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DECENTRALIZATION   Tags: decentralization  

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Policy Papers & Briefs



Bird, Richard and Francois Vaillancourt (editors). Fiscal Decentralization in Developing Countries. Cambridge: Cambridge University Press (1998). [Introductory Chapter]

About: In its introductory chapter this book gives an overview of  the general ideas of fiscal decentralization. The following chapters highlight in ten case studies the many different ways in which fiscal decentralization can occur taking into account each country's particular history, traditions and institutional, political and economic context. Experience in a variety of settings does suggest two conditions that seem particularly important for successful decentralization. First, the local decision process must be democratic in the sense that the costs and benefits of decision are transparent and those affect have an opportunity to influence the decision. Second, the costs of local decisions must be fully borne by those who make the decisions. 

الغلاف الأمامي

Bosch, Nuria and Jose Maria Duran. Fiscal Federalism and Political Decentralization: Lessons from Spain, Germany and Canada. Edward Elgar Publisher, 2008. [Google Books]

About: This book analyzes political decentralization and fiscal federalism in Canada and Germany, both traditional federal countries, and in Spain, a unitarian country engaged in the last two decades in a process of decentralization. The three key issues required for a well designed financing system are analyzed in depth herein, namely: tax assignment, equalization grants (i.e. redistribution of money from the wealthy regions or the national government to poorer regions) and the role of regional government in the administration of taxes.

Robin Boadway and Anwar Shah. Fiscal Federalism: Principles and Practice of Multiorder Governance. Cambridge University Press, 2009.

About: "This book provides a comprehensive account of the principles and practices of fiscal federalism based on the currently accepted theoretical framework and best practices. The traditional topics of assignment of responsibilities, intergovernmental fiscal arrangements, fiscal competition, and grants are covered in a unified framework with reference to actual practices followed in federations around the world." [Publisher]

Roy, Jayanta. Macroeconomic Management and Fiscal Decentralization. Washington: World Bank, 1996. 

About: This book consists of a set of papers prepared for a Senior Policy Seminar on " Intergovernmental Fiscal Relations in China " , held in Dalian China in September 1994. Thirty participants from China attended the seminar, including senior representatives from several provincial administrations. The book ' s primary focus is on center-state relationships and only briefly addresses state-local relationships.

الغلاف الأمامي  Tanzi, Vito. Public Finance in Developing Countries. Brookfield: Edward Elgard, 1991. [Jstor]

About: This lively and accessible book discusses the real world fiscal issues in developing countries within a realistic macroeconomic and social framework. It represents the best synthesis currently available of the link between public finance and macroeconomics in developing countries, with emphasis on positive rather than normative aspects.


Research Papers

King, David and Yue Ma. “Decentralization and Macroeconomic Performance,” Applied Economic Letters 7 (2000): 11-14. [Taylor & Francis]

Summary: The paper examines the relationship between some key measures of macroeconomic performance and fiscal decentralization in OECD countries, and the impact on this relationship of increased policy co-ordination among countries since 1985. It is shown that prior to 1985 there was a significant relationship between decentralization and macroeconomic performance on all of these measures, with decentralized performing better. By 1996, however, the relationships had all ceased to be significant. This suggests that, as a result of harmonization, the tendency for decentralized economies to have more effective economic policies has weakened.
Lockwood, Ben. "Fiscal Decentralization: A Political Economy Perspective," Warwick Economic Research Papers (2005).
Summary: This paper surveys recent contributions to the study of fiscal decentralization which adopt a political economy approach. It is argued that this approach can capture, in a variety of formal models, the plausible and influential ideas (increasingly,supported by empirical evidence) that fiscal decentralization can lead to improved preference-matching and accountability of government. In particular, recent work on centralized provision of public good provision via bargaining in a legislature shows how centralization reduces preference-matching, and recent work using "electoral agency" models formalizes the accountability argument. These models also provide insights into when decentralization may fail to deliver these benefits.
Ter-Minassian, Teresa. “Decentralization and Macroeconomic Management,” International Monetary Fund (1997).
Summary: The literature on fiscal federalism has amply discussed both the potential efficiency and welfare gains from decentralization and the potential trade-offs between decentralization and income redistribution. By contrast, it has generally put less emphasis on the effects of decentralization on macroeconomic management, although policymakers worldwide increasingly have to grapple with these effects. This paper examines the constraints that a high degree of decentralization can place on the ability of the central government to carry out its traditional macroeconomic management functions and explores various ways to minimize these constraints.
Tiebout, Charles, “A Pure Theory of Local Expenditures”, Journal of Political Economy, 64 (5) (1956): 416-24.
Summary: analyzes the "free rider problem" that governments face when they provide goods and services. If no one can be excluded from consuming these public goods, individuals do not have an incentive to reveal their preferences for them. Everyone has an incentive to understate their true preferences to reduce their own tax burden, while still hoping to be able to enjoy the public good supplied by others. Markets therefore fail to provide public goods efficiently, and some form of government intervention is needed.
Huther, Jeff, and Anwar Shah. "Applying a Simple Measure of Good Governance to the Debate on Fiscal Decentralization."  World Bank Publications (1998)

Summary:This paper attempts to fill this void by developing a gauge of the quality of government through the construction of an index of governance quality for a sample of eighty countries. This index is offered as a starting point for an objective assessment of various economic policies to further the quality of governance rather than as a precise and definitive indicator of governance quality. After describing the construction of the index and the results, we provide an application to the debate on the appropriate level of decentralization of fiscal powers.



Knowledge for Development: Fiscal Decentralization. Directed by Peter Hegedus. Budapest: Central European University, 2008.

About: A film on the Intergovernmental Fiscal Relations and Local Financial Management course, which was organized in cooperation with the Local Government and Public Service Reform Initiative of the Open Society Institute, Budapest and the World Bank Institute.

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