Refining the Concepts of Territorial Revenue Assignment,Substate Fiscal Self-rule and Territorial Fiscal Balance

Fiscal federalism has offered a template for understanding intergovernmental fiscal relations. Yet when politicians are involved in day-to-day decentralization it may happen that some of the normative elements of fiscal federalism do not fit reality. Substate entities may go beyond the own-source paradigm and have a practical interest in alternative forms of fiscal self-rule. To better understand this pragmatism a threefold stage model of territorial revenue assignment is presented drawing on some insights offered by Germany’s fiscal constitution. Within this framework a reassessment of the role of territorial levels as levels during vertical revenue assignment is undertaken, a new typology of fiscal self-rule is introduced, and finally a theory of multiple territorial fiscal balance points is outlined, including the one based on the real domain of substate own policy-making.     

Southern Europe and the Eurozone Crisis Negotiations: Preference Formation and Contested Issues

South European countries were severely hit by the eurozone crisis. Adopting the theoretical framework of prospect theory, this article conducts an empirical analysis of the interpretation of the situation by the South European political leaders in terms of gains and losses. After discussing the stances of South European countries vis-à-vis a number of contested issues which emerged during the 2010–2013 negotiations, the article goes on to provide a comparative account of the determinants of national preference formation with respect to the eurozone crisis reforms in Cyprus, Greece, Italy, Malta, Portugal and Spain, paying special attention to the relationship between governments and parliaments.     

Decentralised governance and empowerment of county governments in China: betting on the weak or the strong?

Decentralised economic development initiatives empowering local governments have gained currency in both developed and developing contexts. The empowerment of county governments in China is a case in point. This study uses difference-in-differences (DID) and the fixed-effects model with panel data (1997–2008) in counties in Zhejiang Province to empirically investigate the different impacts of the empowerment reform on county economies and fiscal revenue (FR). The results reveal that the reform has not promoted county economies as expected but has significantly increased FR. The reform has had a larger impact on less developed counties than on developed ones, which suggests a positive outcome of this decentralisation policy in China with regard to revenue generation. This study on county empowerment in Zhejiang Province provides some policy implications for other regions in China or developing countries.     

Current challenges to multinational federalism in India

India’s multinational federation has experienced multiple challenges in the last 25 years, relating to the rise of coalition politics and the process of economic liberalization, both of which have increased the power of some of the states of the federation at the expense of others. The internal borders of India continue to be restructured, with the latest state, Telangana, created in 2014. India is often seen as a successful multinational federation, but it is important to recognize the limitations of this success, as well as the areas where the rise of an aggressive Hindu nationalism poses a powerful threat to India’s multinational federal democracy.     

Head versus heart: The ambiguities of non-sovereignty in the Dutch Caribbean

Whereas political scientists tend to make binary distinctions between sovereign states and subnational units, in recent decades the number of a third, hybrid category of federacies or non-sovereign jurisdictions has strongly increased. In this paper, we explore the benefits and downsides of non-sovereignty from the perspective of these territories’ inhabitants. We zoom in on the six islands of the Dutch Caribbean, which in 2010 experienced a profound change in their political status. Using data from two large-scale opinion surveys that we conducted in 1998 and 2015, respectively, we show that the population of the Dutch Caribbean islands maintains a highly ambiguous attitude towards the non-sovereign status. While many respondents appreciate the material benefits of the enduring link with the metropolis, there are significant emotional and ideational objections to this relationship. These findings are embedded in broader scholarly discussions about the position of decentralized and peripheral jurisdictions vis-à-vis their administrative core.     

Reexamining the Relationship Between Fiscal Stress and Outsourcing

The determinants of outsourcing in local government are widely studied from a variety of frameworks. One concept consistently used to explain local government outsourcing is fiscal condition, with many noting that outsourcing is more likely when a local government’s fiscal condition declines into fiscal stress. Despite the ubiquity of this expectation in the outsourcing literature, several articles reviewed suggest that the findings for this relationship remain uncertain. As a result, the research presented in this article sought to examine and extend what is known about the relationship between fiscal stress and outsourcing in U.S. municipalities. The research includes previous measures of fiscal stress and adds new measures. In addition, it tries to overcome the limited theoretical testing of the relationship between fiscal stress and outsourcing by examining both direct and indirect effects of fiscal stress on outsourcing. It finds that municipalities in the United States that are experiencing fiscal stress are more likely to engage in outsourcing, particularly municipalities that are experiencing fiscal stress and have a positive evaluation of the external market to provide services.     

