Sustainable Development–Fiscal Federalism Nexus: A “Beyond GDP” Approach

Round 1

Reviewer 1 Report

The authors need to learn basic scientific writing knowledge. For example, not enough useful information is provided in the abstract, instead, the authors spent most of it on the background.
Table 3, please use consistent significant numbers on all the values.
Lines 775 and 776, is it necessary to use such a lot of significant numbers?
In the results and discussion part, this manuscript mainly focuses on the result description and lacks a comprehensive discussion.
Overall, the topic is kind of interesting. This paper needs heavy edits.

Author Response

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Author Response File: Author Response.docx

Reviewer 2 Report

2022-04-13

Review for Sustainability

Article title “SUSTAINABLE DEVELOPMENT- FISCAL FEDERALISM NEXUS: A “BEYOND GDP” APPROACH”

This article examines the relationship between fiscal decentralization and sustainable development, where the latter is defined through various indices taking into account economic, environmental, and social factors. The paper addresses an interesting topic, is well-written, and in terms of methods, it is sound and rigorous. I liked in particular that the authors present a transparent analysis that is not in a desperate search for significance.

 

There were a few issues that were, in my opinion, not convincing and, therefore, would require some more work.

1. The introduction provides a “Wikipedia-type” explanation of what sustainability is with a standard reference to the Brundtland report. The article, however, does not deal with what sustainability is or isn’t, and therefore, it is advisable to shift the focus from an unnecessary discussion to one that is actually missing, namely “why is fiscal decentralization expected to have any effect on sustainable development?” Neither Tiebout-sorting nor allocative efficiency is, from a theoretical perspective, related to the type or content of political decisions. Thus, within the fiscal federalism literature, there is no endogenous argument for more or less sustainable development in fiscally decentralized systems. Hence, the motivation should come from empirical information, cases, or any other kind of reasoning that helps to establish a relationship. But perhaps there is no case for it? This is what your results may suggest. One could argue the other way around, i.e. academic research, think tanks or politicians imply that there is such a relationship without sound empirical evidence. My point is, that there needs to be a deeper qualitative discussion to justify the study in the first place.
2. The Jin and Martinez-Vazquez study seems to be very similar to what this paper attempts. It would be good to put more emphasis on your contribution. For the reader, it is not clear what it means that you do an analysis “from scratch” while the Jin and M-V only test for a hump-shaped relationship. Using different measures isn’t a sufficient contribution either. So perhaps you can discuss the issue a bit more controversial? Why does the other study find a significant relationship? Inadequate method? Selection of countries? Measurement concepts?
3. The methodology section is very instructive and well-written. The dynamic panel estimation section, however, reads a bit like a textbook. I don’t object to that in general. But for those being familiar with econometrics, it is not more than a refresher and for students of sustainability, it might be a section they are not interested in because they cannot relate to it. I, therefore, think the technical section and its extent is more of editorial nature.
4. A final remark relates to the resulting NSDI ranking which puts Australia on no. 1 – the country that is by far the least committed with respect to climate action. Canada and Norway are major producers and beneficiaries of fossil fuels and they end up on No. 2 and 3. Thus, the ranking needs some discussion. I understand that this is the result of the index creation process – but it raises the question of whether the index is related to a credible sustainability concept in the first place.

Author Response

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Reviewer 3 Report

Review of the paper: Sustainable Development- Fiscal Federalism Nexus: A “Beyond Gdp” Approach”

The Paper examines fiscal federalism's impact on sustainable development.  And reports a lack of linkage.  It uses advanced data analysis methods GMM and entropy for sustainability index generation.  

Overall impression: The paper is unbalanced the development of the aim, research gap, research question, hypothesis, and contribution is insufficient and inconsistent, while the technical econometrical part is interesting with the number of the technical issue. The paper gives the impression of being an extract from another larger project. The paper is messy in terms of the flow of communication, the number of basic errors, e.g. references to the nonexisting estimation tables, and numerous repetition of the text. It needs substantial copyediting and clarification. The contribution is lean.  The Paper does not develop the hypothesis.

Please find below enhancement ideas:

The paper examines fiscal federalism and sustainable development. It applies the National Sustainable development Index (NSDI) to 40 selected counties over the period 2006-18. With the application of entropy methods and GMM, it finds that there is no relation between both of the mentioned.

 l.202-209 rather relevant for the introduction.

Missing

Introduction:

identification of the research gap and contribution of the paper

lack of clear references to the theory applied and the relevance of the framework.

