The Flypaper Effect: Do Political Institutions Affect Danish Local Governments’ Response to Intergovernmental Grants?

Abstract

Despite a large number of empirical studies on the flypaper effect, it remains disputed whether the effect exists and to what extent it is asymmetrical. The flypaper effect suggests that intergovernmental grants tend to result in higher increases in public expenditures than a similar increase in citizens’ private income would have led to. An asymmetrical effect exists when the fiscal response differs depending on whether grants are increased or decreased. By considering political institutions that moderate the effect of intergovernmental grants, this article offers a theoretical explanation that accounts for the mixed empirical evidence. The local response to intergovernmental grants is tested using a reform of the Danish intergovernmental grant scheme in 2007. In line with the expectation, the article finds a strong asymmetrical effect, but more surprisingly, this effect is found both when subnational budget institutions are centralised and when they are fragmented.     

Merging county administrations – cross-national evidence of fiscal and political effects

ABSTRACT

While many central governments amalgamate municipalities, mergers of larger county administrations are rare and hardly explored. In this article, we assess both fiscal and political effects of county mergers in two different institutional settings: counties act autonomously as upper-level local governments (Germany), or counties being decentralised branches of the state government (Austria). We apply difference-in-differences estimations to county merger reforms in each country. In both cases, some counties were amalgamated while others remain untouched. Austrian counties (Bezirke) and German counties (Landkreise) widely differ in terms of autonomy and institutions, but our results are strikingly similar. In both cases, we neither find evidence for cost savings nor for staff reductions. Instead, voter turnout consistently decreases in merged counties, and right-wing populists seem to gain additional support. We conclude that political costs clearly outweigh fiscal null benefits of county merger reforms – independent of the underlying institutional setting.     

Autocracy, Elections, and Fiscal Policy: Evidence from Malaysia

Authoritarian regimes often use fiscal policy to reward political supporters and to punish political opponents. In many authoritarian regimes with political institutions like parties, legislatures, and elections, elections become a focal point for budget expenditures and the distribution of government patronage. A time-series analysis of Malaysian fiscal expenditures from 1967 to 1997 shows that the ruling coalition systematically increases federal government spending before elections. In addition to marshalling private resources to distribute patronage, the Malaysian government manipulates the government’s official position. These findings have important implications for the growing literature on political institutions under autocratic regimes and the politics of patronage and redistribution in the developing world. They also suggest a new empirical domain for existing theories of political business cycles.     

Presidents and cabinets: The political determinants of fiscal behavior in Latin America

What political factors drive fiscal behavior in Latin America’s persidential democracies? This work seeks to identify the political determinants of the level of public spending and the primary balance of ten democratic regimes in Latin America between 1980 and 1998. We consider, besides the influence of traditional variables such as the government’s ideological orientation and electoral cycle, the impact of other institutional and political aspects, such as the legislative strength of the president, ministerial stability, and the degree of centralization of budget institutions. Methodologically, the work is based on a pooled cross-section-time-series data analysis of 132 observations. Our main findings are that presidents supported by a strong party and leading a stable team of ministers—and ones more to the right on the political spectrum—had a negative impact on public spending and a positive effect on fiscal balance, and that the electoral cycle deteriorates the latter.     

Testing for Fiscal Illusion in Wisconsin Towns

Fiscal illusion, a theory of the impact of government revenue structures on voter decision-making, has been studied extensively by economists and political scientists; however, empirical verification has been limited. This study builds on Lowery's (1987a) work by examining the relationship between suggested illusionary revenues and measures of electoral stress. Here, electoral stress is measured as constituent contacting—one possible measure of voter influence—for local government officials up for re-election. Using a combination of survey data from over 1,000 Wisconsin town board members, audited fiscal data and U.S. Census data, we were able to test for fiscal illusion. Our findings show that when looking at five revenue types (conditional grants, unconditional grants, property taxes, user fees and charges, and debt service) there is some evidence suggesting officials seeking another term in office will tend to support fees and charges as a revenue structure over other structures. Overall, there is little consistent evidence suggesting that elected officials are manipulating revenue structures for electoral gain. Revenue structures are mostly influenced by social and economic factors, such as median household income, population changes, and per capita property valuation.     

