Four Centuries of Fiscal Decentralisation in the Netherlands in View of Different Economic Theoretic Perspectives

OECD Journal on Budgeting, No. 2, pp. 1-54, 2012

67 Pages Posted: 6 Jan 2013 Last revised: 2 Apr 2015

See all articles by Frits Bos

Frits Bos

CPB Netherlands Bureau of Economic Policy Analysis

Date Written: November 6, 2012

Abstract

The history of the Netherlands reveals major shifts from centralisation of government tasks towards decentralisation and vice versa. In the seventeenth century, the Republic of United Provinces was the first federal state in modern history. Many transformations later the Kingdom of the Netherlands became a big centralized welfare state. Since the 1980s a reverse development has started: the welfare state is being downsized and decentralised. This paper describes and discusses this evolution in view of a broad spectrum of economic theories. Four conclusions are drawn. Firstly, a major reason for changes in fiscal decentralisation arrangements was a deterioration of economic and political circumstances. Secondly, also many other factors, like the increase in communication, mobility, population density, urbanization and the role of government, necessitated changes. Thirdly, accountability and transparency of local government has been improved substantially. Fourthly, current arrangements are not optimal and should be changed. For example, Dutch municipalities should increase further in scale and the role of Dutch provinces should be reconsidered.

Keywords: fiscal federalism, subsidiary, history of Dutch public finance, Oates, Tiebout, agglomeration-effects, Dutch municipalities, Dutch provinces, water boards, spatial planning, infrastructure, local taxes, Thorbecke, local governance, Dutch Republic of United Provinces, multi-order governance, theories

JEL Classification: D70, H11, H70, N43, N44

Suggested Citation

Bos, Frits, Four Centuries of Fiscal Decentralisation in the Netherlands in View of Different Economic Theoretic Perspectives (November 6, 2012). OECD Journal on Budgeting, No. 2, pp. 1-54, 2012 , Available at SSRN: https://ssrn.com/abstract=2197022

Frits Bos (Contact Author)

CPB Netherlands Bureau of Economic Policy Analysis ( email )

P.O. Box 80510
2508 GM The Hague, 2585 JR
Netherlands

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