Blockchain Papers

Núria Bosch Roca, José María Durán Cabré

No abstract is available for this record.

Gao Peiyong

The fiscal and tax system reform in China has roughly undergone four stages which are both independent and interrelated with each other. One is from reform which concentrates on paving way for whole reform and takes the decentralization of power and transfer of profits as fundamental tone to fiscal and tax reform in 1994 which intends to take road to systematic innovation and establish a new fiscal and tax system and its operating mechanism. The second is from one-way policy of government’s revenue and expenditure and tax revenue within system to interaction of these two aspects both within and outside system. The third is from tax reform which standardizes government’s behavior of revenue and expenditure and its mechanism, and management system reform of financial expenditure to establishment of whole fiscal and tax reform and development goal. The last is from building fundamental frame of public finance to further improving public financial structure and system.

Jesús Ruiz-Huerta Carbonell, Ana Herrero Alcalde

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. Three key issues required for a well designed financing system are analyzed in depth, 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 local governments in the administration of taxes.

Žan Jan Oplotnik

Introduction When scholars talks about local government (LG in continuation), they often point to three basic values that the structures of LG may fulfill (Sharpe, 1973; Stewart, Greenwood, 1995): a) autonomy; because the existence of LG prevents over-concentration of political power and allows for different political choices in different localities, b) democracy; because LG encourages the active involvement of citizens in self-governance; c) effectiveness; because LG is efficient structure for delivery of services tailored to varying needs of localities. With decentralization, decision makers are closer to the results of their decisions, which is helpful in predicting the effects of decisions to be made and in turn supports effective allocation of resources. LG enables a better match of policies with local conditions and preferences. This supports effectiveness both objectively and subjectively (policies are closer to voters' preferences) and variation in solutions promotes innovation and diffusion of positive examples. LG is a feature of all EU states, despite many differences between them. Its importance has been strengthened by the adoption of the subsidiary principle in the Maastricht Treaty and by the EU Charter of LG. Criteria for Expenditure and Revenue Assignment The principles discussed below are among the basic foundations of the fiscal federalism model. As Rattso (2002) notes, model is based on four key assumptions: a) LG is mostly responsible for the delivery of public goods; b) the base for local finance is provided by local taxes (those who pay also benefit), c) there is considerable social mobility; d) in the case of local services, the catchments area is close to the area of administrative jurisdiction, i.e., spillover effects are minimal. The main principles of a decentralized system of public finance recommended by fiscal federalism theory are (Musgrave, 1957; Oates, 1972; King, 1984): a) the division of functions between central and LG is based on the subsidiary principle, which involves a considerable amount of fiscal and functional decentralization. (LG spending to national GDP, although this measure creates several methodological and data problems), b) The allocation of functions takes into account the specific territorial organization. If the structure is to diversified, with many, small units, the functional decentralization cannot be broad. Small units will not be able to perform functions effectively, c) The golden of the balanced budget (Damon, 2002) is enforced by regulations. In short, the rule states that current spending should be financed exclusively from current revenues, while capital investment expenditures are financed from capital receipts, d) The system of local finance is transparent for citizens and LG has an autonomy to form the structure of local expenditures. The most general classification of resources consists of three major categories: a) Own revenues of LG (revenues allocated to LG unconditionally and for an undefined period and that LG has at least some discretion to decide upon these categories of revenue, b) transfers from the central budget in form of grants, c) borrowed resources, d) shared revenues. (1) The model of local finance should conform to the following criteria: a) vertical allocation of resources should reflect the allocation of functions, b) a large proportion of local revenues should come from own sources, because this supports accountability, stimulates councillors and increases citizens interest in local activities, c) equalization system which ensures that each unit is able to provide at least a minimal set of standard services (Buchanan et al., 1999). Principles of Local Taxation There are various candidates for local taxes, and several criteria to help us choose appropriate mix for the country. Some of them are identical with requirements for good taxes in general, but others are specific to LG. …

Sonia Esteban Laleona, Pablo de Frutos Madrazo, María José Prieto Jano

Traditionally, the academic debates about the benefits that the existence of multilevel government structures provide have been directly related to the gains in efficiency that derive from the processes of decentralization of the Public Sector. However, as of the last decades, the Public Finance has broadened its analysis towards other questions, one of them being if the fiscal decentralization influences positively in the economic growth of a country. The objective of this document is to provide a "reading guide" for this new line of investigation on the influence of fiscal decentralization on regional economic growth.

Anwar Shah

The book is divided into two parts. The
\n first part macro federalism provides a fresh look at
\n emerging constitutional challenges arising from
\n globalization and the information revolution, as well as the
\n dynamic-efficiency and growth implications of existing
\n federal constitutions. Several aspects of these systems are
\n examined: (a) institutional design to achieve internal
\n economic union; (b) policies for regional development; (c)
\n conduct of monetary policy; (d) coordination of fiscal
\n policies, with a special emphasis on tax harmonization; and
\n (e) management of risks of insolvency from sub-national
\n borrowing. The second part of the book local finance
\n provides a comparative perspective on local finances and
\n measures the progress of decentralized governance reforms in
\n developing countries.

