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Fiscal Federalism

This literature review by Andy Pike, Centre for Urban and Regional Development Studies (CURDS), Newcastle University, outlines the definition of fiscal federalism, its underlying assumptions, principles of public funding allocation, and advantages and disadvantages, before concluding.

Fiscal federalism also informs debates about the decentralisation of governance and funding in devolving centralised states including the UK.

Andy Pike
Henry Daysh Professor of Regional Development Studies, Centre for Urban and Regional Development Studies

The organisation of responsibilities and finances between different levels of the state is a fundamental task for governments in achieving their political and public policy goals. This arrangement of powers and resources underpins how funding is allocated and distributed between government levels and geographical areas. Fiscal federalism refers to this organisation of responsibilities and funding.

It has become increasingly important internationally following the expanded roles of national governments and their policies and funding programmes in responding to the Global Financial Crisis in 2008, the COVID-19 pandemic from 2020, and the recent geopolitical disruptions of conflict in Ukraine and the middle east. Fiscal federalism also informs debates about the decentralisation of governance and funding in devolving centralised states including the UK. 

Meet the Author

Andy Pike

My central research interest is the geographical political economy of local, regional and urban development, governance and policy.

This core provides the basis for two main strands of work. First, this research is concerned with the concepts and theory of the meaning and governance of ‘development’ regionally and locally in an international context. This work seeks to question and broaden our understandings of ‘development’ beyond only the economic to encompass the social and ecological in more sustainable and progressive ways and to begin more meaningfully to connect ‘development’ locally and regionally in the global North and South.

Second, this research focuses upon the intersections between local, regional and urban development and the sub-discipline of Economic Geography. This theme has been explored recently in projects on: economic evolution, structural change and adaptation in British cities (ESRC); financialisation, the local state and infrastructure (EPSRC and ESRC); manufacturing renaissance in industrial regions and local industrial policy (ESRC); and, 'left behind places' and understanding demographic and socio-economic change in peripheral regions in France, Germany and the UK (ESRC ORA).

My research builds upon close policy and institutional engagement and has informed local, regional and urban development, governance and policy for international (e.g. European Commission, United Nations International-Labour Organisation (UN-ILO), Organisation for Economic Co-operation and Development (OECD), national (e.g. Government Departments – Business, Energy and Industrial Strategy; Housing Communities and Local Government, National Audit Office, devolved administrations, Joseph Rowntree Foundation), regional (e.g. Local Enterprise Partnerships, Regional Development Agencies, trade unions, voluntary organisations) and local (e.g. Local Authorities, Development Agencies) institutions.