The Korea Local Administration Review

This study aims to examine the effect of intergovernmental relations on the diverse
utilization of policy tool in local governments. To achieve the purpose of the study,
panel data analysis were conducted using panel data from 2010 to 2020 for 226
local governments. Panel data analysis were conducted employing fixed effects (FE)
and Generalized Method of Moments (GMM) estimations. The analysis focused on
exploring the influence of intergovernmental relations on the diverse utilization
of policy tool, as well as the effects of administrative autonomy and fiscal autonomy
on this diversity. Inter-governmental relations were classified based on administrative
autonomy (z-scores for civil servant and organization numbers) and fiscal autonomy
(modified Vo's fiscal decentralization index) into four group types. Additionally,
the diversity of policy tool utilization was measured using the HHI formula.
The results of the relationship analysis between intergovernmental relations and the
diverse utilization of policy tool firstly revealed four groups statistically significant
positive(+) impacts across the entire set and district level. Specifically, city level showed
a statistically significant positive(+) impact within an Expanded Administrative Autonomy
Group. Secondly, the analysis results of this study regarding the relationship between
the components of inter-governmental relations (administrative autonomy, fiscal
autonomy) and the diversity of policy tool utilization confirmed that administrative
autonomy and fiscal autonomy are key influencing variables affecting the diversity
of policy tool utilization. It was reaffirmed that an increase of one unit in administrative
autonomy had a statistically significant positive (+) effect on the diversity (HHI) of
policy tool utilization in cities and districts, while an increase of one unit in fiscal
autonomy had an overall positive (+) effect but statistically significant negative (-) effects
in cities and counties on the diversity (HHI) of policy tool utilization. Taken together,
the introduction of institutions that enhance administrative autonomy and fiscal autonomy
can be seen as key influencing variables affecting the diversity of policy tool utilization.