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Determinants of Local Revenue Mobilisation: Do Governmental Transfers and Public Investment Matter? A Case of the Western Balkan Countries

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Garvanlieva Andonova V., Trenovski B.

Studia Regionalne i Lokalne

2023

vol. 93

issue 3

7-19

Local governments in the Western Balkan countries are dependent on central governments’ transfers, with low fiscal autonomy and limited efforts for own-source revenue mobilisation. The paper identifies that besides central government transfers, other significant factors in determining municipal own-source revenues include central and local public investment, current expenditures, human development index, and population density. Municipal own-source revenue is adversely affected by intergovernmental transfers, implying their de-incentivising effect in collecting local revenues. Local capital expenditure is a significant and strong determinant with a higher strength than central government investments, suggesting their importance for local fiscal autonomy. The human development index as a composite measure, unlike GDP per capita, positively affects the municipal fiscal autonomy.

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1 Studia Regionalne i Lokalne

1 Garvanlieva Andonova V.

1 Trenovski B.

1 2023

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Determinants of Local Revenue Mobilisation: Do Governmental Transfers and Public Investment Matter? A Case of the Western Balkan Countries