Unraveling the Politics of Decentralization: Argentina and Spain in

154 Pages·2004·0.72 MB·English

UNRAVELING THE POLITICS OF DECENTRALIZATION: ARGENTINA AND SPAIN IN
COMPARATIVE PERSPECTIVE

by

Jorge P. Gordin

BA, The Hebrew University of Jerusalem, 1989

MA, The Hebrew University of Jerusalem, 1992

Submitted to the Graduate Faculty of

Arts and Sciences in partial fulfillment

of the requirements for the degree of

Doctor of Philosophy

University of Pittsburgh

2004
UNIVERSITY OF PITTSBURGH

FACULTY OF ARTS AND SCIENCES

This dissertation was presented

by

Jorge P. Gordin

It was defended on

16 September 2004

and approved by

B. Guy Peters

William R. Keech

Louis Picard

Alberta M. Sbragia
Dissertation Director

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Copyright © 2004 by Jorge P. Gordin
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UNRAVELING THE POLITICS OF DECENTRALIZATION: ARGENTINA AND SPAIN IN
COMPARATIVE PERSPECTIVE

Jorge P. Gordin, PhD

University of Pittsburgh, 2004

This dissertation explores the politics of fiscal decentralization in comparative
perspective. Case studies of Argentina and Spain are used to provide insights into the way that
the distribution of institutional and economic resources in multitiered polities shapes the extent
to which the policy of transferring revenue and revenue authority to subnational governments
can be exploited for political gain. This approach draws attention to the political conditions that
inhibit the coordination of fiscal reform efforts between the different levels of government and
perpetuate the financing of subnational spending with revenue collected by the national
government. This political context undermines national fiscal adjustment efforts and leads to
economic catastrophes such as those experienced in Argentina throughout the last two decades.
Specifically, this study uses statistical analyses and empirical institutional theory to show how
patterns of territorial representation and bargaining strategies hindered revenue decentralization
in Argentina but advanced it in Spain.
The research suggests, first, coalition-building goals drive national executives in
Argentina to reach out legislators of the opposition by means of allocating larger shares of
federal transfers to the provinces the latter belong to. However, all else equal, legislatively
overrepresented, i.e. economically marginal and sparsely populated, provinces will be targeted
first. Second, the increasing role of regionalist parties in Spanish national politics and their
acceptance in joint-policy mechanisms tilts the allocation of chosen federal transfers slightly in
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favor of economically developed and densely populated autonomous communities, which are
generally governed by regionalist forces. Third, whereas Argentine subnational interests are
“locked-in” at the Senate level and intergovernmental negotiations are conducted bilaterally,
open-ended institutional arrangements and a relatively impotent senate in Spain boosted the
redressing of regional concerns through informal intergovernmental fora and increasing
multilateral collaboration Fourth, such differences in patterns of institutional representation and
bargaining strategies explain the paucity of fiscal decentralization in Argentina and its relative
progress in Spain.

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TABLE OF CONTENTS

PREFACE......................................................................................................................................ix
1 Chapter 1: Introduction...........................................................................................................1
1.1 Why Decentralization?....................................................................................................2
1.1.1 The Theoretical Argument......................................................................................4
1.1.1.1 Goals of this Dissertation....................................................................................7
2 Chapter 2: Institutional Sources of Fiscal Decentralization: “The Rules of the Game” and
Subnational Politics......................................................................................................................19
2.1 The Territorial Role of Political Institutions: Representation and Policy Scope of the
Senate 19
2.1.1 The “Puzzle”.........................................................................................................19
2.1.1.1 Representation: Who and How?........................................................................21
3 Chapter 3: The Political Significance of Fiscal Decentralization.........................................41
3.1 Why is Fiscal Decentralization Politically Important?.................................................45
3.1.1 Conceptualizing the Politicization of Fiscal Decentralization: The Role of
Transfers 48
3.1.1.1 Types of Fiscal Decentralization: A Political Explanation...............................55
4 Chapter 4: The Politics of Intergovernmental Transfers in Argentina: Time-series and
Cross-sectional Analysis...............................................................................................................63
4.1 The Argentine “Paradox”: Federalism, Political Spending and Fiscal Crises..............64
4.1.1 Understanding the Role of Political and Economic Factors in Argentine
Intergovernmental Relations.................................................................................................66
4.1.1.1 FONAVI...........................................................................................................67
5 Chapter 5: The Politics of Intergovernmental Transfers in Spain: Time-series and Cross-
sectional Analysis.........................................................................................................................96
5.1 The Empirical Analysis.................................................................................................99
5.1.1 Benevolent Central Planners or Strategic Politicians?: The Determination of
Federal Transfers, Spanish Style...........................................................................................99
5.1.1.1 The Limits to Redistribution: The Inter-AC Distribution of Intergovernmental
Transfers in Spain...........................................................................................................110
6 Chapter 6: Conclusions and Implications...........................................................................121
APPENDIX A.............................................................................................................................127
APPENDIX B.............................................................................................................................128
BIBLIOGRAPHY.......................................................................................................................129

