Factors determining intra-regional fiscal decentralization in Russia and the US

Abstract

We use panel data for Russia's regions (2005–2013) and the US states (1997–2013) and several different econometric specifications to estimate and compare the determinants of fiscal decentralization in the two countries. We find that while the factors of decentralization in the US states largely conform to existing theoretical predictions, this is not so for Russia, where almost no factors are consistently associated with intraregional fiscal decentralization. Moreover, our results for Russia differ from prior results based on earlier data. We conjecture that the recent weakening of the effects of conventional fiscal decentralization determinants in Russia is due to the decline of democratic institutions in Russia's regions and overall political and economic centralization in the country.