The Political Economy of Fiscal Decentralization under the Islamic Republic of Iran

2021/07/08
Theme: 

How responsive are local government institutions in Iran to their constituents? In this recent academic article, The Political Economy of Fiscal Decentralization under the Islamic Republic of Iran, Kian Tajbaksh assesses the fiscal dimensions of elected local government officials in Iran. This paper is the first and only comprehensive empirical study of municipal finances in Iran and utilizes a unique dataset of almost 90 cities across the country during the first phase of decentralization in Iran from 1998-2006. A key finding of the paper is that local elected municipalities in Iran possess limited fiscal and legal autonomy over both revenue and expenditures. Furthermore, these municipalities are often charged with responsibilities by the central government that are beyond their fiscal capacity and ultimately leads to inefficient local government that is fully capable of achieving its goals. The local financial system shapes incentives in such a way that elected local councils lack the range of responsibilities necessary for fostering a local constituency for effective government, because residents may not have adequate incentive to participate in local politics or engage with elected officials.