Fiscal Decentralization, Good Governance and Regional Development—Empirical Evidence in the European Context

The nexus between local governments’ budgets and regional growth is a complex one, with organic interconnections, ideally offering better outcomes, both in the matter of (local) fiscal consolidation and the welfare of societies. In this study, we analyze the impact of local fiscal consolidation effo...

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Bibliographic Details
Published inSustainability Vol. 14; no. 12; p. 7093
Main Authors Onofrei, Mihaela, Oprea, Florin, Iaţu, Corneliu, Cojocariu, Lenuţa, Anton, Sorin Gabriel
Format Journal Article
LanguageEnglish
Published Basel MDPI AG 01.06.2022
Subjects
Budgets
Consolidation
Decentralization
Developing countries
Economic development
Economic growth
Expenditures
Fiscal policy
GDP
Gross Domestic Product
Growth rate
Impact analysis
Income distribution
Indicators
LDCs
Local government
Per capita
Regional development
Regional planning
Statistical analysis
Statistical models
Sustainability
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Summary:The nexus between local governments’ budgets and regional growth is a complex one, with organic interconnections, ideally offering better outcomes, both in the matter of (local) fiscal consolidation and the welfare of societies. In this study, we analyze the impact of local fiscal consolidation efforts (as reflected by the budget indicators regarding local revenues and expenditures for the countries involved) on regional development, using a sample of 21 EU Member States and a timescale between 2001 and 2019, based on specific data reported by Eurostat and the World Bank. By employing the Generalized Linear Model (GLM), the results show that some of the considered indicators have a statistically significant positive influence on the GDP per capita at the regional level, thus highlighting the important role of sound local public finances in achieving the objectives of regional development. Based on our findings, we recommended some improvements regarding the practice of local fiscal policy in order to enhance the role of fiscal consolidation in sustaining regional development within the subject countries.
ISSN:2071-1050
2071-1050
DOI:10.3390/su14127093