Fiscal Federalism and Regional Growth : Evidence from the Russian Federation in the 1990s

Desai, Raj M. ; Freinkman, Lev M. ; Goldberg, Itzhak

World Bank, Washington, DC

关键词: AUDITING;    AUTHORITY;    AUTONOMOUS REGIONS;    AUTONOMY;    BANKRUPTCY;   

DOI  :  10.1596/1813-9450-3138
RP-ID  :  WPS3138

学科分类：社会科学、人文和艺术（综合）

来源: World Bank Open Knowledge Repository

【 摘 要 】

Subnational fiscal autonomy-the basisfor fiscal federalism in modern federations-is meant toserve two roles. First, local control over revenuecollection is meant to provide a check on the capacity ofcentral authorities to tax arbitrarily local capital.Second, retention of taxes raised locally is meant toestablish incentives for subnational governmentalauthorities to foster endemic economic growth as a way ofpromoting local tax bases. But in the Russian Federation,fiscally autonomous regions have often resistedmarket-oriented reforms, the enactment of rules protectingprivate property, and the dismantling of price controls andbarriers to trade. The authors find statistical evidence insupport of the hypothesis that fiscal incentives of theRussian regions represent an important determinant ofregional economic performance. The authors also seek tounderstand the conditions under which fiscal autonomyprompts regional growth and recovery, and the conditionsunder which it has adverse economic effects. They argue thatthe presence of "unearned" incomestreams-particularly in the form of revenues from naturalresource production or from budgetary transfers from thecentral government-has turned regions dependent on theseincome sources into "rentier" regions. As such,governments in these regions have used local control overrevenues and expenditures to shelter certain firms (naturalresource producers or loss-making enterprises) from marketforces. Using new fiscal data from 80 Russian regions from1996-99, the authors test this central hypothesis in bothsingle- and simultaneous-equation specifications. Theirresults indicate that tax retention (as a proxy for fiscalautonomy) has a positive effect on the cumulative outputrecovery of regions since the breakup of the Soviet Union.But they also find that this effect decreases as rentableincome streams to regions increase.