Economic Research and Perspectives

Economic Research and Perspectives

The Vertical Balance Financial Decentralization and Regional Development in Iran’s Provinces

Document Type : Original Research

Authors
marzieh ahmadi 1
Ruhollah Alikhan Gorgani 2
1 PhD in Economics, Faculty of Social Sciences, Razi University, Iran
2 Assistant Professor, Department of Business Administration, Islamic Azad University, Rasht Branch, Iran
Abstract
Regarding the bilateral relationship between financial decentralization and regional development at the national level, this study examines the relationship between regional inequality and vertical balance financial decentralization across the provinces of Iran. For this purpose, the calculations are carried out in two stages: in the first stage, the Composite Index of Regional Development (CIRD) is calculated in five dimensions (macroeconomics, science and innovation, environmental sustainability, human capital and public services) by using the two-stage principal components analysis (PCA) during 2006-2016. In the second stage, the interactions between vertical balance financial decentralization and regional development are estimated using the simultaneous equations and error component two-stage least squares (EC2SLS). The results of the first stage analysis show that Tehran province is at the highest level of development, and Sistan and Baluchestan province is at the lowest level of development, and these two provinces practically reflect the wide inequality in the provinces of Iran. In addition, the highest regional inequality is related to the dimensions of science, innovation and human capital. The results of the second stage indicate that the effect of vertical balance financial decentralization on negative regional development is significant and negative, meaning that if provinces spend based on their income, a slight decrease in provincial development has it Because provinces play lesser role in determining tax rates and bases, less developed provinces are not able to generate sufficient revenue to cover their provincial expenditures. Financial decentralization also increases with an increase in regional development, meaning that provinces with different levels of development are likely to have different tendencies toward the quality and quantity of public goods.
Keywords
regional development
CIRD Combined Development Index
Financial Decentralization
Two-Step Principal Component Analysis (PCA)
Error component two-stage least squares (EC2SLS)

