What Determines the Extent of Fiscal Decentralization? The Russian Paradox

42 Pages Posted: 21 Sep 2005

See all articles by Lev Freinkman

Lev Freinkman

National Research University Higher School of Economics; World Bank - The International Bank for Reconstruction and Development (IBRD)

Alexander Plekhanov

University of Cambridge - Faculty of Economics and Politics

Date Written: September 2005

Abstract

The paper provides an empirical analysis of the determinants of fiscal decentralization within Russian regions in 1994-2001. The conventional view that more decentralized governments are found in regions/countries with higher income, higher ethnolinguistic fractionalization, and higher levels of democracy is not supported by the data. This motivates a more refined analysis of the determinants of decentralization that points to the link between decentralization and the structure of regional government revenue: access to windfall revenues leads to a more centralized governance structure. The degree of decentralization also depends positively on the level of urbanization and regional size and negatively on income and general regional development indicators such as the education level.

Keywords: Decentralization, local government, fiscal federalism

JEL Classification: H1, H7

Suggested Citation

Freinkman, Lev and Plekhanov, Alexander, What Determines the Extent of Fiscal Decentralization? The Russian Paradox (September 2005). World Bank Policy Research Working Paper No. 3710, Available at SSRN: https://ssrn.com/abstract=805425

Lev Freinkman (Contact Author)

National Research University Higher School of Economics ( email )

Myasnitskaya street, 20
Moscow, Moscow 119017
Russia

World Bank - The International Bank for Reconstruction and Development (IBRD) ( email )

Washington, DC 20433
United States

Alexander Plekhanov

University of Cambridge - Faculty of Economics and Politics ( email )

Austin Robinson Building
Sidgwick Avenue
Cambridge, CB3 9DD
United Kingdom

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