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This paper explores how fiscal incentives offered to local governments in China affect investment rates in their jurisdictions. Theoretically, we build a simple fiscal competition model to establish the linkage between local fiscal incentives and expenditure policy and consequently, capital movement. The key prediction of the model, borne out by data from Chinese provinces spanning 2004–2013, is that an increase in the local corporate income tax-sharing ratio, which proxies fiscal incentives offered to local governments, motivates local governments to compete for capital investment through increased public expenditures. Our results contribute to the fiscal federalism literature by showing that local fiscal incentives significantly shape policy choices and local economic performance. In addition, by exploring fiscal incentives offered to local governments, we offer a novel explanation for the unusually high investment rate in China that has been sustained over a prolonged period of time.

Regional, structural change is currently among the greatest challenges facing the public sector in many EU countries at the moment. In countries like Finland, where the public sectors have a large role in providing educational, health and social services, structural change rapidly becomes a fiscal problem. Demography is directly linked to the demand for public services and to the potential growth of regional economies. On the one hand, ageing increases the demand for age-related services; on the other, it decreases labour supply, limiting the growth potential of many regions. The state's main tools for regional policies consist of both direct subsidies to the regions, as well as a mechanism reallocating tax revenues between poor and rich municipalities. However, the welfare costs of funding subsidies to poorer regions may be considerable. Thus, instruments not involving changes in spending have been preferred. Here, we consider the relocation of certain functions of the central government to the periphery – decentralization – as an instrument for coping with regional structural change. An improvement in regional municipal finances should also reduce the transfers received from the central government. This study aims at evaluating the effects of decentralization on regional development in recent years and in the near future. The study is related to an on-going evaluation of the financial relations between the central government and local authorities. Decentralization has in practice meant the relocation of central government jobs. We can cover the relocation of jobs quite accurately, and we also have the data of the number of employees that actually relocated with the jobs. Moreover, we are able to calculate state transfers to municipalities at the level of individual municipalities within each region. However, to capture all the implications of relocation to regional economies, we extend the model to take into account the average size and age profile of the families of those relocating. In this way, we obtain an estimate on the effects of decentralization on demand for public services locally, as well as on the overall effect on local population, labour supply and state, municipal and social security funds' budget balances. We analyse decentralization at the level of the twenty regions of Finland, using a dynamic, regional, AGE model. We find that while decentralisation has been beneficial for many regions by creating new jobs and increasing municipal tax revenues, it has also entailed double efforts since there is only limited obligation for the employees to relocate with the jobs. Interestingly, however, this effect is partly off-set by a reduction of transfers to municipalities.

Over the last decade or so, the debate on the planning and development of the Paris (Île-de-France) region has revolved around two little words: "Grand Paris", or Greater Paris. Despite existing political and scientific controversies surrounding the future of the capital region, three major issues, different but interdependent in nature, have emerged. The first is the economic development of Paris and its place on the world stage (section 1); the second is socio-spatial justice and quality of life in the region (Section 2); and the third is governance (Section 3). These three issues, in our opinion, are key to understanding the processes currently under way in the Île-de-France region in connection with the concept of a Greater Paris. The aim of this paper is to stimulate scientific discussion by exploring each of these issues on the basis of the key stylized facts and the rationales of the various stakeholders.

Regional assets are an essential resource for local governments as the primary support for local revenue. Therefore, local governments must be able to manage assets adequately. The variables that affect the probability of using local government assets in the Special Region of Yogyakarta are population density and health facilities. Variables of land area, GRDP, and educational facilities have not increased the probability of asset utilization in the Special Region of Yogyakarta. The various problems and challenges faced in asset management must be addressed immediately by carrying out reforms in regional government asset management.

Regional assets are an essential resource for local governments as the primary support for local revenue. Therefore, local governments must be able to manage assets adequately. The variables that affect the probability of using local government assets in the Special Region of Yogyakarta are population density and health facilities. Variables of land area, GRDP, and educational facilities have not increased the probability of asset utilization in the Special Region of Yogyakarta. The various problems and challenges faced in asset management must be addressed immediately by carrying out reforms in regional government asset management.

