Skip to main content

Fiscal Decentralization and Macroeconomic Management in Turkey

  • Chapter
  • First Online:
Public Financial Management Reforms in Turkey: Progress and Challenges, Volume 2

Abstract

There is a broad interest in fiscal decentralization around the world. But there are considerable differences in the way that fiscal decentralization is implemented among various countries. As a result, outcomes of fiscal decentralization also differed among countries. Fiscal decentralization in Turkey poses many challenges especially for the macroeconomic management. Turkish fiscal decentralization is characterized by high local government expenditures with limited local government own revenues which causes local governments to heavily depend on the intergovernmental transfers and borrowings to fulfill their responsibilities. In this context, this chapter reviews the impact of fiscal decentralization on the macroeconomic management in Turkey where the related research is limited.

This is a preview of subscription content, log in via an institution to check access.

Access this chapter

Chapter
USD 29.95
Price excludes VAT (USA)
  • Available as PDF
  • Read on any device
  • Instant download
  • Own it forever
eBook
USD 84.99
Price excludes VAT (USA)
  • Available as EPUB and PDF
  • Read on any device
  • Instant download
  • Own it forever
Softcover Book
USD 109.99
Price excludes VAT (USA)
  • Compact, lightweight edition
  • Dispatched in 3 to 5 business days
  • Free shipping worldwide - see info
Hardcover Book
USD 109.99
Price excludes VAT (USA)
  • Durable hardcover edition
  • Dispatched in 3 to 5 business days
  • Free shipping worldwide - see info

Tax calculation will be finalised at checkout

Purchases are for personal use only

Institutional subscriptions

References

  • Akdemir, T. (2011). Kuresel krizin yerel yonetimlerin mali yapılarına etkileri. In A. Kesik & H. Canpolat (Eds.), Kuresellesme ve kamu yonetiminde donuşum (pp. 359–389). Ankara: Seckin Yayıncılık.

    Google Scholar 

  • Akman, C., Akman, E. & Okcu, M. (2015). Reform in Local Governments: What Did the New Munic pal Law Bring in Turkey? Global Journal on Humanites & Social Sciences, 02, 119–123. http://archives.sproc.org/index.php/pntsbs/article/viewFile/3742/3410.

  • Anderson, J., & Van den Berg, H. (1998). Fiscal Decentralization and Government Size: An International Test for Leviathan Accounting for Unmeasured Economic Activity. International Tax and Public Finance, 5(2), 171–186.

    Google Scholar 

  • Arikan, G. G. (2004). Fiscal Decentralization: A Remedy for Corruption? International Tax and Public Finance, 11, 175–195.

    Google Scholar 

  • Arikboga, U. (2016). Turkiye de Belediyelerin Gelir Yapısı Sorunlar ve Çozum Onerileri. Mustafa Kemal Universitesi Sosyal Bilimler Enstitusu Dergisi, 13(33), 276–297.

    Google Scholar 

  • Baskaran, T. (2011). Fiscal decentralization, ideology, and the size of the public sector. European Journal of Political Economy, 27, 485–506.

    Google Scholar 

  • Baskaran, T., & Feld, L. P. (2012). Fiscal Decentralization and Economic Growth in OECD Countries. Public Finance Review, 41(4), 421–445. https://doi.org/10.1177/1091142112463726.

  • Baskaran, T. (2012). Revenue decentralization and inflation: a re-evaluation. Economics Letters, 116(3), 298–300.

    Google Scholar 

  • Bayraktar, U. S. & Massicard, E. (2012). Decentralisation in Turkey. Agence Francaise de Developpement, Focales 07, Paris.

    Google Scholar 

  • Bıcakcı C. S., & Ozgul, C. G. (2017). Turkiye’de Yerel Kredi Piyasası ve Belediyelerin Tahvil İhracı Uzerine Bir Degerlendirme. In M.Guler (Ed.), Belediyelerin Gelecegi ve Yeni Yaklasımlar (pp. 114–125). Istanbul: Marmara Belediyeler Birligi Kultur Yayınları.

