What is Tiebout Hypothesis

The global economic and social actors are restructuring both private production and public production patterns. This change process is called globalization. The globalization process brings new opportunities with it. One of these opportunities is to increase the efficiency of the local government economics in public finance. The processes of globalization and localization are twin processes and are progressing simultaneously. With globalization, international capital wants to minimize the nation state and to communicate with local governments themselves. In this context, becoming a member of a local government gets ahead of being a nation-state citizen. In the globalization process, existing public goods productions are trying to simulate the market. Such efforts require the public economy to adapt to the market and such adaptation is characteristic of the local government economics itself. International capital, on the other hand, sees central government as a force to be overcome and wants to establish first-hand commercial relations with the local units.