Fisical Decentralization in Somali National /Regional State
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Date
2011-07
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Addis Ababa University
Abstract
The thesis attempts to examine and asses the trends of fis cal decentralization in Ethiopia in
general and Somali National Regional State in particular. Thi s is done first by allempt to place
theoretical and empirical inv estigation. fO di scern asp eC lS of change and continuity in f isca l
decentralization in Ethiopia. Th e sludy he lps to cril ica l ly se l OUI f act ors that are resp onsible for
similarities and differences across years and put impli calion of the study accordingly. We develop
indicators to measure the degree of decentralization both in Ethiopia and with regional case study.
The fiscal decentralization indicators are revenue share between central and regional
governments, expenditure share between center and regional governments and aspects of
inter-governmental tran~fers. We also analyze expenditure assignment in light of own revenue
which reveals fiscal capacities of reg ional and local government respectively.
The research primarily inquires how fiscal decentralization is practiced in the regiOn. In ligh t of
the above main objective it tries to see the overall impacts of decentralization on socio-economic
background, capacity, planning and budgeting in th e region. The researcher applied a
combination of quantitative and qualitative social research methods specifically; a case study.
This is be cause tra cin g th e practice o(fiscal dec en trali:a lio l1 in mO Sf cases entails 'hall" and
'why' questions, which are hell er answered by case .H udi e.l· rather than resear ch designs such as
surveys .
The main conclusion that emerged Fom the study; higher degree of decentralization for recurrent
expenditure than capital across years, low fiscal capacity of local government, diverse Fiscal
capacity among regions to .fianc e expenditure responsibility out of own revenue sources.
Previous studies on the is sue have made an allempt to generate consensus. They concluded that ,
weak revenue bases, capacity deficiency, tendency to decentralize expenditure than reve nue.
However this study concludes diverse .fiscal capacity both at regional and local level of
government provides evidence that, resource and tax bases, infrastructure coverage , institutional
strength and some other geographical and socialfactors are not evenly distributed this provides
an explanation /01' the fact that th e above variables may prevent/ul! use a/production fac tors
critically indicating to give emphasis to each :,pecific var iahles and their dynami c link they have to
each individual region based on each characlerislics.
This in turn provided strong support f or Tegegne eral (2 0 0 7), Getach ew (2 002) , Melkamu (200-1) ,
Degefa (2003) tha t emerging re gions have very limited re source and sever .financing gap, potential
and actual revenue collection indicat es that there is h uge difference between the two. This
indicates the need to streng th th e mechanism for lo cal reso urce mobilization could in fact be the
wayforward
Key Wor ds: Fiscal Federa lism, St ate an d Local Taxation, Intergovel'llm elltal Relatio n
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Keywords
Fiscal Federa lism, St ate and Local Taxation, Intergovel'llm elltal Relatio n