Decentralisation in Africa and Fiscal Competition: Evidence from Benin

36 Pages Posted: 2 Oct 2010

See all articles by Emilie Caldeira

Emilie Caldeira

Université d'Auvergne, CERDI-CNRS

Gregoire Rota-Graziosi

Université Clermont Auvergne

Martial Foucault

University of Montreal; Center for Interuniversity Research and Analysis on Organization (CIRANO)

Date Written: August 1, 2010

Abstract

Without denying particular dimensions of the decentralisation in Sub-Saharan countries, this paper applies standard reasoning from the fiscal federalism literature to a developing country and tests the existence of strategic interactions among local Beninese governments, called ‘communes.’ We first propose a two-jurisdiction model of public expenditure interactions, considering a constrained Nash equilibrium to capture the extreme poverty of some communes. We show that spillovers among jurisdictions involve strategic behaviours of local officials who have sufficient levels of fiscal resources. Second, by estimating a spatial lag model, our analysis provides evidence for the presence of strategic interactions in Benin, contingent on communes’ fiscal autonomy. Such interactions arise among communes which are geographically or ethnically close. We also highlight both an opportunistic behaviour of local governments before local elections and an effect of partisan affiliations. This African democracy appears to be as concerned as developed democracies with strategic fiscal interactions.

Keywords: Fiscal Interactions, Benin, Decentralisation, Local Government, Dynamic Panel Data

Suggested Citation

Caldeira, Emilie and Rota-Graziosi, Gregoire and Foucault, Martial, Decentralisation in Africa and Fiscal Competition: Evidence from Benin (August 1, 2010). CIRANO - Scientific Publications 2010s-35, Available at SSRN: https://ssrn.com/abstract=1685905 or http://dx.doi.org/10.2139/ssrn.1685905

Emilie Caldeira

Université d'Auvergne, CERDI-CNRS ( email )

2020 rue University, 25th floor
Montreal H3C 3J7, Quebec
Canada

Gregoire Rota-Graziosi

Université Clermont Auvergne ( email )

Clermont-Ferrand
France

Martial Foucault (Contact Author)

University of Montreal ( email )

Political Science Department
C.P. 6128 succursale Centre-ville
Montreal, Quebec H3T 1B9, Quebec H3C 3J7
Canada

Center for Interuniversity Research and Analysis on Organization (CIRANO)

2020 rue University, 25th floor
Montreal H3C 3J7, Quebec
Canada

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