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Article
Publication date: 9 November 2022

Vaseem Akram

There is vast disparity in public expenditure on science, technology and environment (STE) across various Indian states. Public expenditure on STE is crucial in…

Abstract

Purpose

There is vast disparity in public expenditure on science, technology and environment (STE) across various Indian states. Public expenditure on STE is crucial in maintaining symmetric growth, social cohesion and sustainable development. Literature on this topic is scarce, which prompted the investigation of club convergence of STE public expenditure. In particular, the purpose of this paper to study the club convergence of STE public expenditure in the case of 20 Indian states during the period from 1987–1988 to 2019–2020.

Design/methodology/approach

This study applies the clustering algorithm to identify club convergence, advanced by the Phillips and Sul test, which enables identification of multiple steady states or club convergence, unlike beta and sigma convergences.

Findings

The findings of this paper show that all Indian states do not converge towards single steady states. This suggests a disparity in STE public expenditure across Indian states. Moreover, the findings favour three clubs that have their own unique transition paths. The results of this study are supported by the robustness check.

Practical implications

The findings suggest that the allocation of public expenditure on STE can be made based on club convergence to achieve social cohesion, sustainable development and millennium development goals across states.

Originality/value

Although several previous studies have investigated the convergence of public expenditure by considering either aggregate public expenditure or health/education expenditure, literature on the convergence hypothesis of STE public expenditure, particularly across Indian states, is scarce. Moreover, this paper is unique, as it examines multiple steady states or club convergence. Finally, this paper contributes to policymaking by suggesting which states should be given a push to achieve social cohesion and sustainable development.

Details

Studies in Economics and Finance, vol. ahead-of-print no. ahead-of-print
Type: Research Article
ISSN: 1086-7376

Keywords

Article
Publication date: 9 September 2022

Tilak Sanyal

Niehaus and Sukhtankar (2013a, 2013b) find that in response to an increase in the public wage rate in National Rural Employment Guarantee Act (NREGA), underpayment of wage…

Abstract

Purpose

Niehaus and Sukhtankar (2013a, 2013b) find that in response to an increase in the public wage rate in National Rural Employment Guarantee Act (NREGA), underpayment of wage and embezzlement rates increase monotonically. This paper aims to investigate theoretically whether the empirical finding of Niehaus and Sukhtankar (2013b) is valid in the long run. The author also verify whether their observation extends to the situation where multiple types of corruption coexist.

Design/methodology/approach

The author builds a theoretical model comprising of three individuals – a government official, a landlord and a representative worker. First, the author defines a no-corruption equilibrium where the official honestly reports the employment period to the government. In a two-stage game, the landlord announces the private wage rate in stage one, followed by the worker deciding on the allocation of time between private and public works and leisure. Then the author considers a single type of corruption where the official embezzles a part of public money by over-reporting the employment period. The landlord-worker game remains the same as before. Finally, the author considers multiple types of corruption where alongside embezzlement, the official takes a bribe from the worker for employing her. Here also, the author considers a two-stage game where in stage one, the official and landlord simultaneously determine embezzlement and bribe rates and the private wage rate, respectively. In stage two, the worker decides on the allocation of time. In both types of corruption, the probability of detection increases with the corruption rate.

Findings

In the case of a single type of corruption, the embezzlement rate behaves nonmonotonically in response to an increase in the public wage rate. A similar kind of result is obtained with multiple types of corruption as well.

Originality/value

First, to the best of the author’s knowledge, no paper prior to this has theoretically modeled corruption in NREGA. Also, the observations of Niehaus and Sukhtankar (2013a, 2013b) is neither valid in the long run nor extend to multiple corruptions.

Details

Indian Growth and Development Review, vol. 15 no. 2/3
Type: Research Article
ISSN: 1753-8254

Keywords

Article
Publication date: 30 June 2020

Olabanji Olukayode Ewetan, Romanus Osabohien, Oluwatoyin Augustina Matthew, Abiola Ayopo Babajide and Ese Urhie

The purpose of this paper is to examine the relationship between fiscal federalism and accountability in Nigeria. Corruption is a global plague and is endemic in nature…

Abstract

Purpose

The purpose of this paper is to examine the relationship between fiscal federalism and accountability in Nigeria. Corruption is a global plague and is endemic in nature. Several policies have been adopted by the Nigerian Government to institutionalize accountability and combat the scourge of corruption that have hindered socio-economic progress but to no avail.

