Background Information about the Working Group

The working group focuses on quality comparative empirical research on financial and accounting practices in the public sector – first of all related to local governments – in Central and Eastern European Countries. The working group has been established in 2001 and during its existence various aspects of local government finance, intergovernmental fiscal relations and related issues were discussed. By now four NISPAcee publications were published, additionally two books are edited now.

Proposed research topic and outline of the research protocol

For the 2009/2010 period the Working Group will focus on the effect of crisis on local government finance. The topic is very much in line with main theme of the 18^th NISPAcee Annual Conference on “Public Administration in the Times of Crisis”. The geographical focus of the project is transitional countries of Central and Eastern Europe and the former Soviet Union. However, regarding comparison, few cases from the countries of advanced economies are also welcomed.

In the countries of the region there have been several fiscal and economic crises over the last two decades. First of all at the change of the system, the so-called Transition of CEE countries and the countries of the former Soviet Union was caused by a very deep political and economic crisis. During the transition the countries of the region have also phased crises depended on their individual situation. The nature and the background of the actual crises is different because it is related to a world wide financial and economic crisis which effects both advanced market economies and transitional economies as same as the Third World countries. The present situation is unique that respect there was only two such world wide crises in the last century: the World Economic Crisis in 1929-1933 and the Oil Price Crisis in the 1970s.

The core research question is that how to public sector respond to this situation. The previous world wide crises increased the role of the state to eliminate market failures. Within the region the Transition has been a process of decentralisation of an entirely centralised political and economic system. What are the reactions to the actual crisis in individual countries: increasing concentration of power (fiscal capacity) on the level of Central Government or increasing role of decentralisation among the government levels and/or between the government and the private sector?

Beside this top-down approach it is also questionable what local governments can or able to do in such crisis situation? In the 1970s, the answer by local governments of the advanced economies was local economic development. Localities developed their strategies based on endogenous resources to reduce the effects of crisis on employment and decreasing revenues. What spaces of actions for local governments are in CEE and CIS countries which are in various stages of Transition: the pioneers of Transition (Visegrád Countries), other so-called Accession Countries, and other countries of the former Soviet Union?

The research protocol will require very specific papers – country studies – without long general introduction.

The first chapter should describe the level of decentralisation at he beginning of the crisis and the general effects of the crisis in each country. The relative importance of Central and Local Government related to the GDP, additionally the rate of own revenue sources in the total Local Government revenues may indicate the level of fiscal decetralisation. The change of macro economic indicators – facts of the last three years and possibly the forecasting of the next two years – like GDP (and per capita GDP), unemployment rate etc.

The key part of the paper will be a country case study (top-down approach) or case study of one or more local governments (initiatives/barriers at the bottom).

Country studies should analyse two main topics regarding the effect of crisis:

1. Is there a change in the vertical allocation of resources?

2. Is there a change in horizintal equalisation: a) between municipalities; b) according to local needs generated by the crisis?

Local case studies also should comprise two sub-topic:

1. The nature of crises in the municipality comparing with the national processes (and with other municiplaities if the paper evaluates more cases).

2. Local answers to the crises (identified best practices).

This approach has two advantages: (1) we can compare the actions taken by individual countries and localities; (2) we can accept more (maximum 2-3) papers from the same country without duplication of the topic (at least at the case study level).

WG5 research protocol 2010

You may see the accepted  presentations scheduled
in the Preliminary Conference Programme