From: The Wealth of the Wild: How Local Power Shapes Resource Taxes
perspectivescientific

Economists argue that fiscal decentralization must match a region's administrative capacity to avoid economic disaster. If a tiny local administration with limited staff is suddenly flooded with massive, volatile resource tax windfalls, they cannot absorb the capital. It leads to waste and corruption. Conversely, larger regions with robust institutions, like Indonesia's Bojonegoro regency, can manage these fluctuations. The economic success of decentralization depends entirely on scale and institutional maturity.

controversy

Supporting arguments

  • Small administrations lack the capacity to absorb sudden revenue windfalls.
  • Volatile resource prices destabilize local budgets without federal smoothing.
  • Institutional maturity determines if resource wealth becomes a blessing or a curse.
Read the full exploration
What else is in this exploration
3 evidence blocks2 visualizations2 insights8 media resources4 rabbit holes
evidence
Under fiscal revenue decentralization, local tax competition can cause green taxes to inadvertent...
evidence
High dependence on centralized natural resource transfers, like Peru's Canon system, limits the e...
evidence
Relying on central government resource revenue-sharing transfers actually reduces a local region'...
Sign up to unlock
Continue exploring
The Wealth of the Wild: How Local Power Shapes Resource Taxes
Evidence, perspectives, rabbit holes, and more