Literature review

Define what you consider fiscal federalism e.g. financial relations between units of government in a federal government system.

I wonder how your research questions ties back to fiscal federalism and sustainability, do focus on the intercountry relation, or cross-country.

 As you apply GMM (7) l. 481, I would expect to develop after a clear research gap a hypothesis statement and then analyze the results to fill in the gap and formulate a contribution. At the moment it is not easily readable from the paper.

l.133 -144 I am not able to link the research gap defined in this section of the research questions and (potentially hypothesis).

 

1. 188 The discussion on the alternative methods of the sustainable development Is missing considering a variety of the possible indexes and the potential of multi-entry (Staszkiewicz, 2019; Staszkiewicz & Werner, 2021), why do you choose the National Sustainable Development Index (NSDI) is not backed up from the text.

 

Consider more recent discussions and wider perspectives (Cho et al., 2021; Clark & Harley, 2020; Dutta & Shahani, 2014; Ji et al., 2021; Lavrovskii & Goryushkina, 2021; Miniesy & AbdelKarim, 2021; Röhn et al., 2013; Shan et al., 2021)

 

Empirical parts

1. 276 -278 how do you control municipalities and local government organizations operating independently of government structures? To account for federalism?

l.385  Did you test the output for correlation across individuals in the idiosyncratic disturbances.

I suggest replacing the order current section 4 as the section 3 and current section 3 as 4.

1. 459 define “n”.
2. 550 please explain when you are using the two-step estimation of GMM, did you check for overfitting risk?
3. 559 and l 388-409 is a redundant replication of Roodman selection criteria for GMM application, consider shortening both paragraphs and removing the redundancy.

Tables 3-5 consider an appendix.

Table 3: Average NSDI and average ECODI – I suggest moving it as the appendix to the text, t0o large

 

Missing robust testing

Missing limitations of the study

The missing link between the research question (unexpressed hypothesis) and the results link to hypothesis and contribution.

 

Data and variable definition

L 284-386 I suggest tabularizing the definition of the variables.

 

The results of the various estimations performed in this study are presented in TablebA3– Table A18 in the Appendix. -  both table A3 and the appendix missing.

 

Conclusion

Line 803 suggests a new paragraph.

Contribution not presented. What kind of problem have you sorted out, and what kind of theoretical enhancements do you claim?

“The study also shows that while fiscal federalism has a significant positive impact on economic development, it has no significant impact on the environmental and resource development, and social development components of sustainable development” that’s just a result.

Line 807 and 809 a redundant replication of the relationship between fiscal and sustainable development, consider removing one of the repetitions.

 

Editorial

l.46 double parentheses

The paper needs substantial copyediting, proofreading, and reorganization.

 

Ref

Cho, W., Kim, D., & YS Park, A. (2021). Local Government’s Resource Commitment to Environmental Sustainability: Capacity, Conservatism, and Contractual Dynamics. Urban Affairs Review, 10780874211064976.

Clark, W. C., & Harley, A. G. (2020). Sustainability science: Toward a synthesis. Annual Review of Environment and Resources, 45, 331–386.

Dutta, I., & Shahani, J. (2014). Green Federalism: A Historic Leap Towards Sustainable Human Development. In Environment and Sustainable Development (pp. 143–158). Springer.

 

 

Author Response

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Author Response File: Author Response.docx

Reviewer 4 Report

The article deals with a very interesting topic. Noteworthy is the effort undertaken by the Authors to calculate the National Sustainable development index (NSDI) and its subcomponent indices for 40 selected countries. I can see a good motivation to take up this topic. The solid rationale for each variable used in the study. A solid study was carried out with the use of appropriate research tools. Properly conducted discussion and conclusions drawn. A wide range of used literature. Congratulations to the Authors. I am not making any suggestions for improvement.

Author Response

Thank you so much.

Round 2

Reviewer 1 Report

The authors addressed the comments very well. From my perspective, this version can be published in its present form.

Author Response

Thank you.

Reviewer 2 Report

Thanks for the clarifications! I have no further comments or requests.

Author Response

Thank you.

Reviewer 3 Report

Watch copyeditig.

Author Response

Thank you so much for taking time to review our manuscript. Your comments are taking really seriously since no research is hundred percent perfect, and there is always opportunity to revise and update every research work in the future, especially in the light of new information and development in our ever dynamic world. The manuscript was proofread and necessary copyediting was done.