Survey
* Your assessment is very important for improving the workof artificial intelligence, which forms the content of this project
* Your assessment is very important for improving the workof artificial intelligence, which forms the content of this project
Data Note The World Bank Decentralization & Sub-National Regional Economics Thematic Group August 2004 Measuring Fiscal Decentralization Available data are imperfect, but provide some indicative evidence on the extent of decentralization and the importance of public finance at the state and local level. Decentralization is a complex and multifaceted concept that spans fiscal, political, and administrative dimensions. While measuring decentralization is equally complex, the fiscal flows to, from and among different levels of government can be used to assess aspects of fiscal decentralization across countries, regions, and time. Fiscal decentralization encompasses expenditure and financing dimensions. To understand who does what, the amount of subnational government spending relative to the central government (e.g., relative to total public expenditure or GDP) or on particular sectors (e.g., education or health) is often analyzed. How sub-national governments finance these expenditures, either through own revenues, shared revenues, or transfers from the central government is also relevant. The best data source for cross-country analysis of fiscal flows is the International Monetary Fund’s (IMF) Government Finance Statistics (GFS), which provides data with consistent definitions across countries and years. The purpose of the GFS is to provide data for monitoring, analyzing and evaluating the performance of the general government sectors, in a framework that is applicable across countries with different legal and institutional structures. The GFS provides a snapshot of state and local finances in almost 70 countries. Disadvantages are that coverage for particular regions and individual years may be limited. For example, coverage of OECD countries, transition Fiscal Decentralization Indicators economies, and Latin America tends to be more complete than other regions. Unlike recent efforts to provide more detailed measurements, albeit for a limited sample of countries (see Ebel and Yilmaz, 2002; Meloche et. al., 2004), the GFS does not measure the autonomy sub-national governments actually have over revenues and expenditures. Since sub-national governments are typically constrained in fiscal decision making to some degree by higher levels of government, this could lead to an overestimate of decentralization. Fiscal flows to, from and among Fiscal Decentralization Indicators The World Bank’s Decentralization and SubNational Regional Economics Thematic Group has prepared over a dozen indicators of fiscal decentralization from the IMF GFS. These are accessible on the Thematic Group’s website. The indicators include broad measures of subnational revenue mobilization, transfers, expenditures, including sectoral indicators in health and education (see Annex). These indicators can used to illustrate global, regional, and country trends in decentralization. Given the many indicators, and multiple ways to present them, there is no single best way to present the data. Since data are not available for all countries in any given year, the most recently available observations are used to describe magnitudes across countries/regions. This note presents two, illustrative indicators. different levels of government can be used to assess some aspects of fiscal decentralizatio n August 2004 Expenditure Decentralization The share of sub-national expenditures in total government expenditures provides one broad measure of decentralization. Annex Figure 1 shows graphically the total share of subnational expenditures, grouping OECD and developing countries. The graph highlights the differences in expenditure shares according to this measure. State and local tiers of government contribute to these shares. For example, South Africa’s sub-national