    Google Scholar 

  • Bodman, P. (2011). Fiscal Decentralization and Economic Growth in the OECD. Applied Economics, 43(23), 3021–3035. https://doi.org/10.1080/00036840903427208.

  • Bojanic, A. (2018). The Impact of Fiscal Decentralization on Accountability, Economic Freedom, and Political and Civil Liberties in the Americas. Economies, 6(1), 8. https://doi.org/10.3390/economies6010008.

  • Bomfim, A., & Shah, A. (1994). Macroeconomic Management and Division of Powers in Brazil: Perspectives for the 1990s. World Development, 22 (4), 535–542.

    Google Scholar 

  • Brennan, G., & Buchanan, J. M. (1980). The power to tax: Analytical foundations of a fiscal constitution. Cambridge: Cambridge University Press.

    Google Scholar 

  • Cetinkaya, O., & Demirbas, T. (2010). Belediye Gelirlerinin Analizi ve Mali Ozerklik Acısından Degerlendirilmesi, İstanbul Universitesi Iktisat Fakultesi Maliye Arastırma Merkezi Konferansları, 53, 2–18.

    Google Scholar 

  • Compean, R.G. (2008). Decentralization: Panacea or Pandora’s Box? Fiscal Perversity in Mexico. Ensayos Revista de Economia, 27 (2) 89–110.

    Google Scholar 

  • Davoodi, H., & Zou. H. (1998). Fiscal Decentralization and Economic Growth: A Cross-Country Study. Journal of Urban Economics, 43 (2), 244–57.

    Google Scholar 

  • De Mello, L. R., (2000). Fiscal decentralization and intergovernmental fiscal relations: a cross country analysis. World Development, 28(2), 365–380.

    Google Scholar 

  • De Mello, L. R. (2001). Fiscal Decentralization and Borrowing Costs: The Case of Local Governments. Public Finance Review, 29(2), 108–138.

    Google Scholar 

  • Dillinger, W., & Webb, S. B. (1999). Fiscal Management in Federal Democracies: Argentina and Brazil. World Bank Policy Research Working Paper, No. 2121.

    Google Scholar 

  • Ebel, R., & Yilmaz, S. (2002). On the Measurement and Impact of Fiscal Decentralization, Policy Research Working Paper, No: 2809, World Bank, Washington DC.

    Google Scholar 

  • Esener, S. C. (2019). Mali Ozerklik ve Mali Tevzin Acısından Yerel Yonetim Vergi Gelirlerinin Kisi Bası Gelir ve Ekonomik Buyume ile Karsilikli Nedensellik İliskisi: Secilmis OECD Uyesi Ulkelerde Mali Yerellesme Uzerine Bazı Cıkarımlar. Akademik Arastırmalar ve Çalısmalar Dergisi, 11(20), 1–28.

    Google Scholar 

  • Feltenstein, A., & Iwata, S. (2005). Decentralization and macroeconomic performance in China: regional autonomy has its costs. Journal of Development Economics, 76(2), 481–501. https://doi.org/10.1016/j.jdeveco.2004.01.004.

  • Fornasari, F., Webb, S., & Zou. H., (2000) The Macroeconomic Impact of Decentralized Spending and Deficits: International Evidence. Annals of Economics and Finance, 1(2), 404–433.

    Google Scholar 

  • Gemmell, N., Kneller, R. & Sanz, I. (2013). Fiscal Decentralization and Economic Growth: Spending versus Revenue Decentralization. Economic Inquiry, 51(4), 1915–1931. https://doi.org/10.1111/j.1465-7295.2012.00508.x.

  • Guzel, A., & Yılmaz, H. (2018). Fiscal Decentralization in Turkey and Differentiation in Selected Provinces. International Journal of Public Finance, 3(1), 63–82.

    Google Scholar 

  • Gumus, M. & Yereli, A. B. (2016). Yerel Yonetimlerin Finansmanında Yerel Yonetim Bankacılıgı Uygulaması, Iller Bankası Ornegi ve Turkiye icin Oneriler. Sosyoekonomi, 24(28), 209–234. https://doi.org/10.17233/se.55933.

  • Gungor, H. (2018). Belediyelerin Genel Butce Payları. Ankara: TBB.

