Negotiating universalism in India and Latin America: Fiscal decentralization,subnational politics and social outcomes

ABSTRACT

This is the introductory paper for a special issue which focuses on an exploration of how vertical inter-governmental political and fiscal bargains and horizontal variation in political, social and economic conditions across regions contribute to or undermine the provision of inclusive and sustainable social policies at the subnational level in Latin America and India. The papers incorporate both federal, as well as decentralized unitary states, pointing to common political tensions across unitary and federal settings despite the typically greater institutionalization of regional autonomy in federal countries. Jointly, the papers examine the territorial dimension of universalism and explore, in greater and empirical detail, the causal links between fiscal transfers, social policies and outcomes, highlighting the political dynamics that shape fiscal decentralization reforms and the welfare state. This introductory essay reviews existing scholarship, and highlights the contribution of the special issue to understanding these issues beyond OECD contexts.     

Central Decisions,Decentralized Solutions: Comparing the Implications of Central Cutback Policy for the Agency Level in Estonia and Latvia

Abstract

The paper investigates the implications of governmental cutback strategies related to the recent fiscal crisis at agency level in Estonia and Latvia. For this purpose, the article applies a comparative case study approach, through a purposeful selection of five agencies – three in Estonia and two in Latvia – to map the maximum possible variation of before-and-after effects of the crisis on organizational responses and individual-level coping. The selected agencies represent a range of regulatory and social policy domains directly and severely affected by the crisis through budget cuts and increased demand for services, and therefore most affected by the crisis. The study demonstrates that the budget cuts imposed by the cabinets of both countries and widely praised internationally actually left agency-level actors in an extremely difficult situation. Centrally imposed across-the-board cuts resulted in diverse public service gaps, leading to a range of hardships for the citizens, and therefore turning out to be neither equal nor fair for the target groups. The study concludes that centrally decided cutbacks shifted the burden to street-level bureaucrats, who in turn took on the role of key policy actors by ensuring the delivery of public services during the fiscal crisis.     

Adjusting Fiscal Decentralization Programs to Improve Service Results in Bulgaria and Romania

Fiscal decentralization programs are works in progress, and expenditure roles often need to be adjusted to improve service delivery. The Balkan countries of Romania and Bulgaria, both needed for accession to the European Union in 2007, must demonstrate positive results from their fiscal decentralization programs in the social services area. Focusing on social service delivery, this paper explores how the design of fiscal decentralization programs, in the form of assigning intergovernmental expenditure roles and responsibilities, affects service performance. The authors conclude that fiscal decentralization requires the proper assignment of authority to match expenditure responsibilities and the policy and administrative capacity to carry them out.     

Distinguishing city and Suburban Movers: Evidence from the American housing survey

Abstract

A significant amount of research has concentrated on the process of urban decentralization. Resulting patterns of urban development have far‐reaching effects on land use, transportation, regional fiscal structure, public services and facilities, economic development, and social equity. Because planning policies are being developed to attempt to revitalize the urban core, it is important to know which households may be deciding to relocate to the central cities and why.

A discriminant analysis is used to explore the similarities and differences among movers to central cities and suburban locations drawn from metropolitan samples of the 1989 through 1991 American Housing Survey. The analysis compares the reasons for relocation, demographic differences, and metropolitan characteristics between central‐city‐to‐suburb movers and suburb‐to‐central‐city movers. The results indicate that these two groups are very similar in some respects and that some metropolitan‐area characteristics may play a role in urban residential decentralization patterns.     

Intergovernmental Fiscal Relations: Coordination Failures and Fiscal Outcomes

This article estimates the fiscal impact of coordination failures in intergovernmental fiscal relations. The coordination failures considered here are due to agency problems arising from the delegation of fiscal powers to sub-national governments, and "common pool" problems associated with funding decentralised government spending through intergovernmental transfers. Particular attention is focused on the trade-off between coordination and fiscal decentralisation. Evidence provided for a sample of thirty countries suggests that coordination failures are likely to result in a deficit bias in decentralized policy making, particularly in the case of developing countries, for which the benefits of decentralization may be over-stressed. Developed countries were found to be less adversely affected by coordination failures and have therefore managed to pursue fiscal consolidation in a decentralized setup.     

