While some scholars argue that …scal decentralization gave Chinese local o¢ cials strong incentives to promote local economic growth, traditional …scal federalism theories are not directly relevant to explain such an e¤ect in the particular context of China. In this paper, we explain the existence of interjurisdictional competition among Chinese local o¢ cials using a model of yardstick competition "from the top", in which the central government (and not local voters) creates a competition among local o¢ cials by rewarding or punishing them on the basis of relative economic performance. Our model predicts that, in this context, local governments are forced to care about what other incumbents are doing and that public spending settings are strategic complements. Then, by estimating a spatial lag dynamic model for a panel data of 29 Chinese provinces from 1980 to 2004, we provide empirical evidence of the existence of such public spending interactions. We propose a rigorous empirical framework which takes into account heterogeneity, simultaneity and endogeneity problems and spatial error dependence. The results are encouraging to the view that there are some strategic interactions among Chinese provinces, resulting from a yardstick competition created by the central government.JEL Classi…cation: D72, H2, H7
This paper proposes (i) a new database of tax revenue for 42 Sub-Saharan African countries (SSA) over the period 1980-2015, (ii) an estimate of tax effort for these countries, and (iii) some replication analyses of previous tax effort estimations. The database results from statistical information of the African Department of the International Monetary Fund (IMF). In particular, it allows distinguishing tax revenue from the natural resource sector from the other economic sectors. SSA countries collected on average 13.2 percent of GDP in non-resource tax revenue over the studied period and their average estimated tax effort is 0.57. In other words, SSA countries could raise 23.2 percent of GDP in non-resource taxes if they fully used their potential. In line with previous analyses, we find that countries' stage of development measured by per-capita income, financial development, and trade openness are important factors improving tax revenue in the region, while natural resource endowment and the importance of the agriculture sector reduce unambiguously the non-resource tax-to-GDP ratio. Finally, beyond the originality of the database itself and the empirical results, this work participates explicitly to the replication principle given its online development with R software (https://data.cerdi.uca.fr/taxeffort/).
We study the effect of decentralization on the access to some poverty-related public services in Benin. Compiling panel data from local governments' accounts and from surveys on 18,000 Beninese households performed in 2006 and 2007, our study suggests that decentralization has a positive overall effect on access to basic services. However, this effect appears to be nonmonotone following an inverted U-shaped curve. It varies according to local jurisdictions' wealth and to the nature of basic services. Decentralization in Benin contributes positively to the reduction of poverty by improving the average access to poverty-related services. However, the devil is in the details, as decentralization seems to increase inequality among local governments in terms of access. Another result relying on the success of decentralization in Benin is the prioritization of basic services, which differs among local governments according to their wealth. While the poorest jurisdictions neglect primary education, focusing more on access to drinking water, the richest ones get less attention to sewage services, since these are already provided at a sufficiently high level.
Without denying particular dimensions of the decentralisation in Sub-Saharan countries, this paper applies standard reasoning from the …scal federalism literature to a developing country and tests the existence of strategic interactions among local Beninese governments, called 'communes'. We …rst propose a two-jurisdiction model of public expenditure interactions, considering a constrained Nash equilibrium to capture the extreme poverty of some communes. We show that spillovers among jurisdictions involve strategic behaviours of local o¢ cials who have su¢ cient levels of …scal resources. Second, by estimating a spatial lag model, our analysis provides evidence for the presence of strategic interactions in Benin, contingent on communes' …scal autonomy. Such interactions arise among communes which are geographically or ethnically close. We also highlight both an opportunistic behaviour of local governments before local elections and an e¤ect of partisan a¢ liations. This African democracy appears to be as concerned as developed democracies with strategic …scal interactions.JEL Classi…cation: D72, H2, H7
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