perceptions of reforms and, on the other hand, a consistent difference in the mayors' orientations from two groups of autonomous communities. The first ones acceded to the 'fast track' decentralization process that unfolded in Spain since 1978, due to the pressure exerted by their political leaders; the second group acceded to autonomy in a later wave, equating the distribution of power in all the territories of the state. Specifically, it is found that homogeneity in responses is only apparent when the two groups of mayors are considered. Thus, those from 'fast track' regions are more in favor of decentralization towards their regions and structures of coordination or cooperation between levels of government than mayors in 'slow track' autonomous communities. We conclude that, in a scenario of shared power and multilevel interdependence, fast-track mayors tend to protect more intergovernmental agreements that favour spaces where they can control the formulation of policies that affect them. ; [spa] Este artículo analiza la percepción de los alcaldes españoles en tres áreas de posibles reformas que actualmente están en la agenda del gobierno local: reordenación, fusiones y creación de gobiernos metropolitanos. Este estudio revela dos características principales. Por un lado, una homogeneidad relativa de las posiciones de los alcaldes respecto a las reformas y, por otro, una diferencia consistente en las orientaciones de los alcaldes de alcaldes de dos grupos de comunidades autónomas. Las primeras accedieron al proceso de escentralización por la vía rápida que se desplegó en España a partir de 1978, debido a la presión ejercida por sus líderes políticos; el segundo grupo accedió a la autonomía en una ola posterior, equiparando la distribución del poder en todos los territorios del Estado. Específicamente, se ha descubierto que la homogeneidad en las respuestas sólo se aprecia cuando se consideran los dos grupos de alcaldes mencionados. Así, los de las regiones de la vía rápida están más a favor de la descentralización hacia sus regiones y de estructuras de coordinación o cooperación entre niveles de gobierno que los alcaldes en las comunidades autónomas de la vía lenta. Concluimos que, en un escenario de poder compartido y de interdependencia multinivel, los alcaldes de la vía rápida tienden a proteger más los acuerdos intergubernamentales que favorezcan los espacios donde puedan controlar la formulación de políticas que los afectan.

Without much preparation, Indonesia, in 2000, at a stroke replaced the previous system of centralized government and development planning with a wide range of decentralization programs. The reforms gave greater authority, political power, and financial resources directly to regencies and municipalities, bypassing the provinces. The powers transferred include those of executing a wide range of responsibilities in the areas of health, primary and middle-level education, public works, environment, communication, transport, agriculture, manufacturing, and other economic sectors. At the same time, the government replaced the antiquated cash-based, single-entry system of public finance with a modern double-entry accounting system that uses a single treasury account; is performance based; and has transparent management of the public treasury, tight expenditure and financial controls with performance indicators, computerized reporting, and a tightly scheduled auditing system. On the positive side, unlike in many developing and transition countries, the decentralization program in Indonesia has not caused major political or economic problems. However, the decentralization program was ill prepared and not carried out in a logical order for two reasons. First, the capacity of subnational governments to produce public and private goods, increase productivity and employment, and promote economic growth in their jurisdictions, was not increased. Because of the long tradition of centralization, local government never built the capacity to carry out economic planning and undertake initiatives to promote local economic growth. Before the reform, the local governments had mainly functioned as implementing agencies of national policies and programs. Second, the number of good financial managers, as required by the new laws of public treasury and auditing, was also limited and needed to be trained. The rising revenues of local governments do not follow their increasing government functions to promote economic development that could potentially cause fiscal imbalances.

In the last two decades there has been a worldwide interest in decentralization of government in all parts of the world. According to Ebel (2000), out of the 77 developing and transition countries with populations greater than 7 million, 63 have embarked on some form of fiscal decentralization. There are two main objectives that we tried to achieve through this thesis. Firstly, we tried to examine empirically the effects of decentralization on macroeconomic stability. Even though there is a huge literature both theoretically and empirically on the impact of decentralization, not many of them seems to be interested on the question of the link between decentralization and macroeconomic stability. Nevertheless, it should be noted that the outcome of a decentralization policy which in short can be defined as the delegation of more powers and responsibilities to lower level governments, depends largely on the behavior of these subnational governments. As such, in the second part of this thesis, we tried to analyze the determinants of subnational governments' behaviors. More specifically, we tried to look at the relation between the behavior of subnational governments and the institutions in which they evolve and more particularly the incentives that result from these institutions. In order to achieve that, we used Malaysia as our case study. ; Lors des deux décennies dernières, une vague de décentralisation a déferlé sur le monde entier. En effet, selon Ebel (2000), des 77 pays en développement et en transition recensés dans le monde, 63 ont procédé à une politique de décentralisation. Il y a deux objectifs principaux que nous essayons d'atteindre dans cette thèse. Premièrement, nous essayons d'examiner empiriquement les effets de la décentralisation sur la stabilité macroéconomique. Cette recherche est motivée par la constatation que s'il existe une littérature assez importante sur l'impact de décentralisation sur la croissance, la question des effets de la décentralisation sur la stabilité macroéconomique reste ...