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This paper employs a panel of 23 local governments in Taiwan over 1998–2010 to re-estimate the redistribution effects of intergovernmental fiscal transfers by considering a self-financing resources of local government as the transition variable in panel smooth transition regression models. Empirical results show that the income (or tax revenues) redistribution effects of fiscal transfer policies are nonlinear and vary with time and across local governments. The grants from central government can improve income and tax revenues distribution of local governments; however, the centrally allotted tax revenues have inverse effects and the total fiscal transfers have ambiguous effects. The total fiscal transfer is a proper policy instrument for improving income redistribution, and the grants for improving tax revenues redistribution. However, high self-financing resources ratios are harmful for these redistribution effects. [ABSTRACT FROM PUBLISHER]

Examines the experience of industrialization in Taiwan between 1952 and 1972, its policy choices as compared to those made by African countries, and the lessons that may be of relevance to African industrialization strategies. Preconditions for industrial development; Policies for industrial development in Taiwan, 1952-72; The state as agent of development; Conclusions.