expenditure share is 49 percent, of which 11 percent is attributable to local governments. However, these measures do not assess the extent to which expenditures are restricted to certain activities (e.g., due to earmarked/conditional grants versus block transfers, central mandates, etc.). The actual degree of sub-national expenditure autonomy varies significantly on a country-by-country basis. Aggregate figures also mask the fact that sub-national expenditure shares differ markedly across sectors. For example, defense spending typically tends to be highly centralized, while countries exhibit varying degrees of expenditure decentralization in social sectors. measure of vertical imbalance. For example, in Albania, transfers accounted for 97 percent of total sub-national revenues. Aggregate measures of vertical imbalance will not capture the significant horizontal disparities that typically exist across regions within a country (e.g., wealthy cities with a buoyant tax base versus poor, lagging regions). Conclusion Decentralization is a multi-dimensional phenomenon. No single indicator neatly summarizes the degree of decentralization. Data limitations suggest that these indicators must be interpreted with caution, but can provide a starting point for evaluating intergovernmental fiscal relations across countries. Additional qualitative indicators are also available for expenditure and revenue assignments, the regulatory system for subsub-national borrowing, and characteristics of the transfer system. These can be further complemented with indicators of political/electoral decentralization, including the presence of elections at the sub-national level (World Bank 2000). Fiscal decentralization indicators based on IMF GFS data are available from the Decentralization and Sub-National Economics Thematic Group website Vertical Revenue Imbalances The distribution among types of sub-national revenues can provide a broad measure of the degree of decentralized, own-revenue mobilization and the dependence of subnational governments on central transfers. Annex Figure 2 plots these types of revenues, grouped by region. Within regions, countries are ranked by the share of sub-national tax and non-tax revenues in total revenue. Since sub-national expenditure assignments typically exceed tax and non-tax revenue assignments, sub-national governments depend on intergovernmental transfers in addition to locally derived revenues. Limited own source revenue mobilization is typically due to the fact that revenues are more effectively collected at higher levels, insufficient tax bases have been assigned to lower levels, and/or local revenue capacity and effort are weak. The degree to which sub-national governments depend on higher level transfers to finance their expenditures can be interpreted as a Fiscal Decentralization Indicators This note was prepared by Kai Kaiser and Ines Kudo Further Reading Ebel, Bob, Serdar Yilmaz, 2002, On the Measurement and Impact of Fiscal Decentralization, Washington, DC: World Bank Policy Research Working Paper, WPS 2809 Meloche, Jean-Philippe; Vaillancourt, Francois; Yilmaz, Serdar. 2004, Decentralization or Fiscal Autonomy? What Does Really Matter? Effects On Growth and Public Sector Size in European Transition Countries, Washington, DC: World Bank Policy Research Working Paper, WPS 3254 World Bank, 2000, World Development Report: Entering the 21st Century, Washington, DC World Bank, 2004, Fiscal Decentralization Indicators, Washington, DC: Poverty Reduction and Economic Management (PREM), Decentralization and Sub-National Economics Thematic Group, www1.worldbank.org/publicsector/Decentraliza tionSubNationalEconomics August 2004 Annex: Summary Data The data set covers 18 annual, country-level indicators of fiscal decentralization, which are derived from the IMF-GFS. These indicators can be presented along a number of dimensions (e.g., across regions) in tabular or graphic format. List of Indicators Summary Tables & Figures A summary snap-shot of