An Analysis of the Level of Fiscal Decentralisation in Two Selected Groups of Central and Eastern European Countries

In the three types of decentralisation (political, administrative and fiscal), fiscal decentralisation has gained the most prominence in the last few decades in both developed and developing countries. For a set of (post)transition countries, the significance of fiscal devolution and fiscal decentralisation is even greater bearing in mind that these countries have also undergone economic and market decentralisation in the process of transition shock. Hence, the aim of this paper is to analyse the level of fiscal decentralisation in two sets of Central and Eastern European countries, namely, Visegrad countries and Western Balkan countries. In order to determine the level of fiscal decentralisation in each group of countries, we have calculated the fiscal decentralisation index firstly introduced by Vo (2009) and later represented by Aristovnik (2012) for selected group of Eastern European countries. Fiscal decentralisation index was calculated for the two groups of countries for the period of ten years of the most recent available data (2005-2014). Our results show inter-group differences in the level of fiscal decentralisation as well as intra-group differences. In fact, our results indicate that fiscal decentralisation index is low in both groups of countries implying relative fiscal centralisation. We focus on the level of fiscal decentralisation in Bosnia and Herzegovina due to its unique constitutional organisation and the position of local government units within such constitutional structure.