Political participation and city county consolidation: jacksonville-duval county

This article analyzes the effect of consolidation on the perception of power and influence in city and county government. It focuses specifically on the political effects of consolidated government by examining the extant literature and assessing the political impacts of consolidated government in Jacksonville-Duval County. Using an interrupted time series analysis of voter participation, taxes, and expenditures were examined to determine the impact on consolidation and to explore the consequences of administrative reform.     

The political determinants of fiscal policies in the states of India: An empirical investigation

Using data from the 14 major states of India, we investigate whether state governments' fiscal policy choices are tempered by political considerations. Our principal findings are twofold. First, we show that certain fiscal policies experience electoral cycles: state governments raise less commodity tax revenue, spend less on the current account, and incur larger capital account developmental expenditures in election years than in all other years. Second, we show that coalition state governments raise less own non-tax revenues and spend less on the current account than state governments that are more cohesive in composition. In sum, the dispersion of political power affects government size.     

Political Entrepreneurs and Public Administration Reform: The Case of the Local Authorities' Unification Reform in Israel

This article examines a specific institutional change in Israel. In 2003 the Israeli Knesset implemented the local authority unification plan, an unprecedented reform in the structure of local authorities in Israel. This article is about a local government reorganization taking place in a unique political culture. This article tries to integrate the role of political entrepreneurs within an Institutionalist and “learning” perspectives to offer an explanation to a local government structure, thus politicians influence and are influenced by a wide range of institutional norms and practices in a complex process of design and determination of institutional change.     

Grass-Root Organisations,Intergovernmental Collaboration,and Emergency Preparedness: An Institutional Collective Action Approach

Abstract

This paper examines the importance of grass-root emergency response groups in emergency preparedness. Consistent with the Institutional Collective Action framework, we highlight key constraints associated with local government strategies of mutual resource exchange and barriers to intergovernmental collaboration. We examine local governments’ emergency preparedness using survey data collected in the North Central Texas region. We employed a simple OLS analysis to determine mutual exchange and Poisson estimations on the likelihood of local governments receiving and providing external assistance. Findings showed that the presence of grass-root organisations in a jurisdiction is associated with emergency preparedness, highlighting the importance of norms of volunteerism. Local political institutions and participation in federally funded programmes also have an effect on local government decisions.     

Analysing Local Policy Agendas: How Dutch Municipal Executive Coalitions Allocate Attention

Abstract

This article provides an analysis of the allocation of attention to policy problems on the local level, focusing on the executive agenda of six municipalities in the Netherlands over a 25-year period. It reveals that there is specifically a local politics of attention, showing differences between national and local policy agendas in specific policy areas. We did not find evidence that the political composition of the local executive coalitions leads to agenda differences, revealing the more problem-oriented and pragmatic nature of local politics. We did find evidence of an effect of institutional arrangements between national and local government on shifting patterns of attention, such as due to decentralisation. This shows that the local politics of attention is limited in scope and conditioned by the functions of local government and the institutional arrangements of policy making in the Dutch decentralised unitary state and that rearrangements affect these patterns of attention.     

Pitfalls of power to the people: Decentralization,local government performance,and system support in Bolivia

Across the developing world, many governments have implemented political reforms—heavily promoted by international donors—designed to transfer greater power to subnational levels of government and to provide a more substantial policymaking and oversight role to citizens. Although economic analyses have frequently argued that such decentralization programs improve the efficiency of public expenditures, far less is known about their political impact. Based on an analysis of two large national public-opinion surveys from Bolivia, a country that has recently implemented one of the most comprehensive decentralization reforms yet attempted in Latin America, we analyze the role decentralized local institutions are playing in shaping citizen attitudes toward their political system. Our findings support the contention that decentralization can bolster citizen levels of system support at the national level. Equally important, however, we also demonstrate that the renewed emphasis on local government can have the opposite effect of producingmore negative views of the political system when the performance of local institutions falters. Jonathan T. Hiskey is assistant professor of political science at the Univeristy of California, Riverside. His most recent research focuses on subnational processes of political and economic development taking place across Latin America. Mitchell A. Seligson is Daniel H. Wallace Professor of Political Science, research professor of international studies, and professor in the Graduate School of Public and International Affairs at the University of Pittsburgh. His research centers on surveys of democratic values and behaviors in Latin America.     