    Google Scholar 

  • Humar, F. (2019). Financial structure and problems of the municipalities in Turkey; The Case of Ankara Metropolitan Municipality, Master’s Thesis, Ankara.

    Google Scholar 

  • Jin, J., & Zou, H. (2002). How does fiscal decentralization affect aggregate, national, and subnational government size? Journal of Urban Economics, 52 (2), 270–293.

    Google Scholar 

  • Karagoz, B., (2015). Turkiye’de Mali Yerellesme Emareleri ve Yatay Esitsizlik Sorunu. Sosyoekonomi Dergisi, 23(26), 139–163.

    Google Scholar 

  • Kazan, A. (2017). The Effects of the Law no 6360 on the Financial Structures of Metropolitan Municipalities. Sayıştay, 104, (1), 87–106.

    Google Scholar 

  • Kazan, A., (2019). Belediyelerde Borc Yonetimi. Turkiye Belediyeler Birligi Dergisi, 851–852, 8-12.

    Google Scholar 

  • Kazan, A. (2011). The Effects of Municipalities Debts in Turkey on General Budget: Analysis of 1980–2009 Period, Master’s Thesis, Ankara.

    Google Scholar 

  • King, D., & Ma, Y. (2001). Fiscal decentralization, central bank independence, and inflation. Economics Letters, 72(1), 95–98. https://doi.org/10.1016/s0165-1765(01)00405-0.

  • Kurtulus, B. (2006). Turkiye’de Belediyelerin Mali Yapısı ve Harcamalarının Finansmanı. Yayın No:2692, Ankara: DPT.

    Google Scholar 

  • Local Governments 2017 General Activity Report. (2018). Retrieved from https://webdosya.csb.gov.tr/db/yerelyonetimler/icerikler/2017_m-_gnl_faal_rpr-20180904082437.pdf.

  • Liu, L. (2009). Turkey - Strengthening the framework for sub-national borrowing: selected issues - a policy note (English). Washington, DC: World Bank Group. http://documents.worldbank.org/curated/en/425611486110135962/Turkey-Strengthening-the-framework-for-sub-national-borrowing-selected-issues-a-policy-note.

  • Manor, J. (1999). The Political Economy of Democratic Decentralization. Washington, DC: The World Bank.

    Google Scholar 

  • Marlow, M. L. (1988). Fiscal decentralization and government size. Public Choice, 56 (3): 259–269.

    Google Scholar 

  • Martinez, Y. U., Arzoz, P. P., & Apezteguia, B. I. (2018). Does decentralization contribute to efficiency? Evidence from OECD countries. Applied Economics, 50(7), 726–742. https://doi.org/10.1080/00036846.2017.1340572.

  • Mendoza, C. E. (2013). Fiscal Federalism in Mexico: Distortions and Structural Traps. Urban Public Economics Review, 18, 12–36.

    Google Scholar 

  • Musgrave, R. (1959). Theory of Public Finance, New York: McGraw-Hill.

    Google Scholar 

  • Ministry of Finance. General Directorate of Public Accounts, www.muhasebat.gov.tr.

  • Nacar Karabacak, B. (2013). Yerel Yonetimlerde Esnek Butce Kısıtı: Kavram, Ulke Deneyimleri ve Turkiye. Sayıstay Dergisi, 90(3), 119–141.

    Google Scholar 

  • Neyapti, B. (2005). Fiscal Decentralization and Socio-Economic Outcomes in Turkey: An Empirical Investigation. Metu Studies in Development, 32 (2), 433–465.

    Google Scholar 

  • Neyapti, B. (2004). Fiscal Decentralization, Central Bank Independence and Inflation: a Panel Investigation. Economics Letters, 82 (2), 227–230.

    Google Scholar 

  • Neyapti, B. (2010). Fiscal decentralization and deficits: international evidence. European Journal of Political Economy 26 (2), 155–166.

    Google Scholar 

  • Oates, W. E. (1972). Fiscal Federalism, New York: Harcourt Brace Jovanovich.

    Google Scholar 

  • Oates, W. E. (1985). Searching for Leviathan: an empirical study. The American Economic Review, 75, 748–758.

