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The Redistributive Effects of Centralization and Decentralization Across Subnational Units

Published online by Cambridge University Press:  05 September 2022

Lucas González
Lucas González*
Affiliation:
Universidad Católica Argentina and Universidad Nacional de San Martín
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Abstract

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Several scholars have argued that decentralization benefits states and municipalities, granting them more autonomy for managing their budgets and more resources to deliver their services. Others have questioned this assertion, claiming that decentralization makes subnational units more fiscally dependent on central governments. This article argues that the fiscal impact of decentralization must be differentiated across states. It theoretically specifies and empirically demonstrates which states benefit during periods of decentralization and centralization. It argues that powerful presidents who centralize resources have imposed greater costs on more developed and fiscally independent districts (which prefer to administer their own resources and can be serious challengers to presidential power), thus relying mainly on support from less developed and more fiscally dependent provinces, which prefer more redistribution. I present empirical evidence for Argentina (1983-2004), a developing federation with strong governors and high cross-regional inequality, and discuss some implications for comparative studies on the topic.

Resumo

Resumo

Varios investigadores han argumentado que la descentralización beneficia a las unidades subnacionales, otorgándoles más autonomía para gestionar sus presupuestos y más recursos para cumplir sus funciones. Otros han cuestionado esta afirmación, alegando que la descentralización hace que las unidades subnacionales sean más dependientes fiscalmente de los gobiernos centrales. Este trabajo sostiene que debemos diferenciar el impacto fiscal de las políticas de descentralización en los distintos estados. Para ello, el trabajo especifica teóricamente y demuestra empíricamente cuáles son los estados que se benefician durante períodos de descentralización y centralización. Argumenta que los presidentes crean apoyo para las reformas centralizadoras compensando a los gobernadores que prefieren un gobierno nacional capaz de recaudar impuestos de los distritos más ricos y de redistribuir esos fondos entre ellos, imponiendo mayores costos a los que tienen mayor autonomía fiscal y que prefieren más competencias descentralizadas para administrar sus propios recursos. En el trabajo se presenta evidencia empírica para Argentina (1983-2004), una federación en desarrollo con grandes desigualdades interregionales y gobernadores fuertes, y se discuten algunas implicancias para los estudios comparados sobre el tema.

Type
Research Article
Information
Latin American Research Review , Volume 47 , Issue 3 , 2012 , pp. 109 - 133
Copyright
Copyright © 2012 by the Latin American Studies Association

Footnotes

The author is grateful to the late Guillermo O'Donnell for his advice on this work. Ernesto Calvo, Marcelo Escolar, Tulia Falleti, Martín Lardone, Marcelo Leiras, Germán Lodola, Marcelo Nazareno, and three anonymous LARR reviewers provided enormous help and insightful comments. Any mistake is my sole responsibility. Oscar Cetrángolo generously gave me access to data on Aportes del Tesoro Nacional. Santiago Alies, Facundo Galván, and Ignacio López provided valuable research assistance. Special thanks also to the Department of Political Science, the Graduate School, and the Kellogg Institute at the University of Notre Dame; Universidad Católica Argentina; and Universidad Católica de Córdoba for their financial support to conduct the research for this article and the broader project.

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