Fiscal consolidation under electoral risk

The European debt crisis has uncovered serious tension between democratic politics and market pressure in contemporary democracies. This tension arises when governments implement unpopular fiscal consolidation packages in order to raise their macroeconomic credibility among financial investors. Nonetheless, the dominant view in current research is that governments should not find it difficult to balance demands from voters and investors because the economic and political costs of fiscal consolidations are low. This would leave governments with sufficient room to promote fiscal consolidation according to their ideological agenda. This article re‐examines this proposition by studying how the risk of governments to be replaced in office affects the probability and timing of fiscal consolidation policies. The results show that governments associate significant electoral risk with consolidations because electorally vulnerable governments strategically avoid consolidations towards the end of the legislative term in order to minimise electoral punishment. Specifically, the predicted probability of consolidation decreases from 40 per cent after an election to 13 per cent towards the end of the term when the government's margin of victory is small. When the electoral margin is large, the probability of consolidation is roughly stable at around 35 per cent. Electoral concerns are the most important political determinant of consolidations, leaving only a minor role for ideological concerns. Governments, hence, find it more difficult to reconcile political and economic pressures on fiscal policy than previous, influential research implies. The results suggest that existing studies under‐estimate the electoral risk associated with consolidations because they ignore the strategic behaviour that is established in this analysis.     

Intergovernmental councils in the United States

ABSTRACT

This article focuses on intergovernmental councils (IGCs) in the United States in which prominent state-level executive politicians, that is, governors, play a leadership role. In the US case, these IGCs developed out of a desire to facilitate interstate information exchanges and a need for state governments to join forces to protect their autonomy vis-à-vis the federal government. In this latter role, the councils function as lobbyists for state government interests. The research question driving the analysis has to do with impact: what difference do executive-led IGCs make, either vertically or horizontally, in the US federal system? The question of impact is particularly relevant because growing partisan polarization in contemporary federal and state political institutions complicates collective action by states.     

Vertical influence or horizontal coordination? The purpose of intergovernmental councils in Switzerland

ABSTRACT

In 1993, the Swiss cantons established the conference of cantonal governments (KdK). While the literature on Swiss federalism generally acknowledges the important role of the KdK, little is known about its specific purpose, in particular compared to other, older intergovernmental councils operating in Switzerland. We therefore investigate the purpose of the KdK and contrast it with two other intercantonal conferences with nationwide scope, namely those on education and finance. To do so, we trace two of the most important federal reform processes of the last decade: the latest renewal of fiscal equalization and educational harmonization. We find a division of labour between the KdK and policy-specific councils. While the former aims at vertical political influence, the latter primarily engage in genuine horizontal policy coordination. This flexible and smooth interplay of the two types of councils has contributed to further strengthening the political role of the cantons in the Swiss federation.     

Renegotiating the empire,forging the nation(-state): the Bohemian/Czechoslovakian case through the political–economic thought of Thomas G. Masaryk and Karel Kramář, c. 1890–1920s

This article explores the dilemma of the small Bohemian Lands/Czechoslovak nation(-state) in staying “in” or “out” of the larger Habsburg supranational entity in the late nineteenth and the early twentieth century. It does so mainly through the language of political economy (on national wealth creation and redistribution) articulated in the opinions and political actions of Czechoslovakia’s two founding statesmen, the first president, Thomas G. Masaryk, and the first prime minister, Karel Krama?. The article argues that their choice of staying “in” the large imperial space was premised upon renegotiating a better political and political–economic deal for the Bohemian Lands, whereas the option of abandoning it and of forging the Czechoslovak nation-state was essentially based on political reasons. And while both advocated an interventionist role for the state in the economy during the imperial period, they considered such a prerogative even more essential for their new nation-state.