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Decentralisation
is particularly widespread around the world for a variety
of reasons such as the advent of multiparty political systems
in Africa; the deepening of democratisation in Latin America;
the transition from a command to a market economy in Eastern
Europe and the Former Soviet Union. The conventional theory
of fiscal decentralisation states that local governments
can efficiently undertake only allocation function. They
will better meet the preferences of the citizens since
they are closer to them and are better informed about local
characteristics. However the theory states that redistribution
activities should be exclusively performed by the central
government, because otherwise competition of regional governments,
enforced by mobility and migration of private households,
may lead to an erosion of the social support system. This
paper tries to test whether redistribution function should
only be under the responsibility of central government,
using data on redistributive expenditures and property
tax in the context of Mauritius. The results obtained show
that local governments have an informational advantage.
Further tests were undertaken to find out whether local
governments are accountable to the poor, using ZEP project
under which children from poor families and attending a
ZEP school were being targeted. The results prove to be
in favour of the argument that local governments are more
accountable to the poor when redistribution activities
are devolved to them. |
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