Search results
1 – 6 of 6The 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…
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
Keywords
Yuliya Kasperskaya and Ramon Xifré
The objective of this study is to analyze the role that budgetary analytical capacity (BAC) plays for fiscal discipline in a sample of Eurozone countries in the postcrisis period.
Abstract
Purpose
The objective of this study is to analyze the role that budgetary analytical capacity (BAC) plays for fiscal discipline in a sample of Eurozone countries in the postcrisis period.
Dessign/methodology/approach
Building on the policy capacity literature, an index for the BAC is constructed by including OECD budgetary data from three dimensions: reliability of projections, openness to legislative scrutiny and transparency. The proposed BAC index is validated by checking that larger values of the index are associated with the higher fiscal discipline scores across countries.
Findings
Controlling for the economic cycle, BAC index is positively associated with fiscal discipline. The association is stronger for the index as a whole than for the three separate dimensions.
Research limitations/implications
The study is done on the limited sample of countries, and it is not feasible to validate results over time.
Practical implications
Budgetary policymakers can improve fiscal discipline by enhancing the three pillars that support the BAC.
Social implications
Stronger BAC can help to improve the quality of public decision-making and overcome political opportunism.
Originality/value
This is the first study that introduces the concept of BAC, makes it operational and suggests its relevance for supporting fiscal discipline.
Details
Keywords
Fábio de Oliveira Paula and Jorge Ferreira da Silva
The level of R&D spending of a country tends to increase the national patent rate and, in consequence, can collaborate with its economic development. However, there are a few…
Abstract
Purpose
The level of R&D spending of a country tends to increase the national patent rate and, in consequence, can collaborate with its economic development. However, there are a few empirical studies investigating this phenomenon by comparing countries from all over the globe. The purpose of this paper is to disassemble the sources of R&D spending and identify the role of national patent applications as a mediator in the relationship between R&D spending and national development.
Design/methodology/approach
Panel data on patent applications in 35 countries of all continents (except Africa) over 15 years (from 1999 to 2013) regarding four levels of national R&D intensity (i.e. by enterprises, governments, higher education institutions and private non-profit organisations), gross domestic product (GDP) per capita, gross national income (GNI) and human development index (HDI) were collected from the OCDE. Then, two-stage panel regressions were conducted to test the hypotheses.
Findings
The empirical findings indicated that R&D spending from firms and higher education institutions (public and private) help to directly improve national patent applications, thus contributing to the national development (measured by GDP per capita, GNI per capita and HDI).
Originality/value
The importance of this study was to show that the investments in R&D made by universities and firms are more effective in leading to patent applications, which contributes to promoting national development. With these findings, governments can focus their efforts on stimulating these types of investments if they want to foster the growth of national patent rates.
Details
Keywords
Ivana Pajković, Nives Botica Redmayne and Vesna Vašiček
This study analyses to what extent politicians use public sector entities' financial statements along with the politicians' perceptions of the usefulness of such statements in the…
Abstract
Purpose
This study analyses to what extent politicians use public sector entities' financial statements along with the politicians' perceptions of the usefulness of such statements in the politicians' decision-making. The authors analyze financial statements' use and usefulness when the statements are prepared on a modified accrual basis and in the setting where there is the intention of full accrual accounting adoption. In addition, this study provides information about the use of the individual components of financial statements and investigates the reasons why the statements may not be used.
Design/methodology/approach
This study was conducted using a questionnaire. The authors surveyed politicians that are members of Croatian public sector bodies. To conduct this research, the politicians were contacted by telephone over the period from February to April 2022.
Findings
The findings of this study are of potential interest to researchers, regulators and policy makers. The findings show that most politicians use financial statements, but the politicians' perception of the statements' usefulness when the statements are prepared on a modified accrual accounting basis is greater than the politicians' actual use of the statements. The findings also show that in the process of making decisions, politicians use the selected financial statements that contain information of interest to the politicians; that the politicians tend to gravitate to the use of reports on revenue, expenses, receipts and expenditure prepared on modified accrual bases which are closer to budgetary reporting; that the politicians use the information that supports the politicians' sphere of responsibility as enforced by legislation.
Originality/value
This study provides insights into the use and usefulness of financial statements in public sector setting where modified accrual accounting is used to prepare the statements and reports. This study provides additional evidence on the significance of legal setting to the financial reporting in public sector.
Details
Keywords
Oliver Nnamdi Okafor, Festus A. Adebisi, Michael Opara and Chidinma Blessing Okafor
This paper investigates the challenges and opportunities for the deployment of whistleblowing as an accountability mechanism to curb corruption and fraud in a developing country…
Abstract
Purpose
This paper investigates the challenges and opportunities for the deployment of whistleblowing as an accountability mechanism to curb corruption and fraud in a developing country. Nigeria is the institutional setting for the study.
Design/methodology/approach
Adopting an institutional theory perspective and a survey protocol of urban residents in the country, the study presents evidence on the whistleblowing program introduced in 2016. Nigeria’s whistleblowing initiative targets all types of corruption, including corporate fraud.
Findings
This study finds that, even in the context of a developing country, whistleblowing is supported as an accountability mechanism, but the intervention lacks awareness, presents a high risk to whistleblowers and regulators, including the risk of physical elimination, and is fraught with institutional and operational challenges. In effect, awareness of whistleblowing laws, operational challenges and an institutional environment conducive to venality undermine the efficacy of whistleblowing in Nigeria.
Originality/value
The study presents a model of challenges and opportunities for whistleblowing in a developing democracy. The authors argue that the existence of a weak and complex institutional environment and the failure of program institutionalization explain those challenges and opportunities. The authors also argue that a culturally anchored and institutionalized whistleblowing program encourages positive civic behavior by incentivizing citizens to act as custodians of their resources, and it gives voice to the voiceless who have endured decades of severe hardship and loss of dignity due to corruption.
Details
Keywords
Lobna Mohamed Abdellatif, Baher Mohamed Atlam and Ola Abdel Moneim El Sayed Emara
This paper aims to show the aligned development that took place in public administration and public financial management toward serving public values. By analyzing the mode of…
Abstract
Purpose
This paper aims to show the aligned development that took place in public administration and public financial management toward serving public values. By analyzing the mode of institutions’ interaction, the paper attempts to pinpoint the changing trends in budget institutions in Egypt, probing the extent to which they can be read from an administrative perspective and the possibility of enhancing budgetary outcomes under the existing administrative arrangements.
Design/methodology/approach
An analytical framework for public management administrative and budgetary institutions’ alignment is presented. A ladder analysis is developed to highlight the consistency of rationale between the two sets of institutions. The alignment is demonstrated at three consecutive levels: control and discipline, efficiency and effectiveness and openness and communication.
Findings
The international experience reveals that the alignment of administrative and budgetary institutions is both theoretically traceable and practically applicable in the case of developed economies. Whereas, in the case of Egypt, both sets of institutions have been exposed to best practices; yet, they are not seen as complementary and enforcing each other. The internalization of the benefits of reforms in the two tracks into an integrated public management context in the case of Egypt is not reached.
Practical implications
Egypt needs to ensure the alignment of both dimensions to maximize the benefits of reform.
Originality/value
The ladder approach sorts the developments in both administrative and budgetary institutions into three levels to help assessing the maturity and conformity in countries’ public management systems.
Details