Fiscal decentralization in Central and Eastern Europe

Abstract

The paper analyses the level of fiscal decentralization (FD) in selected countries of European Union for 2014 year. The empirical analysis was based on the method of multicriteria decision-making. Method of Simple Additive Weighting (SAW) was used as framework for the analysis. In order to evaluate the different level of fiscal decentralization, the same analysis was applied to subsets of countries categorized into two groups - Central and Eastern Countries. The empirical results show that developed countries of European Union has higher degree of fiscal decentralization than countries of Eastern and Central Europe. These results show that local government of developed countries (such like Sweden or Denmark) has more power for financial solutions then developing countries (Estonia or Poland). Fiscal decentralization index in Lithuania is the lowest among 14 countries of European Union. Originality of this article that was used new fiscal decentralization index, which consists of 26 indicators.