SPATIAL SPENDING PATTERNS IN MUNICIPAL CULTURAL EXPENDITURE SELECTED EVIDENCE FROM THE NETHERLANDS

Dutch municipalities are responsible for a significant amount of governmental support of culture. Since the average distance between Dutch municipalities is only 7.5 kilometers, it is likely to expect that inhabitants of a certain municipality are willing to travel to neighboring municipalities to visit cultural initiatives. Previous studies mainly account for local factors that impact the decisions of local jurisdictions, while the expenditures of neighboring municipalities are also likely to have an influence on the decisions. This thesis analyzes whether and how municipalities influence each other in the decision to financially support culture. The literature review provides explanations for both positive and negative spatial interdependence. Negative spatial interdependence is explained by the concepts of spillover effects and free-riding behavior, in which freeriding is considered as a rational response of municipalities since municipalities can benefit from positive externalities of neighboring jurisdictions without having to invest in culture. Contrary, positive spatial interdependence can be caused by fiscal competition to attract businesses and inhabitants, competition to increase a region’s reputation, mimicking behavior as a consequence of yardstick competition and incomplete information, and acquired tastes and intellectual trends. Interestingly, the urban status of municipalities is considered as well to account for the prevalence and importance of asymmetries in competition between municipalities. For the empirical analysis, data on local government spending in 344 Dutch municipalities in 2017 is used as well as additional data necessary to control for other socio-economic, political, and financial factors. By means of the spatial research method Moran’s I, which required the calculation of different 344 x 344 weights matrices that indicate whether two municipalities are neighboring or not, the existence of a spatial pattern is found. The results of multiple OLS regressions demonstrate a positive spatial interdependence between municipalities. Regarding the urban status, there is expected that large municipalities, specifically ‘central places’, affect their neighbors’ behavior differently than small municipalities. However, the econometric analysis demonstrates a less complex interdependence than expected, since both central places and smaller municipalities have a significant and positive effect on municipal cultural expenditures. Additionally, the outcomes of the total cultural spending are compared to the subdiscipline performing arts expenditures. This kind of comparison has not been addressed before in studying spatial patterns of cultural spending. Even though in both cases a pattern of positive spatial interdependence is found, there is a slightly more complex pattern when considering jurisdictions’ urban status in performing arts spending