Recasting German federalism? The politics of fiscal decentralization in post-unification Germany

Why did the ideas of fiscal decentralization gain such political currency in Germany in the late 1990s but meet such a relatively dismal political fate by the Summer of 2001? In answering this question, I propose a framework centered around the interaction of ideas and state institutions to study the politics of fiscal decentralization in advanced democratic nation-states. First, I show that the new set of politically-charged ideas of fiscal decentralization which gained political weight in Germany in the late 1990s were driven by economic problems associated with German unification, the increasing popularity of “fiscal federalism” in German policy circles, and a centerperiphery conflict within German political parties. Second, my analysis explains the political failure of these ideas despite their apparent popularity among political and policy elites. Here, I focus on the role of the upper house of the German parliament in order to explain why these ideas have had such little policy success. After demonstrating that the long-standing tradition of “cooperative” federalism has largely survived German unification, the paper concludes by discussing the potential impact of the European Union’s 1997 Growth and Stability Pact on German federalism.     

Policy Decentralization and the Endogenous Effects of State Traditions: Devolution of Water Management in Ghana and Senegal

Abstract

The widely held belief that decentralization of public services would reduce the fiscal burden of deeply indebted states led a large number of developing countries throughout the 1980s and 1990s to embark on devolution and public sector reform. Among the responsibilities that have generally been devolved are the provision and support of drinking water facilities. There is, however, a substantial cross-national difference in implementation records of public service devolution. This paper argues that state-building legacies, which shaped the capacity of local governments and the opportunity structure of local governments to cooperate with indigenous communities, explain this variation. This argument is analyzed in the context of devolution of water supply in Ghana and Senegal. The analysis shows that the weak capacity of local governments is compensated in Ghana, but not in Senegal, through co-optation of historically strong traditional authorities into local governance structures.     

Fiscal Decentralization Policies in the EU: A Comparative Analysis through a Club Convergence Analysis

Abstract

We study the degree of convergence or divergence in fiscal decentralization in the European Union over the period 1995–2015 using a club convergence approach. First, we analyze non-central expenditure and revenue as percentages of GDP, of total expenditure and of total revenue. The results for the EU-15 countries indicate some clustering, with three clubs formed when using GDP and four to five when using total revenue or expenditure. Second, we study the gap between expenditure and revenue as a proxy of fiscal responsibility. This results in three and two clubs respectively, with Denmark as the divergent country with the highest gap. Finally, we analyze potential unions of clubs and transitions. We also interpret our results taking into account variables found in the literature as determinants of fiscal decentralization. These results show how European countries are quite heterogeneous in terms of fiscal federalism and decentralization, with greater convergence in fiscal responsibility than in the other magnitudes.     

The purpose of intergovernmental councils: A framework for analysis and comparison

ABSTRACT

Intergovernmental councils (IGCs) are specific, institutionalized forums of intergovernmental relations. They provide essential horizontal and/or vertical executive channels for preparing, deciding, and implementing multilevel policies. We assume there to be variation, both across federal systems and policy domains, in the purpose they serve – from mutual influence and protection of autonomy through joint decision-making to mere exchange of information – the use that central or sub-state actors make of IGCs, as well as their effectivity. In order to map and explain such variation, this introductory article provides a framework for analysis that includes both conceptual building blocks and conjectural relationships, laying the comparative groundwork for the case studies included in this Special Issue. Findings from the case studies indicate that it is primarily the institutional architecture, but also the structure of the multilevel party system, that account for variation in the purpose and effectiveness of IGCs.     

Iron Houses in the Tropical Heat: Decentralization Reforms in Africa and their Consequences

Abstract

Decentralization reforms introduced to Africa have not always delivered the intended outcomes. Through interaction with the broader historical, political, social and economic context, reforms seem to have engendered political consequences beyond decentralization itself. Most of the literature on decentralization and development emphasizes questions of institutional design and policy, but here we expand the focus of analysis and incorporate the harder-to-pin-down political patterns marking the workings of decentralization in Africa. Through the case-studies of Ghana, Senegal, Zimbabwe, Namibia, Ethiopia and Uganda we seek to connect the debates on development with the scholarly literatures on comparative federalism, comparative decentralization and local democracy. The conclusion that emerges is that no magic formula which can turn countries into peaceful, stable and prosperous democracies overnight exists. And, importing formal institutions without regard to the local historical, political, social and economic context risks leaving us with elegant but dysfunctional iron houses in the tropical heat.     

Federal dynamics in times of economic and financial crisis

The global economic and financial crisis is a challenge for all governments, but particularly for federal states because divided and/or shared territorial powers make federations susceptible to coordination problems in fiscal policy making. This article explores the effects of the ongoing crisis on federal relations. Three kinds of problems that may become the cause of federal tensions and conflicts are evoked: opportunism of subgovernments, centralisation and erosion of solidarity among members of the federation. Our analysis of fiscal policies and federal conflicts of 11 federations between 2007 and the present reveals three kinds of coordination problems: shirking in the use of federal government grants, rent‐seeking in equalisation payments, and over‐borrowing and over‐spending. Our results show that shirking remained limited to few cases and occurred only in the first part of the crisis. However, rent‐seeking and over‐borrowing and over‐spending led to a reduction of solidarity among subgovernments and to increased regulation of the fiscal discretion of the members of the federation. Subsequently, tensions in federal relations increased – although only in one case did this challenged the federal order.     