Design/methodology/approach

Thus, this study examined fiscal federalism and accountability issues in Nigeria using secondary data and used the auto-regressive distributed lag econometric technique to analyse the data.

Findings

The results from this study reveal that fiscal federalism fails to mitigate corruption in the long run in Nigeria because of poor bureaucratic quality (BQ) and ineffective law and order (LOR).

Social implications

Fiscal decentralization must be accompanied by legislations that will strengthen BQ of fiscal institutions at subnational levels and promote effective LOR.

Originality/value

This study recommends that for fiscal federalism to mitigate corruption in the long run, government must adopt appropriate policies to improve BQ and further strengthen LOR in Nigeria. The finding also suggests that to promote public sector accountability in Nigeria, government should ensure the simultaneous decentralization of expenditure and revenue to lower tiers of government. This study provides detailed empirical evidence that fiscal decentralization without accountability will accentuate public sector corruption, and in the long run, weaken local economic development initiative to boost growth and development.

Details

Journal of Money Laundering Control, vol. 24 no. 2
Type: Research Article
ISSN: 1368-5201

Keywords

Article
Publication date: 4 August 2020

Chittaranjan Nayak and Priyabrata Satpathy

Despite existence of a constitutional demarcation of functions and finances between the centre and the states, it is alleged that the centre-state funds transfer systems…

Abstract

Purpose

Despite existence of a constitutional demarcation of functions and finances between the centre and the states, it is alleged that the centre-state funds transfer systems in India have a political bargaining aspect that goes beyond the normative considerations. This paper makes an attempt to investigate if the political system allows to evolve a simple, equitable, objective and rule-based system of transfers. The aim of this paper is to explore the political economic determinants of discretionary fiscal transfers in India.

Design/methodology/approach

This paper is based on a panel data set of 28 Indian states for the period 2001–2014. After diagnostic checking for fixed effects/random effects, the authors prefer to use fixed effects regression with Driscoll–Kraay standard errors and Arellano–Bover/Blundel and Bond system estimation model that uses moment conditions in which lagged first differences of the dependent variable are instruments for the level equation.

Findings

The findings of this study reveal that fiscal performance, economic capacity and political alliance are significant but some other political determinants such as bargaining power and election years are not significant in influencing discretionary transfers.

Originality/value

Considering the limited availability of literature on federal finance, the present paper is an addition to the existing research, especially on a crucial issue concerning extra-constitutional fiscal transfers in India. Analysing a balanced panel comprising all the Indian states and examining the role of various political-economic determinants makes this paper topical.

Details

Indian Growth and Development Review, vol. 14 no. 1
Type: Research Article
ISSN: 1753-8254

Keywords

Article
Publication date: 11 February 2019

Abel Fumey and Festus O. Egwaikhide

The purpose of this paper is to examine the effects of political influences on fiscal transfers from the central government to district assemblies in Ghana.

Abstract

Purpose

The purpose of this paper is to examine the effects of political influences on fiscal transfers from the central government to district assemblies in Ghana.

Design/methodology/approach

It adopted a redistributive politics model and estimated the two-step system generalized method of moment using electoral outcomes, and transfers data for 167 districts which were classified into swing and aligned, from 1994 to 2014.

Findings

The findings reveal that Gh₵6.28m on average was transferred to each district annually, which tend to increase by 8.4 percent in election years. Further, the swing districts received 5.2 percent more than the aligned districts.

Practical implications

The sharing mechanism is significantly influenced by political considerations as there exists a political budget cycle and a general dominance of swing effects.

Social implications

The fiscal transfer system disregards the social principles of fairness and efficiency. Therefore, a wider consultative process in reviewing the formula is proposed; and this should be done in intervals of five years to minimize the indiscriminate adjustments of the sharing formula.

Originality/value

The paper empirically examines the political economy dynamics of intergovernmental fiscal transfers in a decentralized unitary system.