    Google Scholar 

  • Oates, W. E. (1993). Fiscal Decentralization and Economic Development. National Tax Journal, 46(2), 237–243.

    Google Scholar 

  • Oates, W. (1999). An essay on fiscal federalism. Journal of Economic Literature, 37, 1120–1149.

    Google Scholar 

  • Oates, W. E. (2005). Toward a Second-Generation Theory of Fiscal Federalism. International Tax and Public Finance, 12(4), 349–73.

    Google Scholar 

  • OECD. (2018). Subnational Governments in OECD Countries Key Data 2018 edition. Retrieved from http://www.oecd.org/regional/Subnational-governments-in-OECD-Countries-Key-Data-2018.pdf.

  • Ong, L. H. (2011). Fiscal federalism and soft budget constraints: The case of China. International Political Science Review, 33(4), 455–474. https://doi.org/10.1177/0192512111414447.

  • Oto-Peralías, D., Romero-Ávila, D., & Usabiaga, C., (2013). Does fiscal decentralization mitigate the adverse effects of corruption on public deficits? European Journal of Political Economy, 32, 205–231.

    Google Scholar 

  • Parlak, B., Sobaci, Z., & Okmen, M. (2008). The Evaluation of the Restructured Local Governments in Turkey Within The Context of the European Charter on Local Self-Government. Ankara Law Review, 5 (1), 23–52.

    Google Scholar 

  • Perloff, H. (1985). Fiscal Policy at the State and Local Level. In Burns. L. S and John Friedmann, (Eds.), The Art of Planning: Selected Essays of Harvey S. Perloff (pp. 241–257). New York/London: Plenum Press.

    Google Scholar 

  • Presidential Budget and Strategy Directorate. (2018). Retrieved from http://www.sbb.gov.tr/wp-content/uploads/2018/11/Mahalli-Idareler-Gelir-veHarcamalari_27112018.pdf.

  • Prud’homme, R. (1995). The Dangers of Decentralization. The World Bank Research Observer, 10(2), 201–220. https://doi.org/10.1093/wbro/10.2.201.

  • Qiao, M., Ding, S., & Liu, Y. (2018). Fiscal Decentralization and Government Size: The Role of Democracy. International Center for Public Policy Working Paper Series, at AYSPS, GSU paper1818, International Center for Public Policy, Andrew Young School of Policy Studies, Georgia State University. https://icepp.gsu.edu/files/2018/09/paper1818.pdf.

  • Qian,Y., &Weingast, B. (1997). Federalism as a Commitment to Reserving Market Incentives. Journal of Economic Perspectives, 11(4), 83–92.

    Google Scholar 

  • Rodden, J., & Wibbels, E. (2002). Beyond the fiction of federalism: Macroeconomic management in multitiered systems, World Politics, 54 (4), 494–531. https://doi.org/10.1353/wp.2002.0016.

  • Roden, J. (2003). Reviving Leviathan: Fiscal Federalism and the Growth of Government. International Organization, 57 (04), 695–729. https://doi.org/10.1017/s0020818303574021.

  • Rodriguez-Pose, A., & Ezcurra, R. (2010). Does decentralization matter for regional disparities? A cross-country Analysis. Journal of Economic Geography, 10(5): 619–644.

    Google Scholar 

  • Rodríguez-Pose, A., & Kroijer, A. (2009). Fiscal decentralization and economic growth in central and eastern Europe. Growth and Change, 40 (3), 387–417.

    Google Scholar 

  • Sagbas, I., Kar, M., & Sen, H. (2005). Fiscal decentralization, the Size of Public Sector and Economic Growth in Turkey. Environment and Planning C: Government and Policy, 23(1), 3–19. https://doi.org/10.1068/c0421.

  • Shah, A. (2006). Fiscal Decentralization and Macroeconomic Management. International Tax and Public Finance, 13 (4), 437–62. https://doi.org/10.1007/s10797-006-8948-1.

  • Shah, A. (2008). Federalism and Macroeconomic Performance. In Anwar Shah (Ed.), Macro Federalism and Local Finance (pp. 107–241). Washington, DC: The World Bank.