Decentralization and Development in Contemporary Uganda

Abstract

There has long been an emphasis on the importance of decentralization in providing better quality public services in the developing world. In order to assess the effectiveness of decentralization I examine here the case study of Uganda, which has seen major decentralization of power over the last quarter-century. In particular the current government has introduced a five-tiered local government structure, decentralized both fiscal and political power to local governments and introduced regular local government elections. However, initial excitement about Uganda's decentralization programme has tapered off in recent years due to a number of problems outlined here. In particular, I show that decentralization in Uganda has suffered from a lack of independence from central government control, which has led to a lack of effectiveness in the provision of high quality public goods.     

Bicameral bargaining and federation formation

This paper takes a political economy approach to fiscal centralisation through federation formation. We analyse a two-region model of federalism with inter-regional policy spillovers. Departing from a state of independence with decentralised provision of public policy, we analyse the proposed formation of a federation to internalise the spillovers. We consider equilibrium allocations under alternative institutional environments involving: simple majority voting, a restriction of uniform taxation, and regional bargaining through a bicameral legislature. Bicameralism facilitates federation formation for the largest set of parameter values of the model, which is consistent with the observation that bicameralism and federalism often appear together.     

Vote Compass in British Columbia: insights from and about published polls

ABSTRACT

Published polls in the 2013 British Columbia provincial election conspicuously failed. This paper uses the Vote Compass Voter Advice Applications to shed light on the prediction failure. At the same time, it considers whether the dynamics of expressed vote intention in the Compass can be deployed as a rolling cross-section – in particular, whether the dynamics of participant self-selection are driven by temporally differentiated bias. Analysis will include selection effects within the Compass, as participants choose whether or not to proceed beyond the “voter advice” component to the political perception and intention batteries.     

State Retrenchment and Administrative Reform in Ireland: Probing Comparative Policy Paradigms

Abstract

Policy choices in response to crisis may carry consequences both for distributive outcomes and for the future policy capacity of the state itself. This paper uses conceptual heuristics to interpret policy practice. It examines the underlying policy paradigms shaping Irish government decisions in the aftermath of the European financial and economic crisis. Drawing on comparative political economy literature, it distinguishes between two such paradigms – market-conforming and social equity – and applies them to three reform themes: reconfiguration of public budgets, the public service pay bargain, and the organizational profile of state competences. The findings entail lessons for understanding the malleability of policy choice, and how state policy choices in response to crisis are framed and implemented.     

Holes in the safety net,leaks in the roof: Changes in Canadian welfare policy and their implications for social housing programs 1

Abstract

This article surveys recent reforms to Canadian social policy at the national level and welfare programs at the provincial level to determine how social housing policy and programming are being affected. The survey considers Canada's Social Security Review consultation process, which played out over 1994 and 1995. The article outlines various concerns raised over the Canada Health and Social Transfer, a fundamental reform to intergovernmental fiscal and policy relations announced in the 1995 federal budget and elaborated on in the 1996 budget.

The transfer of administrative responsibility for federally funded social housing to provincial and territorial governments is discussed and recent developments in welfare programs across Canada are described, noting housing elements within these programs.     

Social networks and the study of relations: networks as method,metaphor and form

Abstract

Networks have recently become fashionable in social analysis but most of the new network approaches have paid scant attention to the long history of reflections upon the potential of networks as an analytical device in the social sciences. In this paper we chart the developments in networking thinking in two disciplinary areas – social network analysis and social anthropology – in order to highlight the enduring difficulties and problems with network thinking as well as its potential. The first half of the paper explores the uses of network approaches over the past fifty years, situating theoretical and methodological questions in their broader disciplinary contexts. The authors then show how emerging issues from both bodies of work offer the promise of new kinds of networking thinking.     

Decentralization and the post–war political economy

This paper uses cross–national data for 21 OECD nations to examine whether there is evidence of a connection between measures of political and fiscal decentralization and the major, long–term, performance parameters of the post–war political economy. Findings of what is necessarily an exploratory analysis of a wide range of policy outcomes suggest that federalism and the proliferation of constitutional veto–points have inhibited the expansion of the socially protective state and that a low level of fiscal centralization appears to have restrained post–war inflationary pressures and gone along with higher rates of post–war economic growth. No evidence is found to connect either political or fiscal measures with postwar labour market performance.