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1 results

  • 10 - Subnational Development and Fiscal Federalism

  • from Part III - A Focalised View of Sustainable Development
  • Omar A. Guerrero, The Alan Turing Institute, London, Gonzalo Castañeda, Centro de Investigación y Docencia Económicas
  • Book:
    Complexity Economics and Sustainable Development
    Published online:
    04 January 2024
    Print publication:
    25 January 2024, pp 265-288

  • Summary

    This chapter investigates how federal transfers can boost subnational development. We analyse the case of Mexico and its 32 federal states. For this, we assemble a balanced dataset with 103 social, economic, and environmental indicators for each state. First, we study how federal transfers impacted state-level development during the sample period. Second, we analyse how changes in the distribution of transfers across states affect the indicators’ average evolution when attempting to foster all SDGs or each of them. We find that ‘fiscal contributions’ – a particular form of government transfers aimed at equalising regional disparities – exert an average impact on SDGs of around 25%–45%. Likewise, our simulations indicate that it is possible to achieve substantial impact gains when using an ‘optimal fiscal transfer’ to allocate the total federal transfers across SCGs.