Charisma Malixi

This study proceeds from the obvious assumption that without revenue powers and expendi-ture autonomy any devolution of functions on local governments remains hollow. Without resources local self-government is an exercise without much scope for decision-making. But even if local governments do have adequate revenue powers, their fiscal autonomy may be curtailed by utterly restrictive and, often Byzantine, administrative regulations of the central state, erratic interventions by the central government and – for fear of being not returned to office in future elections - a lack of will among local leaders to utilize the revenue powers vested in local authorities. 
<br>\tAlthough there is a plethora of literature on decentralization in the Philippines, the literature reflects what Linn,48 Smoke,49 and Smoke, Martinez-Vasquez and Peterson 50 have deplored elsewhere in relation to fiscal decentralization in more general terms: there is not much systematic research on how the Local Government Code of 1991 affected the fiscal capabilities of local governments. Most of the decentralization literature stands in the tradi-tion of the old institutionalism 51 and thus strongly centers on legal-institutional aspects and the historical evolution of decentralization in the Philippines. The few serious studies are by now dated 52 or are difficult to access because they are studies commissioned by bilateral and multilateral donor organizations.53 
<br>\tThe main objective of this study is thus to explore as to what extent in the Philip-pines the devolution of functions has been accompanied by an adequate allocation of re-sources to local governments. Local fiscal capacities are thus considered as the litmus test for the success of decentralization reforms in the Philippines. 
<br>This dissertation is organized into five parts. Chapter 1 discusses the theoretical foun-dation of decentralization as well as the study’s significance, scope and limitations, and methodology. In particular, the theoretical foundation lays down the debate between centrali-zation and decentralization as well as the differing contexts – political and economic - of de-centralization. The research question and the study’s possible contribution were also ex-plained in this chapter.
<br>Chapter 2 describes the Philippines’ political-legal structure and its local government system. It also briefly outlines the major changes brought about by the Local Government Code of 1991, the most extensive reform legislation on local governments in the country’s history. 
<br>Chapter 3 presents the overall or macro-view of decentralization in the Philippines. First, decentralization and local autonomy were explained using the Local Government Code of 1991 wherein the new Code became a catalyst to personnel, functional and fiscal decen-tralization. Second, the local financing structure was described by presenting the trends and dynamics between the central and local governments in obtaining the consolidated LGU in-come and expenditures from 1985 (pre-LGC of 1991) until 2001 (after the passage of the LGC of 1991). Third, the Local Government Code and the LGU Performance were evaluated using the results of the Local Productivity and Performance Measurement System (LPPMS) as a self-assessment tool. 
<br>Chapter 4 presents the case studies in Bataan and Pampanga on fund sourcing as well as the performance of the Central Luzon Region in local fiscal administration. The case studies will show the experiences of the provinces, cities and municipalities in resource mobilization under the regime of decentralization. This Chapter will also show the impact of inflation or increase in prices in the increase in income on whether the inflation to increase in income leads to real growth in a particular locality. 
<br>Chapter 5 provides an analysis of the results and observations of the study.

Hans‐Georg Petersen

The paper tries to shed some light on the problems of centralization and decentralization within an economic union and the federal member states. Integration and decentralization are not opposite policy strategies but both meaningful if the single public goods and services supplies are analyzed in more detail. Both strategies doubtlessly have advantages, which can be realized if the manifold possibilities are combined in an efficient approach of good governance. Best practice approaches in inter- or supra-national integration, fiscal federalism and taxation do exist and have to be successfully implemented. Obviously such a modern fiscal policy has to be accompanied by an appropriate monetary policy, which in an economic union has to be carried out by an independent central bank as one of the necessary countervailing powers in a democratic setting. A modern fiscal policy strategy efficiently controls budget deficits, which naturally have to be limited to finance reliable public investments. Such strategy has to be safeguarded through modern methods of budgeting and fiscal planning. Modern public management with a clear code of conduct for the government officials ensures corruption free administration.