Details

International Journal of Social Economics, vol. 46 no. 2
Type: Research Article
ISSN: 0306-8293

Keywords

Article
Publication date: 12 September 2016

Benjamin Andrew Chupp

When sectoral shocks hit a large, regionally heterogeneous economy, it is likely that regions with sectoral specialization will be affected in different ways. In these…

Abstract

Purpose

When sectoral shocks hit a large, regionally heterogeneous economy, it is likely that regions with sectoral specialization will be affected in different ways. In these cases, it might be optimal for the country to decentralize the currency into a number of regional currencies, thus allowing for differentiated monetary policy. The paper aims to discuss these issues.

Design/methodology/approach

The author explicates the potential benefits and costs to decentralization. The author also highlights characteristics that should be satisfied in order to consider multiple currencies. This paper uses a theoretical and empirical model to test if the USA contains regional optimal currency areas. The author tests five potential divisions of the states into monetary subunions.

Findings

One of these divisions is proven to result in higher welfare (a 2 percent increase) than the status quo national monetary union. Thus, the USA is not an optimal currency area, and monetary decentralization could be a feasible and welfare-improving option for future policy.

Originality/value

There have been no previous studies of monetary divisions. Given the importance of fiscal decentralization, it is important to also understand the implications of monetary decentralization.

Details

Journal of Economic Studies, vol. 43 no. 4
Type: Research Article
ISSN: 0144-3585

Keywords

Book part
Publication date: 17 October 2017

Ion Sterpan and Richard E. Wagner

Political economy is a term in wide use and has been for centuries. Yet standard economic theory reduces politics to ethics or economics. This reduction is enabled by the…

Abstract

Political economy is a term in wide use and has been for centuries. Yet standard economic theory reduces politics to ethics or economics. This reduction is enabled by the presumption of closed choice data or given utility and cost functions. In this conceptual framework, the political vanishes into an activity of preference satisfaction according to a welfare function (ethics) or into trade (economics). To bring the political back to life within a theory of political economy requires that closed schemes of thought be replaced by open schemes. The ways in which individuals react to the indeterminacy of their subjective choice data, in innocuous small-scale settings as well as in situations of dramatic exception to constitutional rules, separates them into leaders and followers. Followership creates an opportunity for political enterprise at the social level (enterprise in rules) and at the subjective level (enterprise in visions of options, and hence preferences). At both levels the political comes to the fore of political economy as an answer to the “challenge of exception.” Much of our inspiration for this argument traces to the work of Friedrich Wieser, Carl Schmitt, and Vincent Ostrom.

Open Access
Article
Publication date: 8 August 2022

Veronica Ines Fernandez Orellano and Taís Cardoso Tellini

This study investigates the impact of political alignment on intergovernmental transfers to the Brazilian unified health system (SUS). The authors analyzed both automatic…

Abstract

Purpose

This study investigates the impact of political alignment on intergovernmental transfers to the Brazilian unified health system (SUS). The authors analyzed both automatic transfers based on pre-established rules and discretionary transfers, using two criteria of political alignment between mayors and the central government.

Design/methodology/approach

For the empirical analysis the authors used regression-discontinuity design (RDD) and the outcomes of close elections between 2001 and 2017.

Findings

The results indicate positive and statistically significant effects of party alignment on the two transfer categories, especially discretionary transfers, but also on transfers based on pre-established rules. The effect of direct party alignment, when mayors and the president are from the same party, is greater than that resulting from coalitions established in municipal and federal elections.

Research limitations/implications

The positive effect of party alignment was found both in discretionary transfers (those that do not have previously established rules) and some non-discretionary transfers (although they have previously defined regulations). A part of these regulations depends on production capacity and on taking part in programs promoted by the central government, which may produce entropy in the financing system, and a margin to benefit political allies. In the case of the SUS system, it is possible that this entropy is greater in the basic health care category than in the moderate and high complexity one, allowing a higher margin for discretion in transfers allocated to the former. Stricter rules associated to basic health care transfers would be desirable.

Practical implications

In Brazil, stricter rules and monitoring associated to basic healthcare intergovernmental transfers would be desirable.

Social implications

The results may inspire some improvement in the mechanisms that govern the distribution of resources to basic healthcare in Brazil, improving social welfare by improving social justice in the distribution of resources to basic healthcare.

Originality/value

The authors does not know any other study about the impact of party alignment on the distribution of intergovernmental transfers to the Brazilian unified health system.

