10 May To what extent is the Ethiopian fiscal federalism decentralized in experience of Ethiopian fiscal federalism is associated with equal access. An Economic Analysis of Fiscal Federalism in Ethiopia. Abu Girma Moges. Northeast African Studies, Volume 10, Number 2, (New Series), pp. Fiscal Federalism in Ethiopia. Yalew Abate (). Speaker, House of Federations. Federal Democratic Republic of Ethiopia.

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The rationale for this has been in part that decentralization promotes accountability. The underlying theme of the reforms is restructuring the public sector and improving its efficiency. This pattern could broadly be attributable to the structure and performance of the economy, the administration of the taxation system, and the design of the taxation system.

Such transfers of revenues usually fall under three categories: First, despite the legislative assignment of taxes, the actual potency of the tax network depends on the nature and development of the national economy, the relative distribution of economic activities across jurisdictions, and the administrative efficiency of the taxation system.

The current government in power, except some marginal changes, shares important characteristics and behavior in fiscal policy with its predecessor. Constitutionally, the federal government is not effectively centralized through presidentialism. By taking into consideration principles such as ownership of revenue, regional character of revenues sources, convenience fiscal federalism in ethiopia administration, fiscal federalism in ethiopia, and wealth distribution, sharing of revenue between the Federal Government and the State Governments serves the following purposes: While fiscal federalism constitutes a set of guiding principles, fiscal federalism in ethiopia guiding concept that helps in designing financial relations between the national and sub-national levels of the government, fiscal decentralization on the other hand is a process of applying such principles.

The country has become fiscal federalism in ethiopia dependent on foreign aid and borrowing to finance its consumption and investment expenditure. As far as collection of the revenues goes, the regional governments collect their own revenues whereas the Federal Government fiscal federalism in ethiopia not only its own revenues but also the joint revenues, of course with a possibility of delegation whenever deemed necessary.

It may be noted that the ideas of fiscal federalism are relevant for all kinds of government, unitary, federal and confederal. If you would like to authenticate using a different subscribed institution that supports Shibboleth authentication or have your own login and password to Project MUSE, click ‘Authenticate’. Book titles OR Journal titles.



Due to the nature of the responsibilities, the federal government usually assumes macroeconomic stabilization and income redistribution functions and make sure that regional governments would not take measures that are not compatible with such functions. The main economic objectives of fiscal decentralization are improving the efficiency of the public sector, creating an enabling environment for private sector development, and promoting economic fiscal federalism in ethiopia.

The century old exclusive, suppressive and highly centralized governance fiscal federalism in ethiopia came to end in and a multi-ethnic federal arrangement has been adopted. Even in non-federal states, there has been a growing movement towards greater fiscal decentralization in recent years.

Wolf Legal Publishers : Fiscal Federalism in the Ethiopian Ethnic-based Federal System

The fiscal performance of the country is reflections of a typical underdeveloped and agrarian based economy in which the majority of the population lives in chronic poverty and a government ethiiopia fiscal federalism in ethiopia its effort to extraction of resources from the economy and failing to allocate these resources to priority areas and sectors of the economy.

This aspect addresses how regional governments interact to each other especially when there are externalities and spillovers. It is an important predictor of a looming crisis.

Secondly, both governments are required to ensure that the relationship amongst themselves is not adversely affected by the tax and that the rate and amount of taxes are commensurate with the services that the taxes help deliver. Second, the practice of fiscal federalism, especially when citizens across regions with feddralism economic and demographic situations are treated unequally, gives rise to the violation of one of the core principles of horizontal fiscal equity.

The above three points suggest that the relationship between the federal government and the fiscal federalism in ethiopia states is asymmetrical, even though they are in principle considered to be equal. These include administering land and other natural resources in keeping with Federal laws, formulating and execution economic, social fiscal federalism in ethiopia development policies, strategies and plans of the state in question.

Fiscal federalism refers to a process of distribution and redistribution of fiscal decision-making power across multilevel governments. In undertaking this division, Economics emphasizes the need to focus on the necessity for improving the performance of the public sector and the provision of fjscal services by ensuring a proper fiscal federalism in ethiopia of responsibilities and fiscal instruments.

The significance of the residual power is that the regional states can exercise legislative power over matters not specified fiscal federalism in ethiopia the constitution. Home Contact Shopping Cart.

As a subfield of public economics, fiscal federalism is concerned with “understanding which functions and instruments are best centralized and which are best placed in the sphere of decentralized levels of government”.


Nonetheless, the financial and manpower fiscal federalism in ethiopia of the regions are very limited.

Project MUSE – An Economic Analysis of Fiscal Federalism in Ethiopia

Forged from a partnership between a university press and a library, Project MUSE is a trusted part of the academic and scholarly community it serves. The average tax revenue for the period was about Rederalism, in recent years, decentralization has become a feature of reform agenda promoted and supported by the World Bank as stated in the World Bank Report of and other multilateral institutions.

If the lower level of government is to receive this type of transfer, it must fiscal federalism in ethiopia to the spending instructions of the federal government. Fiscal federalism in ethiopia could be contexts where the common decisions of the fiscal federalism in ethiopia become vital to ensure maximum benefits in a particular area.

The fiscal system of Ethiopia has historically been characterized by high centralization and concentration of fiscal decision-making power at the center. This website uses cookies to ensure you get the best experience on our website. While economic analysis, as encapsulated in the theory of fiscal federalism, seeks to guide this division by focusing on efficiency and welfare maximization in determining optimal jurisdictional authority, it needs to be recognized that the construction of fiscal federalism in ethiopia jurisdictional authority in practice goes beyond purely economic considerations.

Beyond the “unrestricted right to administer itself”, self-determination also includes proportional representation at federal organs.

As far as the current system of fiscal federalisms and division of revenues in Ethiopia goes, the FDRE Constitution provides that the Federal Government and the States all collect taxes and shall share revenue, taking the federal arrangement into account.

Powers of the regional chiefs started to diminish at the turn of the nineteen century and had been completely abolished in the early twentieth century. The theme of this article is that fiscal federalksm in the context of ethnic politics and de facto political centralization hampers the realization of giscal economic potential of the country and hence constrains efforts to address core economic problems.

Considerable political and administrative powers have been devolved to the states. There is an increasing dependency on foreign trade, especially import, taxes in recent years.

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