Evaluation methods for fiscal decentralization

Abstract

Fiscal decentralisation has attracted attention from government, academic studies, and international institutions with the aims of enhancing economic growth in recent years. One of the difficult issues is to measure satisfactorily the degree of fiscal decentralisation across countries. Fiscal decentralization is a complex phenomenon, demonstrating its various aspects in reality. Therefore, multicriteria methods may be used for its evaluation. The fiscal decentralization is described by a number of criteria, therefore, an hierarchical set of criteria should be developed to assess it more accurately. Multicriteria evaluation may be aimed at determining the preference order of the considered phenomena or at quantitative evaluation of the state of a particular phenomenon (or object). It is the latter that allows us to determine level of fiscal decentralization of country. All currently used multicriteria evaluation methods have some advantages and disadvantages, therefore, the evaluation should be based on the use of several methods, and the mean value of the data obtained should be considered. This paper provides a general, brief but comprehensive overview of the main evaluation methods from the literature of fiscal decentralization. In doing so, literature on evaluation methods of fiscal decentralization is grouped into two main parts: "used methods’ and "new methods".