    Google Scholar 

  • Shah, A. (1998). Fostering Fiscally Responsive and Accountable Governance: Lessons from Decentralisation. In R. Picciotto & E. Wiesner (eds.), Evaluation & Development: The Institutional Dimension. (pp. 83–96). New Brunswick/London: Transaction Publishers.

    Google Scholar 

  • Siverekli, E. (2015). Turkiye de Merkezi Yonetim ile Belediyeler Arasındaki Mali Iliski Sanlıurfa Ornegi. Erciyes Universitesi Iktisadi ve Idari Bilimler Fakültesi Dergisi,46 (2), 21 42.

    Google Scholar 

  • Sow, M., & Razafimahefa, I. F. (2015). Fiscal Decentralization and the Efficiency of Public Service Delivery. IMF Working Paper, WP/15/59 https://www.imf.org/external/pubs/ft/wp/2015/wp1559.pdf.

  • Sujarwoto, S. (2017). Why decentralization works and does not works? A systematic literature review. Journal of Public Administration Studies, 1 (3), 1–10.

    Google Scholar 

  • Suzana, M., & Kiril, J. (2014). Impact of Fiscal Decentralization on Price Stability In The European Countries. Journal Articles, Center for Economic Analyses, December, 25–34.

    Google Scholar 

  • Suzana, M., & Goran. P. (2015). Fiscal Decentralization and Inflation in Central and Eastern Europe. MPRA Paper 77596, University Library of Munich, Germany, revised 16 Mar 2017.

    Google Scholar 

  • Tanzi, V. (1996). Fiscal federalism and decentralization: A review of some efficiency and macroeconomic aspects, Annual World Bank Conference on Development Economics, 1995, (pp. 295–316) TheWorld Bank, Washington, DC.

    Google Scholar 

  • Tanzi, V. (2002). Pitfalls on the Road to Fiscal Decentralization. In E. Ahmad & V. Tanzi (Eds.), Managing Fiscal Decentralization (pp. 17–31). New York, NY: Routledge.

    Google Scholar 

  • TBB, Union of Municipalities of Turkey. (2019). Retrieved from http://www.tbb.gov.tr/en/local-authorities/.

  • Ter-Minassian, T. (1997). Decentralization and Macroeconomic Management. IMF Working Paper, 1997/155, 1–16.

    Google Scholar 

  • Ter-Minassian, T. & J. P. Jimenez. (2011). Macroeconomic challenges of fiscal decentralization in Latin America in the aftermath of the global financial crisis. Macroeconomía del Desarrollo 112, Naciones Unidas Comisión Económica para América Latina y el Caribe (CEPAL).

    Google Scholar 

  • Ter-Minassian, T. (2015). Promoting Responsible and Sustainable Fiscal decentralization. In E. Ahmad & G. Brosio (Eds.), Handbook of Multilevel Finance (pp. 437–457). Cheltenham, UK: Edward Elgar Publishing Limited.

    Google Scholar 

  • Thiessen, U. (2005). Fiscal Decentralization and Economic Growth in High-Income OECD Countries. Fiscal Studies, 24(3), 237–274. https://doi.org/10.1111/j.1475-5890.2003.tb00084.x.

  • Thornton, J. (2007). Fiscal decentralization and economic growth reconsidered. Journal of Urban Economics, 61(1), 64–70. http://dx.doi.org/10.1016/j.jue.2006.06.001.

  • Tiebout, C. M. (1956). A Pure Theory of Local Expenditures. Journal of Political Economy, 64(5), 416–424.

    Google Scholar 

  • Tosun, M. S., Uz, D., & Yilmaz, S. (2016). Fiscal Decentralization and Local Borrowing in Turkish Provinces. In M. Erdogdu & B. Christiansen (Eds.), Handbook of Research on Public Finance in Europe and the MENA Region (pp. 505–520). Pensilvanya, USA: IGI Global.

    Google Scholar 

  • Tosun, M. S. & Yilmaz, S. (2010). Decentralization, Economic Development and Growth in Turkish Provinces. Emerging Markets Finance and Trade, 46 (4), 23–44.