In der Europäischen Union wurden zwischen 1999 und 2007 - bezogen auf den Kapitalbestand - insgesamt gut sechs Billionen Euro weniger investiert als in den nichteuropäischen OECD-Ländern, zu denen beispielsweise die USA, Kanada und Japan gehören. In der Eurozone waren es sogar 7,5 Billionen Euro weniger. Das Bruttoanlagevermögen, der sogenannte Kapitalstock, ist in fast allen EU-Ländern weniger modern als im OECD-Durchschnitt und wächst auch langsamer. Dies gilt auch für die Industrie, die bei der Wiedererstarkung Europas eine Schlüsselrolle übernehmen soll. Zur Erreichung eines höheren Wachstumspfades muss Europa die Investitionsschwäche daher auf breiter Front überwinden. Es genügt nicht, in einzelnen Ländern, wie den südeuropäischen Krisenstaaten, Investitionsprogramme zu implementieren. Um eine breit angelegte Investitionsoffensive in der EU als Ganzes in Gang zu setzen, müssen unterschiedliche Maßnahmen ergriffen werden. Hierzu zählt mit Blick auf die langfristige Investitionsschwäche eine effiziente Wettbewerbspolitik und eine investitionsfreundliche Steuerpolitik. ; Based on capital stock, in total, over six trillion euros less was invested in the European Union between 1999 and 2007 than in the non-European OECD countries, including the US, Canada, and Japan. In the euro area, investment was more than 7.5 trillion euros less than in non-European OECD countries. In virtually all EU member states, gross fixed assets (capital stock) are older than the OECD average and also demonstrate slower growth. This is particularly true for industry, which is expected to play a key role in Europe's recovery. In order to achieve a higher growth rate, Europe must tackle this lack of investment across the board. Just implement investment programs in individual countries, such as the southern European crisis countries is not enough. In order to launch a broad investment offensive across the EU as a whole, specific steps must be taken. With a view to tackling the lack of investment in the long term, measures include an efficient competition policy and investmentfriendly tax policy.

Based on capital stock, in total, over six trillion euros less was invested in the European Union between 1999 and 2007 than in the non-European OECD countries, including the US, Canada, and Japan. In the euro area, investment was more than 7.5 trillion euros less than in non-European OECD countries. In virtually all EU member states, gross fixed assets (capital stock) are older than the OECD average and also demonstrate slower growth. This is particularly true for industry, which is expected to play a key role in Europe's recovery. In order to achieve a higher growth rate, Europe must tackle this lack of investment across the board. Just implement investment programs in individual countries, such as the southern European crisis countries is not enough. In order to launch a broad investment offensive across the EU as a whole, specific steps must be taken. With a view to tackling the lack of investment in the long term, measures include an efficient competition policy and investmentfriendly tax policy.

The body of literature on purely democratic countries can sometimes fail to explain the behavior of government in semi-democratic African countries. Empirical and theoretical political economic papers and that public funds target ruling party supporters and swing districts. Our results, however, suggest that the opposite was true of Ghana. We observe that pro-government districts received less public investment when the NDC was in power. We posit that this nding is partially driven by the government's will to curry favor with opposition politicians. Indeed, in addition to pursuing its electoral objectives, the government of an emerging democracy may fear political instability and keep the lid on potential unrest by bargaining with opposition leaders. Our analysis also shows that, when controlling for votes and other covariates (including wealth, urbanization and density), public goods allocation is not driven by ethnic group targeting either.

Size class-wise analysis of state's urban services in West Bengal reveals that, in spite of improvement in provision of urban services in 2011 over 2001, service deficits and inter-category variations did persist. Service coverage increased systematically with the size class of the urban local bodies (ULBs), and intra-category disparities were higher for smaller ULBs. Mainly, the larger ULBs exhibited positive relationships between financial performances and urban service delivery. Therefore, this article argues for higher fund allocation for basic services and concerted development of smaller cities, through financial empowerment and institutional strengthening, as the key strategies for ensuring sustainable urbanisation. JEL Classification: H41, R53

Does the positive correlation between infrastructure and productivity reflect causation? If so, in which direction? I find that when growth in roads (the largest component of infrastructure) changes, productivity growth changes disproportionately in U.S. industries with more vehicles. That vehicle-intensive industries benefit more from road-building suggests that roads are productive. At the margin, however, road investments do not appear unusually productive. Intuitively, the interstate system was highly productive, but a second one would not be. Road-building thus explains much of the productivity slowdown through a one-time, unrepeatable productivity boost in the 1950's and 1960's. (JEL E62, O47, R53)

