FISCAL DECENTRALIZATION AND THE QUALITY OF PUBLIC SERVICES IN RUSSIAN REGIONS by ProQuest

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									     FISCAL DECENTRALIZATION AND
    THE QUALITY OF PUBLIC SERVICES
          IN RUSSIAN REGIONS

  Lev Freinkman, World Bank, 1818 H Street, NW,
Washington, DC, 20433, USA, and Alexander Plekha-
nov, European Bank for Reconstruction and Develop-
ment, One Exchange Square, London, EC1A 2JN, UK 1


ABSTRACT

          The paper provides empirical analysis of the relationship
between fiscal decentralization and the quality of public services in
the Russian regions. The analysis suggests that fiscal decentraliza-
tion has no significant effect on the key inputs into secondary edu-
cation, such as schools, computers, or availability of pre-
schooling, but has a significant positive effect on average examina-
tion results, controlling for the key observable inputs and regional
government spending on education. Decentralization also has a
positive impact on the quality of municipal utilities provision. Both
effects can be attributed to strengthened fiscal incentives rather
than to superior productive efficiency of municipal governments.

1. INTRODUCTION

        Empirical evidence in support of the theoretical
advantages of decentralization has been generally in-
conclusive, as highlighted by Treisman (2007). This
may be partly explained by the difficulties of measuring
the extent of decentralization or its relevant aspects such
as the degree of voter accountability or decision making
autonomy (Treisman, 2002; Stegarescu, 2005). In fact,
correlation between different measures of decentraliza-

1
  The authors are grateful to Irina Starodubrovskaya for valuable
comments and suggestions, to Sergei Sivaev for comments and
help with the data and to the anonymous referees.

Public Finance and Management
Volume 10, Number 1, pp. 117-168
2010
118                               Freinkman & Plekhanov


tion proves to be astonishingly low (Voigt and Blume,
2008).

        Inconclusive empirical evidence may also reflect
theoretical ambiguities of the impact of dec
								
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