The “absorption capacity” of the receiving local context most likely determines a reform’s success. Although it has been stressed that population size matters most, the volume of public service provided and the dispersion of population over a certain territory are key to the issue of scale economies as well (Bel and Warner 2016, p. 93). Destructive interjurisdictional competition: Firm, capital and labor mobility in a model of direct emission control. In a first step, the key theoretical contributions providing the ground for the basic rationale behind fiscal reforms will be presented. Moreover, the risk of free-riding is diminished (Reynolds 2004). Kelly has over 25 years of experience in teaching, designing and implementing reforms on fiscal decentralization, local government finance, revenue mobilization and property taxation in Asia, Africa, Latin America and Eastern Europe. Richer regions tend to benefit from advantageous initial conditions such as better developed infrastructure, a better educated work force, and a stronger tax base, and have better access to production factors such as credit (Cai and Treisman 2005). 1980. Please monitor this webpage for these important updates. 2015. The Quarterly Journal of Economics 108(3):599–617. 2017. Channa, Anila, and Jean-Paul Faguet. Scheiter, Katharina, and Andreas Lachner. Helge Arends., DOI:, Over 10 million scientific documents at your fingertips, Not logged in What have we learned about the causes of corruption from ten years of cross-national empirical research? Decentralization skeptics have brought forward concerns with regard to both types of efficiency effects of decentralization. The organization of government in metropolitan areas: a theoretical inquiry. Fiscal decentralization and government quality in the OECD. Journal of Economic Geography 10(5):619–644. The impact of fiscal decentralization: a survey. International Tax and Public Finance 12(4):493–513. A major promise of decentralization enthusiasts is that fiscal decentralization improves local public service delivery by making local politicians and bureaucrats more responsive to the voter–taxpayers’ demands, simply because public action is closer to the citizen (De Vries 2000, p. 202). Constitutional determinants of government spending. Lessmann, Christian, and Gunther Markwardt. It is suspected that the federal government does not trust the Länder to provide equitable and quality services in a complex sector such as education. The fiscal illusion hypothesis holds that when citizens who are also voters and taxpayers cannot make the link between taxes paid and benefits received, they are less likely to sanction local politicians for bad quality in service delivery. 2002. 2009. Education decentralization, school resources, and student outcomes in Korea. December 5, 2014. However, in order to comply with the equity dimension of public service provision, most (developed) nations opt for making an extra effort to provide a certain public service in marginalized territories. Interjurisdictional competition would thus function as a remedy to issues such as overregulation or bribery, leading to preservation of favorable market conditions (Brennan and Buchanan 1980; Fan et al.