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LIST OF TABLES

Table 1: SENATE OVERREPRESENTATION (Stepan/Swenden data)...................................28
Table 2: SENATE OVERREPRESENTATION (SAMUELS/SNYDER DATA).......................29
Table 3: INTERGOVERNMETAL FISCAL INDICATORS......................................................52
Table 4: DETERMINANTS OF FONAVI TRANSFERS: PANEL-CORRECTED
REGRESSION RESULTS....................................................................................................80
Table 5: DETERMINANTS OF ATN TRANSFERS: PANEL-CORRECTED REGRESSION
RESULTS.............................................................................................................................81
Table 6: THE DETERMINANTS OF FEDEI TRANSFERS: RESULTS OF CROSS-SECTION
ANALYSIS...........................................................................................................................90
Table 7: Parties in Central and AC Governments 1983-1999....................................................104
Table 8: DETERMINANTS OF SUBVENCIONES GESTIONADAS: PANEL-CORRECTED
REGRESSION RESULTS..................................................................................................107
Table 9: DETERMINANTS OF CONVENIOS DE INVERSION: PANEL-CORRECTED
REGRESSION RESULTS..................................................................................................107
Table 10: THE DETERMINANTS OF SUBVENCIONES GESTIONADAS: RESULTS OF
CROSS-SECTION ANALYSIS.........................................................................................114
Table 11: THE DETERMINANTS OF CONVENIOS DE INVERSION: RESULTS OF CROSS-
SECTION ANALYSIS.......................................................................................................114

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LIST OF FIGURES

Figure 1: TYPES OF FISCAL DECENTRALIZATION.............................................................57
Figure 2: CURVE FIT..................................................................................................................92
Figure 3: RELATIONSHIP BETWEEN SUBVENCIONES GESTIONADAS AND AC
TRANSFER DEPENDENCE.............................................................................................115
Figure 4: RELATIONSHIP BETWEEN CONVENIOS DE INVERSION AND AC TRANSFER
DEPENDENCE..................................................................................................................116

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PREFACE

Over the time I have incurred into many debts with persons and institutions that made the
fulfillment of this project possible. My greatest intellectual debt is to the political science faculty
at Pitt. First, and foremost, I want to thank Alberta Sbragia for having accepted to tutor me
throughout this dissertation and for being a model of what a graduate student’s mentor should be.
Since I arrived as an international student to Pittsburgh, she always provided unconditional
support and examples of intellectual care and sophistication, dedication, and human kindness.
My gratitude to her will certainly be enduring. Without a doubt, Guy Peters has been my maestro
of comparative politics and his tutorship has sharpened and stimulated my thinking to an extent
that goes beyond what words can express. I want to especially thank him for his generosity to
share his unparalleled international networking with me and sponsor my doctoral field work at
the prestigious Juan March Institute in Madrid. Muchísimas gracias (with accent!...) to William
Keech, who always provided detailed comments and inspiring feedback and graciously made
himself available to me every time I needed his wise and authoritative opinion. Many thanks to
Louis Picard for having accepted to join this project when it was already close to completion and
providing refreshing comments and feedback. Last, Mitch Seligson’s devotion to methodological
innovation, hard work, and his unwavering passion for political science have been highly
influential throughout my academic career at Pitt.

I gratefully acknowledge the generous financial support of the Center for West European Studies
and European Union Center at Pitt throughout my dissertation fieldwork and my doctoral
program more generally. Likewise, the Center for Latin American Studies at Pitt provided
significant funding and sponsored a Tinker Foundation doctoral research grant for my field work
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in Argentina and Spain. In addition, many thanks to the political science department and the
University Center for International Studies at Pitt for financial support.

I would also like to thank Anibal Perez-Liñan for reading drafts and amiably discussing ideas
related to this dissertation. Mark Hallerberg generously shared data, ideas, and valuable contacts
in Spain. In Argentina, I owe thanks to Sergio Berenztein, Fabio Bertranou, Tulia Falletti, Dora
Orlanski, Alberto Porto and Pablo Sanguinetti. At the CEDI, Sebastian Saiegh and Juan
Sanguinetti provided extremely valuable advice and guidance. Among policy informants, I was
lucky to meet former and current Argentine Governors, Deputies and other federal and provincial
officials who were willing to share their experience and knowledge. I cannot name each of them,
but their time and cooperation is extremely appreciated. On the other side of the Atlantic, special
thanks go to the Juan March Institute in Madrid-especially José Ramón Montero and its
executive librarian, Marta Peach. I would also like to thank Carlos Alba at the Universidad
Autónoma de Madrid for sharing his wisdom and advise and, above all, making me feel at home
in Madrid. At the Universidad de Murcia, Mireia Grau i Creus generously shared her knowledge
about Spanish “federalism” and provided me with invaluable contacts and data sources. The
following individuals have also been generous enough to assist me in the process of obtaining
data and understanding Spanish politics: Sandra León Alfonso, Cesar Colino, Fátima García
Diez, Manuel Jimenez, Pilar Luaces Mendes, Carlos Monasterio Escudero, Ignacio Peñas Lago,
Jaime Parrondo Aymerich, Jesús Ruiz-Huerta Carbonell, Joan Subirats, and Eduardo Zapico
Goñi. At the Banco de España, Pablo Hernandez de Clos and José Manuel Gonzales Páramo
provided valuable feedback. The same caveat with regards to policy informants in Argentina
applies here.
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