Fiscal and political determinants of local government involvement in public-private partnership (PPP)

ABSTRACT

In this article, we estimate the main determinants of local government’s engagement in public-private partnership (PPP) projects using logistic panel regression. We use data from 2478 municipalities and cities in Poland from 2009 to 2016. The results show that municipalities with higher levels of indebtedness have a higher probability of opening PPP tenders while local units that are more dependent on central grants or receive more European grants are less engaged in PPP. We also found that the mayors of municipalities and cities with stronger electoral competition engage in PPP with a higher probability. These results are important for discussions on the efficient use of PPP. They show that local government decisions made in conditions of fiscal constraint and political struggle can blur the PPP’s value-for-money aim.     

Decentralisation,Governance and the Structure of Local Political Institutions: Lessons for Reform?

Many governments are devolving power to elected local councils, hoping to improve service delivery and citizen representation by bringing officials closer to the people. While these decentralisation reforms hold the promise of improved governance, they also present national and sub-national leaders with a complex array of options about how to structure newly empowered local political institutions. This article draws on cross-national experience and the latest research to identify the trade-offs inherent in structuring local political institutions. The study's specific interest is in the impact of strong, locally elected councils on governance and representation. Proceeding from an empirical basis that competitive elections are vital for the legitimacy and efficiency of local political institutions, the analysis first questions the impact of four institutional features – central versus local control, local executive versus local council authority, local council structure, and the role of parties – on service provision and fiscal solvency. The article's second section analyses the impact of decentralisation on political representation, with a particular focus on the role of institutional design in combating the threat of extremist parties. A final section summarises empirical findings and advances some policy-relevant conclusions.     

Explaining trust in political institutions: Some illustrations from the Baltic states

An important precondition of successful democratic consolidation is voters' confidence that political institutions do not abuse their privileged position of power. Seeking to identify variables that explain trust in political institutions, the paper tests different theories of institutional trust with individual-level survey data from Estonia, Latvia and Lithuania. Building on prior research, two competitive theories—the cultural and performance explanation—are identified and tested, while also controlling for the effects of party preference, ethnicity, and socio-demographic factors. The results show that both cultural and performance variables influence citizens' trust in political institutions. In other words, institutional trust depends on how much the individual trusts other people as well as on how well they believe the economic and the political system to function. Besides cultural and performance variables, most control variables also proved to be significantly associated with institutional trust, confirming the need to include correct control variables in models of institutional trust.     

Local Council Development Areas and Local Service Delivery: How a Fourth-tier Government Unit is Improving Access to Primary Health Care and Education Services in Lagos,Nigeria

ABSTRACT

Emerging accidentally from an array of political and legal contestations is a fourth-tier government unit in Lagos state – Local Council Development Areas (LCDAs). The LCDAs have survived almost two decades of existence without the ’traditional’ monthly federal allocation, which has been the mainstay of the existing 774 LGAs in Nigeria. This study attempts an explanation of this apparent survival by examining the institutional structure of the LCDAs vis-à-vis their service delivery performance. Different from earlier studies that have examined service delivery using final outcomes, the study examines accessibility as an intermediate output; dimensioned as availability, adequacy and affordability. Using a mixed-methods research design, the study shows that Lagos LCDAs’ inclusive operational structure is significantly improving access to primary health care and education services. Thus, the study finds evidence within the operational structure of Lagos LCDAs for Acemoglu and Robinson’s theory of inclusive and extractive institutions.     

Financial Discrepancies in Political Party Funding by Indonesian Local Government Authorities

Through different forms of decentralization variables, this study investigates Indonesian local government authorities' 2006 financial accountability reports in terms of local government authorities' contributing funds to political parties. Audit results by the Supreme Audit Body reveal that many articles were violated by these authorities in regard to the distributing, administrating, and reporting of assistance funds from them to political parties. Each rupiah committed by the 221 local government authorities involved in this study violated, on average, 1.8 articles, indicating a low level of compliance.

