State capture from below? The contradictory effects of decentralisation on public spending

Abstract

This study analyses the contradictory effects of decentralisation on public spending. We distinguish three dimensions of decentralisation and analyse their joint and separate effects on public spending in the Swiss cantons over 20 years. We find that overall decentralisation has a strong, significant and negative effect on the size of the public sector, thus confirming the Leviathan hypothesis. The same holds for fiscal and institutional decentralisation. However, the extent to which political processes and actors are organised locally rather than centrally actually increases central and decreases local spending. This suggests that actors behave strategically when dealing with the centre by offloading the more costly policies. The wider implication of our study is that the balance between self-rule and shared rule has implications also for the size of the overall political system.

Financing framework for local governments: diagnosis and change proposals

“…At the same time, the resilience of local governments to shocks may also weaken because they may rely on the central government as they have no special incentives to take care of the resilience by themselves. Finally, fiscal discipline is also weakening (Mueller et al, 2017). The more the central government finances the local authorities, the higher the political costs it faces if it refuses to support a unit in financial difficulties (Rodden, 2005).…”

“…They rather jeopardised it, especially if they appeared as a consequence of pro-efficiency changes (cf. Mueller et al, 2017). All this shows how important financing framework for local governments may be from economic, social and political perspective.…”

“…First, we start with a brief survey of the literature on effects of (de-)centralisation of public finances (see, e.g. Bartolini et al, 2018;Bukowska & Siwińska-Gorzelak, 2019;de Mello, 2000;Eyraud & Lusinyan, 2011;Köppl-Turyna & Pitlik, 2018;Lago-Peñas et al, 2019;Mueller et al, 2017;Rodden, 2005). We survey the literature in order to define basic features of financing framework for local governments that favour, or conversely, hinder efficiency of their spending.…”

Senkt New Public Management die Verwaltungsausgaben in den Schweizer Kantonen? Eine empirische Analyse über zwei Dekaden

“…In der Schweiz sind die Gesamtausgaben der Kantone und Gemeinden ebenfalls ein stark verbreitetes Forschungsfeld (vgl. Feld und Kirchgässner ; Good et al ; Müller et al ; Schaltegger und Feld ; Vatter und Freitag , ). Viele Beiträge bedienen sich dabei Theorien der vergleichenden Staatstätigkeitsforschung, um die Verwaltungstätigkeit zu erklären.…”

An Ever Closer Union? The Nationalisation of Political Parties in Switzerland, 1991–2015

“…The role of direct democracy, finally, is ambivalent: having favoured the emergence of a national identity (Stojanovic ), it also enables cantonal (party) deviations and contributes to maintaining decentralisation (Mueller et al. ). And in several periods, referendums and initiatives have even served to emphasise territorial cleavages, rather than foster unity.…”