decentralization across countries is provided by comparing the latest available observations (starting with data after 1990). Given the prevalence of missing data, especially for recent years, this strikes a balance between coverage and selection of the most recent observation for any given country. Fiscal decentralization Aggregate Expenditures Measures 1 Sub-National Share of Expenditures (% The tables present the corresponding country Total) level indicators arranged by region. Users 2 Sub-National Share of Expenditures (% can select sub-sets of these data to create Total, Net Defense & Interest) customized tables (e.g., for sub-sets of 3 Sub-National Expenditures (% GDP) countries such as federations). indicators are Sectoral Expenditures Measures 4 Education Share of Sub-National Spending (% Sub-National) 5 Sub-National Education Spending (% Total Education) 6 Health Share of Sub-National Spending (% Sub-National) 7 Sub-National Health Spending (% Total Health) formats to Those interested in annual, country-level indicators and more details on how the indicators were calculated are referred to the World Bank Fiscal Decentralization Indicators Country Dataset (in Microsoft Excel). available in an array of tabular and graphical facilitate global, regional, and country level comparisons. Revenue Measures 8 Sub-National Grants Share (% Total Sub-National Revenues) 9 Sub-National Tax Revenue Share (% Total Sub-National Revenues) 10 Sub-National Nontax Revenue Share (% Total Sub-National Revenues) 11 Vertical Imbalance 12 Sub-National Own-Source Revenues (% GDP) 13 Sub-National Own-Source Revenues (% Total Own-Source Revenues) 14 Sub-National Tax Revenues (% Total Tax Revenues) 15 Sub-National Property Tax (% GDP) 16 Total Property Tax (% GDP) Per Capita Measures 17 Per Capita Sub-National Expenditures (USD) 18 Per Capita Sub-National Revenues (USD) Fiscal Decentralization Indicators August 2004 Selected Summary Figures by Country Fig.1: Sub-natl. Share of Expenditures by Country Fig. 2: Sub-natl. Share of Revenues by Country India (1999) Argentina (2001) Tajikistan (2001) Argentina (2001) India (1999) Tajikistan (2001) Canada (2001) Australia (1999) South Africa (2001) Frm Yugoslavia (1990) Brazil (1998) Switzerland (2000) Spain (1997) United States (2000) Bolivia (2001) Germany (1998) Mexico (2000) Austria (1999) Malaysia (1997) Peru (2001) Portugal (1998) Frm Yugoslavia (1990) Canada (2001) Australia (1999) Brazil (1998) United States (2000) Switzerland (2000) Germany (1998) Mexico (2000) Malaysia (1997) Austria (1999) Bolivia (2001) Spain (1997) Portugal (1998) Peru (2001) South Africa (2001) Netherlands Antilles (1995) Denmark (2000) Belarus (2001) Russian Federation (2001) Kazakhstan (2000) Norway (1999) Finland (1998) Sweden (1999) Mongolia (2001) Georgia (2001) Poland (2001) Ireland (1997) Latvia (2001) Ukraine (2001) Iceland (1998) Moldova (2002) Hungary (2001) Estonia (2001) Italy (1999) United Kingdom (1998) Netherlands (1997) Azerbaijan (1999) Lithuania (2001) Czech Republic (2001) Albania (1998) France (1997) Romania (2001) Bulgaria (2001) Luxembourg (1997) Israel (2000) Zimbabwe (1991) Thailand (2001) Croatia (2001) Slovenia (2001) Belgium (1998) Indonesia (1998) Uruguay (1997) Nicaragua (1993) Chile (2001) Macao (2001) Slovak Republic (2001) Senegal (1998) Mauritius (1999) Trinidad and Tobago Costa Rica (1990) Bahrain (1996) Dominican Republic (1996) Paraguay (1993) Panama (1994) Congo, Rep. (2000) Netherlands Antilles (1995) Kazakhstan (2000) Belarus (2001) Denmark (2000) Georgia (2001) Russian Federation (2001) Finland (1998) Sweden (1999) Iceland (1998) Ukraine (2001) Poland (2001) Moldova (2002) Norway (1999) Latvia (2001) Lithuania (2001) Mongolia (2001) Romania (2001) Estonia (2001) Hungary (2001) Azerbaijan (1999) Zimbabwe (1991) Czech Republic (2001) Italy (1999) France (1997) Croatia (2001) Bulgaria (2001) Nicaragua (1993) Luxembourg (1997) Slovenia (2001) Netherlands (1997) Israel (2000) Thailand (2001) Chile (2001) United Kingdom (1998) Ireland (1997) Slovak Republic (2001) Belgium (1998) Senegal (1999) Trinidad and Tobago (1995) Indonesia (1998) Costa Rica (1990) Panama (1994) Macao (2001) Paraguay (1993) Bahrain (1996) Mauritius (1999) Albania (1998) Dominican Republic (1996) State/Province Local 0 20 Fiscal Decentralization Indicators 40 of Total 60 Share 80 100 State/Province Local 0 20 40 of Total 60 Share 80 100 August 2004 Summary Figures of Selected, Fiscal Decentralization Indicators by Region DECENT14: SN Taxes (% Total National Taxes) DECENT8: SN Grants Share (% Total SN Revenues) Region OECD (21) SAR (1) SAR (1) OECD (21) MNA (0) LAC (13) LAC (8) ECA (21) ECA (21) EAP (5) EAP (5) AFR (4) AFR (4) 0 10 20 30 40 % Regional Average Fiscal Decentralization Indicators 50 60 0 10 20 % Regional Average 30 40 August 2004 Summary Table of Selected Indicators SubNational Education Health SubShare of Share of SubShare of National Expenditur SubSubNational SubShare of es (% National National Education National Expenditur Total, Net Expenditur Spending Spending Spending es (% Defense & es (% (% Sub(% Total (% SubTotal) Interest) GDP) National) Education) National) DECENT2 0.5 5.3 7.9 57.8 16 14.8 7.1 23.7 39.3 14.3 26.6 27.7 43.7 20.3 13.3 22.4 28.5 91.6 41.2 31.3 44.4 32.4 23.9 32.6 38.6 20.6 48.8 7.9 12.4 37.7 33.5 54.1 39.5 50.6 8.8 3.4 2.9 26.3 1995 60.6 1993 1994 1993 2001 1995 1997 9.9 2 2.6 25 4.1 11 Bahrain 1996 India 1999 Latin America and the Caribbean East and Central Asia East Asia Africa 0.4 4.7 6.7 49.1 13.7 11.3 7.1 19.1 35.6 12.5 18.7 24.6 41.7 17.3 12.2 21.1 27.2 80.9 35.3 27.5 40.5 30.6 21.6 27.9 35.1 17.9 41.4 7 11.6 33.7 30.2 45.8 34.5 44.5 8 3 2.6 23.1 Middle East DECENT1 2000 1999 1998 2001 1991 1998 2001 1997 2001 2001 1998 1999 2001 2001 2001 2001 2001 1990 2001 2001 2000 2001 2001 2002 2001 2001 2001 2001 2001 2001 2001 2001 2001 1998 2001 1990 1996 2000 South Asia (year) Congo, Rep. Mauritius Senegal South Africa Zimbabwe Indonesia Macao Malaysia Mongolia Thailand Albania Azerbaijan Belarus Bulgaria Croatia Czech Republic Estonia Frm Yugoslavia Georgia Hungary Kazakhstan Latvia Lithuania Moldova Poland Romania Russian Fed Slovak Republic Slovenia Tajikistan Ukraine Argentina Bolivia Brazil Chile Costa Rica Dominican Rep Mexico Netherlands Antilles Nicaragua Panama Paraguay Peru Trinidad & Tobago Uruguay Fiscal Decentralization Indicators DECENT3 DECENT4 DECENT5 DECENT6 SubSubNational National SubHealth Grants SubNational Spending Share (% National Revenues (% Total Total SN Revenues (% Total Health) Revenues) (% GDP) Revenues) DECENT7 DECENT8 DECENT12 DECENT13 0.1 1.2 1.3 15.5 5.1 1.9 0 0 0 2.8 0 0 19.1 6.7 6 9.4 10.1 0 0 13.3 8.6 10.4 0 0 16.1 6.5 0 2.9 5.2 0 0 13.2 11.2 17.7 2 0.8 0.4 0 0 0.9 6.6 0 4.2 4.6 0 0 42.3 0 41.6 60.7 28.2 32.9 10.7 24.3 45.4 15.5 30.3 15.3 30.3 45.5 58.9 43.2 27.9 36.2 16 0.3 25 38.3 25 29.9 31 0 0 0 0 0 0 0.3 2.6 0 0 6.9 0 0 71 0 80.2 84.2 81.8 58.9 15.6 38.9 67.2 0 77.9 34.1 84 72 68.3 76.1 71.8 56.4 82.2 0.2 23 82.4 60.5 80.2 39.4 0 0 0 0 0 0 0 12.9 0 7.5 2.1 0.1 0 21.5 0 8.4 15.6 19.7 9.2 1 1.1 1.4 21.3 6.2 0 19.9 1.6 0.4 23.3 24.9 0.1 10.8 0.6 1.4 15.1 22.9 11.4 12.2 0 0 0 0 0 0 0 23.8 0 0 9.3 0 0 52.8 0 29.5 84.3 78 15.7 0.9 1.5 2.7 0 40.8 0.1 86 4.8 0.6 65.1 93.1 0.2 88.1 0.3 1.2 81.3 81.8 83.2 33.9 0 0 0 0 0 0 63 33.9 81.6 2.3 75 70.3 21.2 46.1 41.1 96.8 50.4 16.8 33.8 5.6 36.7 39.3 14.2 12.4 51.4 13.8 28.1 10.3 26 40.9 10.5 16.5 21.4 21.7 24.5 29.5 0 51.7 38 7.2 14.2 8.6 47.1 0 0.5 1.1 2.9 4.5 0.5 0 0 0 1.7 0 0 16.5 4.6 5.5 5.8 6 0 0 7 9.9 6.8 0 0 9.5 5.8 0 2.3 4.2 0 0 9.4 5.6 12.2 1.9 0.7 0.1 0 0 2 6 9.6 14.8 3.1 2.4 15.2 19.7 8.7 1.2 15.1 36.2 12.1 12.4 14.6 16.1 78.1 33.1 15.8 45.9 20.7 19.7 23.4 23.4 17.7 32.6 6.5 9.7 27.1 24.2 40.6 24.3 32 7.7 3 0.8 23.6 62.4 0 19.6 75.3 3.9 39 0 0 62 12.4 2.3 3.1 28.1 5.1 11.9 3.1 0.5 0.4 4.9 1.2 3.7 0 0.5 7.5 0 0 0 0 0.1 0.9 0 0 0 0 0.3 16.1 0 0 0 0 0 5.6 0 0 0 1.7 0 0 73.4 0 0 2.6 0.7 0.3 1.4 1.3 0 10.1 2.5 2.3 8.3 4.2 0 2.8 3.6 0.7 0 0 0 0 0 0.6 2.3 52 73.1 12.5 27 89.4 6.1 73.4 39 6.2 33.6 August 2004