Critically, the study finds that administrative, fiscal, and political decentralization decreases discrepancies. The less administratively decentralized provincial authorities, where decision making is a level of government farther from the people, are more likely than non-provincial local government authorities to make discrepancies with political party legislation and regulations. Fiscally decentralized local government authorities, who earn a higher fraction of their revenue from local sources, also tend to have fewer discrepanciesFinally, politically decentralized authorities with a higher percentage of elected officials from the decentralized supporting ruling coalition, also have fewer discrepancies.     

Local Fiscal Stress in Sub‐Saharan Africa: The Kenyan Example

Abstract

This article identifies the fiscal weaknesses of local government in Africa, with concentration of the fiscal stress that is endemic to their condition. It then examines Kenya, as a case study in sub‐Saharan Africa. It continues to focus down on three Kenyan cities—Nairobi, Mombasa, and Kisumu, and identifies their six major revenue sources: land based revenues, regulatory revenues, income‐based taxes, service revenues, user charges, and government grants. Although some of the data is problematic, it is possible to determine several reasons for local fiscal stress. These reasons include limited access to stable financial resources, unstable national economic performance, centralized governmental control, mixed results of decentralization, and institutional and managerial weaknesses, including corruption in the collection and use of resources. Four recommendations are advanced to help these local governments: the development of local credit systems, the use of non‐governmental organizations, the clarification of the use of foreign aid, and the development of a greater capacity for governance. This articles main theoretical contribution is the development of an analytic framework for examining the reasons for fiscal stress in sub‐Saharan Africa. By examining revenue and expenditure patterns of the three localities, the article develops a data set that highlights some of the reasons for local government financial problems—the governments do not know how much revenue can be collected from a particular revenue source, they do not have records of existing sources of revenue, and they only collect about 40–60% of their estimated collections.     

Interlocal collaboration and local climate protection

ABSTRACT

The influences of state government have been curiously absent from most studies of collaboration among cities. Extant research on city collaboration which promotes on climate and environmental sustainability issues focuses primarily on local-level institutions, politics, and processes. Thus, the role of states to constrain or facilitate collaboration among local governments needs to be more fully accounted for. Building on transaction cost and institutional collective action theory and drawing on data from a national survey of US cities, we investigate the influences of city-level factors together with the hierarchical effects of state rules and policies on the extent to which mechanisms for interlocal collaboration are employed in pursuing climate protection and renewable energy development goals. The results confirm predictions that multilevel intergovernmental forces influence the extent to which cities collaborate. These results have both theoretical and practical implications for understanding interlocal collaborations.     

Political Institutions and Public R&D Expenditures in Democratic Countries

While research and development (R&D) expenditure is crucial in a nation's competitive advantage, factors determining levels of public investment in R&D have yet to be examined. This article seeks to fill this void, focusing on different democratic institutions such as presidential versus parliamentary systems, majoritarian versus proportional electoral systems, federal versus unitary systems, bicameral versus unicameral legislatures, and the effective number of parties. Building upon theories of political institutions and government size and utilizing public R&D appropriations data from 18 Organization for Economic Cooperation and Development (OECD) countries between 1981 and 2007, this article reports that democratic institutions do matter in the levels of public R&D spending. However, the effect is more complicated across the different types and performers of research than expected. Additionally, the effect of one institutional dimension is found to be moderated by the existence of the other dimensions, which makes it clearly more challenging to sort out different degrees and directions of the relationships between R&D expenditures and political institutions.     

The limits to military power: Institutions and defense budgeting in democratic Argentina

This article examines the reasons behind the dramatic decline in military budgets in Argentina under democratic rule. These trends were unexpected, given the, political power the armed forces of that country have wielded in the past. Here it is argued that within the democratic state, there were institutional arrangements that enabled civilian decision makers to trim defense expenditures, despite opposition from the military. The two key institutional traits were found to be the concentration of authority and the autonomy of decision-makers from outside pressures. Because budgetmaking was centered within a well-insulated civilian-run ministry, fiscal planners working at the behest of the president were able to design and implement budgets they wanted, over and above the objections of military officers, and without interference from other branches of government. David Pion-Berlin is a Professor of Political Science at the University of California, Riverside. He is the author of several books, includingThrough Corridors of Power: Institutions and Civil-Military Relations in Argentina (Penn State University Press, 1997), and numerous articles on the subjects of Latin American civil-military relations, military regimes, political economy, and political repression.