The relationship between fiscal decentralization and trust in government: evidence from the South Korean case
| Author | Yunsoo Lee,Soojin Kim,Taehee Kim |
| DOI | 10.1177/0020852320933325 |
| Published date | 01 June 2022 |
| Date | 01 June 2022 |
| Subject Matter | Articles |
Article
The relationship between
fiscal decentralization
and trust in government:
evidence from the
South Korean case
Soojin Kim
Nanyang Technological University, Singapore
Yunsoo Lee
Shandong University, China
Taehee Kim
Seoul National University of Science and Technology,
South Korea
Abstract
To date, many developing countries have continued to implement fiscally decentralized
governance systems to respond to the diversified needs of local residents more effec-
tively and to better act in line with the public interest. However, little is known about
the fiscal decentralization–trust link. Focusing empirically on the South Korean case,
this study examines how financially decentralized governance might increase govern-
ment trustworthiness not just at the national level, but also at the local level.
The results of multilevel regression and panel data analyses partly confirm the results
of pro-fiscal decentralization studies in that the growth of local fiscal autonomy is
positively and significantly related to public trust in government. Specifically, we find
that as fiscal decentralization improves, levels of trust in local government also rise.
In addition, our findings show that in terms of having higher levels of public trust in
government, the impact of revenue decentralization tends to be greater than that of
expenditure decentralization. This evidence implies that allowing local governments to
Corresponding author:
Soojin Kim, Public Policy and Global Affairs Programme, School of Social Sciences, Nanyang Technological
University, 48 Nanyang Avenue, HSS-05-02, Singapore 639818.
Email: sjkim@ntu.edu.sg
International Review of Administrative
Sciences
!The Author(s) 2020
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DOI: 10.1177/0020852320933325
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2022, Vol. 88(2) 373–389
International
Review of
Administrative
Sciences
have their own revenue sources rather than expenditure autonomy can be a way to
better respond to people’s needs in the long run.
Points for practitioners
First, as fiscal decentralization improves, levels of trust in local government also rise.
Second, allowing local governments to have their own revenue sources rather than
expenditure autonomy can be a way to better respond to people’s needs in the long
run. Third, government policies should aim to provide benefits to citizens for their own
sake, such as by exercising effective delivery or improving the quality of public
services and programs that are likely to be viewed positively by constituents.
This could encourage citizens to engage with the current public-sector spheres in
ways that affect their confidence and expectations of government policies and bureau-
crats in a positive manner.
Keywords
expenditure decentralization, fiscal decentralization, local fiscal autonomy, local trust,
trust in government
Introduction
Improving the level of trust that citizens have in their government
1
has been a
significant topic of interest in the field of public administration and policy for
several decades. Research suggests that higher levels of public trust motivate or
even alert governments and officials to pursue decisions consistent with the public
interest and to accept accountability for the consequences of their decisions
(Espinal et al., 2006; Wang and Van Wart, 2007). Sometimes, higher levels of
public trust encourage governments to take on greater risk in order to achieve
innovation in governance (Wolak and Palus, 2010), which can lead to better
services for the community. In addition, trust in government helps improve citi-
zens’ compliance with laws and regulations (e.g. tax compliance), thereby lowering
transaction and enforcement costs (Oh and Hong, 2012; Scholz, 1998).
Indeed, trust in government appears to play a critical role in promoting public
values such as accountability, transparency, efficiency, and responsiveness in a
broader manner.
However, in today’s complex and rapidly changing environment, public trust in
government seldom evolves in a linear manner; rather, it tends to fluctuate depend-
ing on various internal and external factors. More importantly, once the erosion of
trust in government begins (e.g. during an economic downturn), it takes consid-
erable time to restore prior levels of trust (Van de Walle et al., 2008). This situation
has thus provided researchers with unique social experiment opportunities to
investigate the factors that may influence public trust. As a result, a large body
374 International Review of Administrative Sciences 88(2)
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