Details

EconomiA, vol. 23 no. 1
Type: Research Article
ISSN: 1517-7580

Keywords

Open Access
Article
Publication date: 28 August 2020

Yinghua Jin and Mark Rider

The authors test the effect of expenditure decentralization and fiscal equalization on short- and long-run economic growth and estimate two-step generalized method of…

2318

Abstract

Purpose

The authors test the effect of expenditure decentralization and fiscal equalization on short- and long-run economic growth and estimate two-step generalized method of moment (GMM) simultaneous equations models, using panel data for China and India for the period 1985 to 2005. The authors estimate two simultaneous equations: a growth equation and equalization equation and find that expenditure decentralization has a negative and statistically significant effect at conventional levels on short-run economic growth for both China and India. However, the authors also find that this result is sensitive to the set of included explanatory variables. This leads the authors to conclude that expenditure decentralization has no effect on short-run economic growth for either country. The authors also find that expenditure decentralization has a positive and statistically significant effect on fiscal equalization for both countries but find no evidence that fiscal equalization affects short-run economic growth for either China or India. In contrast, the authors find that expenditure decentralization has a positive effect on long-run economic growth in the case of India, but not in the case of China. Finally, the authors report evidence that fiscal equalization has no effect on long-run economic growth in the case of China; however, the authors find that equalization has a positive and statistically significant at conventional levels effect on long-run economic growth in India.

Design/methodology/approach

The authors estimate two-step GMM simultaneous equations models, using panel data for China and India for the period 1985 to 2005. To examine the effect of fiscal decentralization (FD) policies on economic growth in China and India, the authors estimate two equations: a growth equation and an equalization equation. For the growth equation, the authors adopt a production-function-based model that is widely used in the empirical literature on growth; however, the authors do make some compromises with this specification due to the unavailability of certain data. For the equalization equation, the authors include variables that economic theory and empirical evidence suggest influence fiscal disparities among subnational governments which in turn influence the demand for horizontal fiscal equalization (HFE). To the extent possible, the authors employ the same econometric specification, variable constructions and sample periods for both China and India. The authors believe this strategy provides a more rigorous test of the FD hypothesis.

Findings

The authors find that expenditure decentralization has a negative and statistically significant effect at conventional levels on short-run economic growth for both China and India. However, the authors also find that this result is sensitive to the set of included explanatory variables. This leads to conclude that expenditure decentralization has no effect on short-run economic growth for either country. The authors also find that expenditure decentralization has a positive and statistically significant effect on fiscal equalization for both countries but find no evidence that fiscal equalization affects short-run economic growth for either China or India. In contrast, the authors find that expenditure decentralization has a positive effect on long-run economic growth in the case of India, but not in the case of China. Finally, the authors report evidence that fiscal equalization has no effect on long-run economic growth in the case of China; however, the authors find that equalization has a positive and statistically significant at conventional levels effect on long-run economic growth in India.

Research limitations/implications

Due to the importance of FD policies, especially to many developing countries that are currently pursuing decentralization reforms, future research should examine the effect of FD on economic growth for other countries. Furthermore, although it would be difficult to do so, future research should examine whether FD promotes political stability on ethnically diverse countries.

Originality/value

To the best of the authors’ knowledge, no one has examined the effect of FD policies on India's growth experience. What is more is that this is also the first of its kind to have a comprehensive empirical investigation into these two major developing countries with very interesting similarities and differences in FD policies. It is thus of great importance to examine the effect of expenditure decentralization and HFE on economic growth in China and India.

Details

Journal of Public Budgeting, Accounting & Financial Management, vol. 34 no. 6
Type: Research Article
ISSN: 1096-3367

Keywords

Article
Publication date: 1 March 1977

C. Marshall

Conductive and non‐conductive epoxies suitable for thick film circuits have been available since about 1970. They were originally intended for mounting semiconductor chips…

Abstract

Conductive and non‐conductive epoxies suitable for thick film circuits have been available since about 1970. They were originally intended for mounting semiconductor chips as an alternative to eutectic bonding, but they are now used for a much wider range of applications. This paper discusses the practical problems and results of epoxy mounted semiconductors in the light of five years manufacturing experience, and goes on to look at some of the latest applications for epoxies in thick film hybrids.

Details

Circuit World, vol. 3 no. 4
Type: Research Article
ISSN: 0305-6120

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