Does Intergovernmental Equalization Create Disincentives for Regional Infrastructural Development?
The subject of the research is the relationship between the amount of fiscal equalization grants and the length of transport routes in the regions. The study aims to test the hypothesis that the current formula for intergovernmental equalization creates disincentives for developing the road network...
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| Format: | Article |
| Language: | Russian |
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Government of the Russian Federation, Financial University
2021-02-01
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| Series: | Финансы: теория и практика |
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| Online Access: | https://financetp.fa.ru/jour/article/view/1132 |
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| author | N. E. Barbashova |
| author_facet | N. E. Barbashova |
| author_sort | N. E. Barbashova |
| collection | DOAJ |
| description | The subject of the research is the relationship between the amount of fiscal equalization grants and the length of transport routes in the regions. The study aims to test the hypothesis that the current formula for intergovernmental equalization creates disincentives for developing the road network in the regions. The relevance of the study is due to the fact that equalizing interterritorial inequality and regional infrastructural development are the most important goals of regional policy, whose instruments should not contradict. The current formula for distributing fiscal equalization grants contains a negative relationship between the length of transport routes in the regions and the amount of the transfer. That is, with an increase in the length of roads, the amount of grants to regions with initially low transport accessibility decreases. The author used the method of simulation modeling to quantify the reduction in grants to regions with low transport accessibility in the case of an increase in the length of roads in 2020 and to assess the potential impact of this decrease on the policy of regional authorities. As a result, the author revealed that while maintaining the current dynamics of road construction, an increase in the length of transport routes will lead to a decrease in the volume of grants to regions within 1%, which is insignificant regarding incentives. However, with an increase in the road network of hard-to-reach regions by one and a half times or more, this decrease may become critical. The work provides the estimate of the minimum additional fiscal revenue required to compensate for the lost income of the region with an increase in the length of transport routes. A further study may provide more details on the impact of the road industry development on the own revenues of regional budgets. |
| format | Article |
| id | doaj-art-4d13af7167f84526bb4064d11da7fefc |
| institution | Kabale University |
| issn | 2587-5671 2587-7089 |
| language | Russian |
| publishDate | 2021-02-01 |
| publisher | Government of the Russian Federation, Financial University |
| record_format | Article |
| series | Финансы: теория и практика |
| spelling | doaj-art-4d13af7167f84526bb4064d11da7fefc2025-08-20T03:59:57ZrusGovernment of the Russian Federation, Financial UniversityФинансы: теория и практика2587-56712587-70892021-02-01251223410.26794/2587-5671-2021-25-1-22-34826Does Intergovernmental Equalization Create Disincentives for Regional Infrastructural Development?N. E. Barbashova0Institute for Applied Economic Research, Russian Academy of National Economy and Public Administration; Financial Research Institute, Ministry of Finance of RussiaThe subject of the research is the relationship between the amount of fiscal equalization grants and the length of transport routes in the regions. The study aims to test the hypothesis that the current formula for intergovernmental equalization creates disincentives for developing the road network in the regions. The relevance of the study is due to the fact that equalizing interterritorial inequality and regional infrastructural development are the most important goals of regional policy, whose instruments should not contradict. The current formula for distributing fiscal equalization grants contains a negative relationship between the length of transport routes in the regions and the amount of the transfer. That is, with an increase in the length of roads, the amount of grants to regions with initially low transport accessibility decreases. The author used the method of simulation modeling to quantify the reduction in grants to regions with low transport accessibility in the case of an increase in the length of roads in 2020 and to assess the potential impact of this decrease on the policy of regional authorities. As a result, the author revealed that while maintaining the current dynamics of road construction, an increase in the length of transport routes will lead to a decrease in the volume of grants to regions within 1%, which is insignificant regarding incentives. However, with an increase in the road network of hard-to-reach regions by one and a half times or more, this decrease may become critical. The work provides the estimate of the minimum additional fiscal revenue required to compensate for the lost income of the region with an increase in the length of transport routes. A further study may provide more details on the impact of the road industry development on the own revenues of regional budgets.https://financetp.fa.ru/jour/article/view/1132intergovernmental equalizationgrantsregional developmenttransport accessibilityroad constructiondisincentives |
| spellingShingle | N. E. Barbashova Does Intergovernmental Equalization Create Disincentives for Regional Infrastructural Development? Финансы: теория и практика intergovernmental equalization grants regional development transport accessibility road construction disincentives |
| title | Does Intergovernmental Equalization Create Disincentives for Regional Infrastructural Development? |
| title_full | Does Intergovernmental Equalization Create Disincentives for Regional Infrastructural Development? |
| title_fullStr | Does Intergovernmental Equalization Create Disincentives for Regional Infrastructural Development? |
| title_full_unstemmed | Does Intergovernmental Equalization Create Disincentives for Regional Infrastructural Development? |
| title_short | Does Intergovernmental Equalization Create Disincentives for Regional Infrastructural Development? |
| title_sort | does intergovernmental equalization create disincentives for regional infrastructural development |
| topic | intergovernmental equalization grants regional development transport accessibility road construction disincentives |
| url | https://financetp.fa.ru/jour/article/view/1132 |
| work_keys_str_mv | AT nebarbashova doesintergovernmentalequalizationcreatedisincentivesforregionalinfrastructuraldevelopment |