Local public investments satisfy basic local communities' needs and are crucial from the perspective of regional convergence. Against this background, investments by Polish local government pose as an interesting research subject. It is because, due to its size and dynamics, local public investments exert a considerably significant influence on the Polish economy. Self-government entities with primary responsibility for conducting local public investments in Poland are municipalities. The paper aims to identify fiscal, demographic and infrastructural determinants of municipal investment spending in Poland. I use panel data for 2412 Polish municipalities over the period 2007-2014. For institutional reasons, the sample excludes cities with county rights. The baseline specification employs two-way fixed-effects (FE) estimation that controls both for municipality and year fixed effects. To test for robustness, the sample is restricted to municipalities with up to 20,000; 10,000 and 5,000 inhabitants. For each considered sample there are four regression specifications implemented. Investment spending increases both in own revenues and grants. On the contrary, I document the negative impact of indebtedness level and the coverage of water supply and sewage systems. The coefficients on population size and the share of old inhabitants cease to be negative and statistically significant for municipalities with fewer than 10,000 inhabitants. The results indicate that, apart from fiscal capacity, the investment policies of Polish municipalities are affected by economies of scale, local communities' preferences and infrastructural endowment. The study also shows that incurring debt should be of particular concern for supervisory and control bodies.

In der Debatte um Gebietsreformen wird zumeist übersehen, dass Fusionen von Gebietskörperschaften mit spürbaren politischen Kosten verbunden sein können. In diesem Beitrag werden die politischen Kos - ten von Gebietsreformen anhand der 2015 in Kraft getretenen Gemeindegebietsreform im österreichischen Bundesland Steiermark erläutert und quantifiziert. Hierbei wird gezeigt, dass eine aus Gemeinde - fusionen resultierende Unzufriedenheit in der Bevölkerung zu einer signifikant geringeren Wahlbeteiligung und einem höheren Stimmanteil für populistische Parteien führen kann. Vor Gebietsreformen sollte der Gesetzgeber daher zunächst immer auch andere, mildere Mittel zur Erreichung möglicher Einspareffekte prüfen.

Der Beitrag beschäftigt sich mit der Frage, ob eine Fusion der Länder Hamburg und Schleswig-Holstein zu einem Bundesland ökonomisch von Vorteil ist. Es wird gezeigt, dass generell die Größe von Ländern nicht positiv mit dem Pro-Kopf-Einkommen oder dem wirtschaftlichen Wachstum korreliert. Die Einsparungen, die durch einen Zusammenschluss der beiden Länder bei der Erfüllung öffentlicher Aufgaben entstehen können, werden als gering eingeschätzt. Eine Fusion von Hamburg und Schleswig-Holstein könnte sich dennoch unter bestimmten Bedingungen lohnen. Es wird argumentiert, dass das fusionierte Land unter einer politischen Führung eine effizientere und wachstumsfreundlichere räumliche Allokation privater und öffentlicher Investitionen realisieren könnte. Die Beseitigung von Ländergrenzen im Agglomerationsraum Hamburg könnte zu einer Stärkung der dortigen Wachstumskräfte führen. Eine weitere Bedingung wäre zu erfüllen, damit sich die Fusion aus Sicht der beiden Länder lohnt: In Verhandlungen mit dem Bund und den anderen Bundesländern wäre sicherzustellen, dass sich das neue Bundesland im Bund-Länder-Finanzausgleich nicht schlechter stellt als gegenwärtig beide Länder zusammen.

This paper explores how Southern Africa can leverage its mineral resources to support growth and industrialization. It considers the aggregate and spatial effects of transport infrastructure improvements, and the relative benefits of financing these investments through resource sector concessions versus government expenditure. Using computable general equilibrium analysis, this paper simulates and compares the effects of (1) royalty rebates for infrastructure; (2) zero royalties for infrastructure; and (3) government revenue-financed infrastructure improvements in South Africa and the rest of Southern Africa. The findings suggest that infrastructure directly financed through government royalty revenue has stronger spatial and aggregate effects than concession-based investments. Nonetheless, concession-based investments are less distortionary and crowd-in private investments. Infrastructure improvements, regardless of the method of financing, stimulate activity in non-mining sectors, but sectoral changes are significantly different for South Africa and the rest of Southern Africa. The choice of financing depends on the objectives of the implementing government.