Subjects

- جوکار، خدیجه (1394). بررسی تأثیر تمرکززدایی مالی بر فقر و توزیع درآمد در ایران. پایان‌نامه کارشناسی ارشد در رشته علوم اقتصادی، دانشکده دانشکده‌ی اقتصاد، مدیریت و علوم اجتماعی، دانشگاه شیراز.
- سامتی، مرتضی و شکوفه فرهمند و مریم السادات موسوی (1391). تحلیل اثرات تمرکززدایی مالی بر ارتباط متقابل رشد و توزیع عادلانه منابع مالی در استان‌های ایران (1386-1380) ، فصلنامه پژوهش‌های اقتصادی (رشد و توسعه پایدار)، 14 (3): 1-22.
- سیاره، مرتضی (1388). تجزیه و تحلیل نابرابری‌های اشتغال و رتبه‌بندی استان‌های کشور براساس مؤلفه‌های کار شایسته». پایان‌نامه ارشد، دانشگاه اصفهان، دانشکده علوم اداری و اقتصاد ، گروه اقتصاد، گرایش توسعه اقتصادی و برنامه-ریزی.
- صادقی شاهدانی، مهد یو اکبر کمیجانی و محمدهادی زاهدی وفا و محمد غفاری فرد (1391). بررسی تاثیر تمرکززدایی مالی بر رشد و توزیع درآمد در مناطق مختلف ایران. پژوهشنامه اقتصادی، 12 (47): 97-122.
- گل‌خندان، ابوالقاسم و مجید بابائی آغ ‌اسماعیلی و رقیه محسنی‌نیا (1396). سنجش تاثیر غیرخطی تمرکززدایی مالی بر اندازه دولت در استان‌های ایران (رهیافت cup-fm). فصلنامه پژوهش‌ها و سیاست‌های اقتصادی، 25 (82): 111-137.
- علی حسنوند، علی، علی فلاحتی و کیومرث سهیلی (1397). تحلیل و بررسی تمرکززدایی مالی بر کارایی و بهبود عملکرد بخش سلامت و درمان در ایران.
- غفاری‌فرد، محمد (1391). مدل‌سازی آثار اقتصادی تمرکززدایی مالی در مناطق مختلف ایران در راستای توسعه عدالت محور، پایان‌نامه دکتری در رشته علوم اقتصادی، دانشکده اقتصاد و معارف اسلامی، دانشگاه امام صادق علیه اسلام.
- غفاری‌فرد، محمد و مهدی صادقی‌شاهدانی (1391). بررسی تأثیر تمرکززدایی مالی بر رشد اقتصادی استان‌های مختلف ایران، فصلنامه علمی- پژوهشی برنامه‌ریزی و بودجه، 17 (4): 3-24.
- مرکز آمار ایران، سالنامه آماری کشور و سالنامه آماری استان‌ها.
- براتی، جواد و کریمی موغاری، زهرا (1395) تعیین سطح نابرابری منطقه‌ای استان‌های ایران: تحلیل شاخص ترکیبی چند بُعدی، فصلنامه رشد و توسعه اقتصادی، 26: 49-70.
- Bartolini, D., S. Stossberg & H. Blöchliger (2016). Fiscal Decentralisation and Regional Disparities. OECD Economics Department Working Papers, 1330, OECD Publishing, Paris.
- Bin, P. (2015). Regional Disparity and Dynamic Development of China: a Multidimensional Index. SIS Working Paper, MPRA Paper No. 61849, University of Trento.
- Bin, P. (2016). Dynamic Development of Regional Disparity in Mainland China: An Experimental Study Based on a Multidimensional Index. MPRA Paper 61849, University Library of Munich, Germany.
- Beramendi, P. (2007). Inequality and the territorial fragmentation of solidarity. International Organization, 61: 783–820.
- Blanco, A., J. Delgado & J. Presno (2018). Fiscal decentralization in the EU: common patterns through a club convergence analysis. GEN Working Paper A :1 – 12.
- Costa-Font, J. (2010). Does devolution lead to regional inequalities in welfare activity? Environment and Planning. Government and Policy, 28: 435–449.
- Crook, R. C. (2003). Decentralisation and Poverty Reduction in Africa the Politics of Local-Central Relations. Public Administration and Development. 23 (1): 77–88.
- Ezcurra, R. & P. Pascual (2008). Fiscal decentralization and regional disparities: evidence from several European :union: countries. Environment and Planning A, 40:1185–1201.
- Gil, C., P. Pascual & M. Rapun (2004). Regional economic disparities and decentralization. Urban Studies, 41: 71–95.
- Kyriacou, A., L. Muinelo-Gallo & O. Roca-Sagalés (2016). Regional inequalities, fiscal decentralization and government quality, Journal of Regional Studies.
- Kyriacou, A., L. Muinelo-Gallo & O. Roca-Sagalés (2015). Fiscal decentralization and regional disparities: the importance of good governance. Papers in Regional Science, 94: 89–107.
- Lessmann, C. (2009). Fiscal decentralization and regional disparity: evidence from cross section and panel data. Environment and Planning, 41(A), 2455–2473.
- Lessmann, C. (2012). Regional inequality and decentralization: an empirical analysis. Environment and Planning, 44 (A), 1363– 1388.
- Moon, D. (2018). A Study of the Impact of the Fiscal Decentralization on the Regional Disparity: Focus on 16 Metropolitan and Provincial Governments of South Korea, Advances in Social Science, Education and Humanities Research,191.
- Oates, W. E. (1972). Fiscal Federalism. New York: Harcourt Brace Jovanovich.
- Rodríguez-Pose, A. & Ezcurra, R. (2010). Does decentralization matter for regional disparities? A cross-country analysis. Journal of Economic Geography, 10: 619–644.
- Rodríguez-Pose, A. & N. Gill (2004). Is there a global link between regional disparities and devolution? Environment and Planning A,36: 2097–2117.
- Sacchi, A. & S. Salotti (2014a). How regional inequality affects fiscal decentralisation: accounting for the autonomy of subcentral governments. Environment and Planning: Government and Policy,32: 144–162.
- Sacchi, A. & S. Salotti (2014b). A comprehensive analysis of expenditure decentralization and the composition of local public spending. Regional Studies.
- Song, y. (2013). Rising Chinese regional income inequality: The role of fiscal decentralization. China Economic Review, 27 (c): 294-309
- Stegarescu, D. (2005). Public sector decentralisation: measurement concepts and recent international trends, Fiscal Studies, 26: 301-333.
- Steiner, S. (2007). Decentralistion and Poverty: Conceptual Framework and Application to Uganda. Public Administration and Development, 27: 175–185.
- Tiebout, C. (1956). A Pure Theory of Local Expenditures. The Journal of Political Economy, 64 (5): 416–24.
Economic Research and Perspectives
Volume 21, Issue 1
Spring 2021
Pages 147-182