## Can Fiscal Decentralization Strengthen Social Capital?

_IMF Working Papers, July 1, 2000_

## Source details

**Canonical URL:** [Can Fiscal Decentralization Strengthen Social Capital?](https://www.imf.org/en/publications/wp/issues/2016/12/30/can-fiscal-decentralization-strengthen-social-capital-3681)

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## Bibliographic details
- Published: July 1, 2000
- Series: IMF Working Papers
- DOI: https://doi.org/10.5089/9781451855104.001

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### Summary
- Countries where social and political institutions stimulate interpersonal trust, civic cooperation, and social cohesiveness tend to have more efficient governments, better governance systems, and faster growth.
- This paper provides cross-country evidence, based on a sample of developing and developed countries, that fiscal decentralization—the assignment of expenditure functions and revenue sources to lower levels of government—can boost social capital and therefore be integrated into second-generation reforms.
- Publication date: July 1, 2000.

### Key findings and evidence
- Fiscal decentralization is associated with increases in social capital measures such as interpersonal trust, civic cooperation, and social cohesiveness.
- Evidence is cross-country, covering both developing and developed countries.
- The paper argues that strengthening local assignment of expenditures and revenues can complement institutional reforms aimed at improving governance and growth.

### Policy implications and recommendations
- Integrate fiscal decentralization into second-generation reforms to strengthen social capital.
- Assign expenditure functions and revenue sources to lower levels of government where appropriate to stimulate interpersonal trust and civic cooperation.

### Subjects and keywords
- Subject: Expenditure, Fiscal federalism, Fiscal policy, Macro-fiscal analysis, Public debt, Revenue administration
- Keywords: civic cooperation, community member, decentralization, decentralization indicator, expenditure share, fiscal decentralization, fiscal federalism, governance, Macro-fiscal analysis, social capital, WP

*International Monetary Fund. "Can Fiscal Decentralization Strengthen Social Capital?", IMF Working Papers 2000, 129 (2000).*

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_Source: https://www.imf.org/en/publications/wp/issues/2016/12/30/can-fiscal-decentralization-strengthen-social-capital-3681_