Local Government Engagement in Fiscal and Regional Policy: A Pilot Study in the Visegrad Countries

02wrz 2025 by Łukasz Czyż

Project ID: 22520274

Project Manager: Dr Habil. Łukasz Jabłoński, Assoc. Prof.

College of Economics and Finance

Department of Economic Theory

Implementation period: 01/10/2025–31/03/2027

Budget: 33,780.00 €

Project description

The project explores the role of local governments in the Visegrad countries in implementing fiscal policy and shaping regionaldevelopment. Through a pilot study, it will develop and test a survey tool to assess local perceptions, challenges, and needs, providing abasis for future research and policy improvements supporting multi-level governance in the V4 region.

The main issue of the project

Local governments in the V4 countries are key actors in delivering public services and shaping regional development. However, their fiscal autonomy remains limited. Subnational governments manage only 12% (HU) – 31% (PL) of total public expenditures (Subnational Governments Structure and Finance, OECD, 2024). Their capacity to raise own-source revenue is constrained, with central transfers dominating local budgets. Moreover, many municipalities report increased responsibilities for state-delegated tasks without corresponding financial support (State of Regions and Cities, 2024). The negative side effects of decentralization reforms revealed fragmented governance and weak coordination between the national and local levels. There is also a lack of harmonized tools and data to understand how local authorities perceive their roles in fiscal and regional policy-making. These gaps hinder constructive dialogue and cooperation between different levels of government and weaken the effectiveness of policy tools. The project seeks to address these challenges by investigating the perception and practical engagement of local governments in fiscal and regional policies. Through desk research and the development of a standardized analytical tool, it aims to generate qualitative and quantitative data and insights that can improve multi-level governance. By fostering cross-border cooperation among experts and municipalities, the project will help strengthen the role of local governments in shaping more coherent regional policies in the V4 countries.

Solutions

To address these challenges, an appropriate balance between delegated tasks and financial resources for local governments has to be ensured. Local governments must be granted a proper scope of control over their financial resources and decision-making powers to respond effectively to the specific needs of their communities (e.g. Dick-Sagoe (2020, https://doi.org/10.1080/23322039.2020.1804036). An essential prerequisite is to examine the role of local governments in implementing fiscal policy and to assess how their involvement shapes the formulation and effectiveness of regional policy. The project contributes to this solution by conducting a pilot study to assess how local governments perceive their current fiscal engagement and the impact on regional policy development. By developing and piloting a standardized survey tool, we will collect detailed data on local authorities’ experiences, challenges, and aspirations regarding fiscal decentralization and governance. This data-driven approach and cooperation of partner institutions from Poland, Hungary, Slovakia and Czech Republic enable evidence-based recommendations tailored to each Visegrad country. Using a standardized survey tool facilitates the dissemination of the approach and supports its application in future studies. Through active collaboration between local government representatives and academic experts the project will work up solutions that strengthen multi-level governance, improve policy coherence, and empower local governments, thereby improving public services for communities across the Visegrad region.

The added value of the project

First, the project adds value by offering a cross-national perspective on the role of local governments in shaping and implementing fiscal and regional policies in the V4 countries. The prior initiatives focused on the level of decentralization (CoR, 2020) and the scope of local finances (OECD, 2024). Research on how local governments perceive their engagement in fiscal policy implementation is underrepresented, yet it is a key determinant of policy effectiveness. This project addresses that gap through the development and pilot testing of an innovative survey tool tailored to local governments’ perceptions related to fiscal autonomy and regional governance. It will be developed collaboratively by researchers and practitioners from all 4 countries, ensuring contextual relevance and future adaptability. Second, the project actively involves local authorities in shaping the research and interpreting results. This ensures that the project outputs are rooted in real needs. The results will contribute to long-term improvements in multi-level governance by enhancing communication between central and local authorities. Third, our consortium of partner institutions possesses extensive experience in implementing international research and policy initiatives within this field of expertise, which ensures the high quality and impact of the project. Actions like publications and the final conference will contribute to the dissemination of the results and the widespread adoption of good practices.

The regional relevance of the project

The proposed project addresses a shared challenge across the V4 countries: the limited fiscal autonomy of local governments and the lack of mechanisms to effectively coordinate fiscal and regional policy across governance levels. Despite differences in administrative structures,V4 countries face similar issues such as fragmented multi-level governance, growing responsibilities of municipalities without matching financial support, and insufficient data on local governments’ involvement in policy-making. What makes the V4 region particularly relevant is its shared historical experience, especially the legacy of centralized governance under communism in the second half of the 20thcentury. This common background distinguishes Central European countries from Western European states and suggests the need for policy solutions tailored specifically to the institutional and cultural context of this region. By focusing on the V4, the project creates a platform for cross-border learning, enabling the development of governance tools that reflect this unique regional identity. Strengthening local government participation contributes to better public service delivery, improved policy coherence, and resilient regional development. The project supports institutional partnerships, reinforces the Visegrad identity, and aligns closely with the objectives of the Visegrad Fund’s Public Policy and Institutional Partnership priority. Conducting pilot studies will help establish lasting relationships with local authorities in Poland, the Czech Republic, Slovakia, and Hungary.