    Google Scholar 

  • Treisman, D. (2000). Decentralization and inflation: Commitment, collective action, or continuity. American Political Science Review, 94(4), 837–857.

    Google Scholar 

  • TUIK, Turkish Statistical Institute. (2019). Retrieved from http://tuik.gov.tr/PreHaberBultenleri.do?id=30709.

  • Turkoglu, I. (2009). Yerel Yonetimlerde Mali Reform Arayısları: Turkiye’de Belediyelerde Mali Ozerklik ve Belediye Baskanlarının Mali Ozerklik Algılaması. Ankara: T.C. Maliye Bakanlığı Strateji Ge-liştirme Başkanlığı Yayın No: 2009/389.

    Google Scholar 

  • Ulusoy, A., & Akdemir, T. (2009). Yerel Yonetimler ve Mali Ozerklik: Turkiye ve OECD Ulkelerinin Karsılastırılması. Balikesir University Journal of Social Sciences Institute, 12(21), 259–287.

    Google Scholar 

  • Vazquez, J. M., Lago‐Peñas, S. & Sacchi, A. (2017). The Impact of Fiscal Decentralization: A Survey. Journal of Economic Surveys, 31(4), 1095–1129.

    Google Scholar 

  • Vazquez, J. M., & McNab, R. (2006). Fiscal Decentralization, Macrostability, and Growth. Hacienda Publica Espanola, 179, 25–49.

    Google Scholar 

  • Weingast, B. (2009). Second Generation Fiscal Federalism: The Implications of Fiscal Incentives. Journal of Urban Economics, 65 (3), 279–93.

    Google Scholar 

  • Weingast, B. (2013). Second Generation Fiscal Federalism: Political Aspects of Decentralization and Economic Development. World Development, 53, 14–25.

    Google Scholar 

  • Wibbels, E., (2000). Federalism and the Politics of Macroeconomic Policy and Performance. American Journal of Political Science, 44 (4), 687–702.

    Google Scholar 

  • World Bank (2019). Retrieved from http://web.worldbank.org/archive/website01061/WEB/0__CO-11.HTM.

  • Yilmaz, S., & Guner, A. (2013). Local Government Discretion and Accountability in Turkey. Administration and Development, 33(2), 125–142. https://doi.org/10.1002/pad.1646.

  • Yilmaz, S., & Guner, A. (2017). Impact of Recent Changes on Local Government Discretion and Accountability in Turkey. Marmara Journal of Economics, 1 (2), 229–250.

    Google Scholar 

  • Yilmaz, H. H. (2013). Turkiye’de Belediyelerin Mali Yapıları ve Mali Farklılaşma. Ankara: Turkiye Belediyeler Birligi Yayınları.

    Google Scholar 

  • Yuksel, C. (2016). Yerel Yonetimlerde Kaynak Paylasım Sistemleri ve 6360 Sayılı Kanunla Turkiye’deki Degisimler. Ankara Universitesi SBF Dergisi, 71(3), 731–756.

    Google Scholar 

  • Yuksel, H. (2014). Mali Yerellesme ve Yerel Ekonomik Buyume Iliskisi Uzerine Ampirik Bir Çalısma: Turkiye Ornegi. Amme Idaresi Dergisi, 47(4), 139–159.

    Google Scholar 

Download references

Author information

Authors and Affiliations

Authors

Corresponding author

Correspondence to Asuman Çukur .

Editor information

Editors and Affiliations

Rights and permissions

Reprints and permissions

Copyright information

© 2020 Springer Nature Singapore Pte Ltd.

About this chapter

Check for updates. Verify currency and authenticity via CrossMark

Cite this chapter

Çukur, A. (2020). Fiscal Decentralization and Macroeconomic Management in Turkey. In: Akdemir, T., Kıral, H. (eds) Public Financial Management Reforms in Turkey: Progress and Challenges, Volume 2. Accounting, Finance, Sustainability, Governance & Fraud: Theory and Application. Springer, Singapore. https://doi.org/10.1007/978-981-15-4226-8_9

Download citation

Publish with us

Policies and ethics