Gonzalo Alcalde

This dissertation examines Peruvian ministries' implementation of administrative decentralization, 2003-2006, and identifies factors shaping their decentralization policymaking. In administrative decentralization, implementation involves translating broad guidelines into sectoral transfer policies. Sectoral policymakers who execute decentralization mandates are, therefore, responsible for relinquishing authority and resources to subnational governments. Despite this challenging situation, little is known said about factors-- or otherwise--shaping the implementation of administrative decentralization. The initiation of state decentralization programs throughout Latin America has been examined and largely attributed to national political factors, rather than technical considerations. However, transferring power is not an assured outcome of national politicians' decisions to decentralize. This study explores a process that continued to be shaped by ministries after national political actors ceased to be involved; after a rapid start of top-down reforms, administrative decentralization virtually stalled under their control. Peruvian policy sectors are very heterogeneous, suggesting a need for distinct approaches to reform. Nevertheless, ministries' collective failure to implement rapidly has been attributed to generalized resistance to relinquish authority. This view is consistent with a bureaucratic politics-type understanding of public policymaking. However, my comparative analysis of decentralization policies reveals that self-interested resistance is significant but does not coherently explain policymaking or variation between policies. Furthermore, while resistance is ubiquitous, there are different types of resistance to reform, coming from autonomous offices, top policymakers, or the Presidency. In contrast, institutionalist lenses identify rules and processes that significantly condition possibilities for administrative decentralization. Policymakers face distinct challenges and opportunities in each sector; some ministries had deconcentration programs underway when national reforms started. While institutionalist lenses elucidate distinct conditions for reform, focusing on "audacious reformers" highlights the role of individual agency. The exceptional case of Health features a complex organization led by a reform-minded minister to the forefront of reforms. All three approaches to analyzing the implementation of administrative decentralization are complementary in providing coherent accounts of sectoral policymaking. Different combinations of institutional conditions, sectoral characteristics and individual motivations are ultimately responsible for variation among approaches to reform. Administrative decentralization emerges, not as one process, but as a constellation of particular paths of reform.

Núria Vergés Bosch, José María Durán

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. Three key issues required for a well designed financing system are analyzed in depth, 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 local governments in the administration of taxes.

Núria Vergés Bosch, José María Durán

Contents:PrefaceNuria Bosch and Jose M DuranINTRODUCTION1. The Financing System of Spanish Regions: Main Features, Weak Points and Possible ReformsNuria Bosch and Jose M DuranPART I: TAX ASSIGNMENT2. Revenue Assignments in the Practice of Fiscal DecentralizationJorge Martinez-Vazquez3. Tax Assignment and Tax Autonomy in OECD CountriesHansjorg Blochliger4. Tax Assignment and Regional Co-responsibility in SpainJuan A. Gimeno UllastresPART II: FISCAL EQUALIZATION5. Fiscal Equalization: The Canadian ExperienceRobin Boadway6. Fiscal Equalization in GermanyThiess Buettner7. Fiscal Equalization in Spain Jesus Ruiz-Huerta Carbonell and Ana Herrero AlcaldePART III: TAX ADMINISTRATION8. Tax Coordination under the Canadian Tax SystemPaul Berg-Dick, Michel Carreau, Deanne Field and Mireille Ethier9. The Decentralisation of Tax Administration in Germany: ConsequencesAlexander Ulbricht10. Current Situation and Proposals for Reform of Spain's Tax AdministrationAlejandro Esteller MoreIndex

Jorge Martínez-Vázquez

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. Three key issues required for a well designed financing system are analyzed in depth, 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 local governments in the administration of taxes.

Chunli Shen, Xiaojun Zhao, Heng‐Fu Zou

The last decade has witnessed a world trend of fiscal decentralization in the developing countries as an escape from inadequate growth and inefficient governance. With respect to China, fiscal decentralization has been a fundamental aspect of its transition to a market economy; and the country has made substantial efforts to break down its highly centralized fiscal management system. China’s fiscal system currently has five levels – central, provincial, prefecture, county, and township. Sub-national governments have been assigned primary responsibility for public services provision and financing. China’s highly decentralized system could be a boon to managing service delivery, but the country’s crave for rapid economic growth in the last two decades has kept the reform of the public services on the fringes of political agenda. Under the current arrangements, public services are extensively decentralized with sub-national governments taking a much larger portion of expenditure responsibilities that are out of line with international practice. The over-devolution of spending responsibilities has resulted in insufficient financing and provision for core public services, and particularly a default in the delivery of vital services in many rural and poor localities. Further, in the absence of mechanisms to ensure national minimum service standards, the decentralized public services delivery system is faced with growing inequality across the country due to the widening regional disparity in economic development over the past decade. This paper reviews fiscal decentralization policies in China, identifies prominent issues in the current pubic service delivery system, and examines the deficiencies in the existing intergovernmental fiscal system that have contributed to insufficiency and inequality in public services provision. It advises plausible reform options to further national objectives.

Patricia Clarke Annez, Gwénaelle Huet, George E. Peterson

This book takes a look at the past to gain insights for the future. Nearly 30 years ago, when the world urban population was only about half of the 3 billion that it is today, when most Less Developed Countries (LDCs) were primarily rural, and before the wave of decentralization of the 1980s and 1990s, the World Bank developed an instrument with great potential. The key characteristics of this instrument, the Urban Infrastructure Fund (UIF), are several. It provides finance for an array of urban services, not just one sector, such as water and sanitation, leaving flexibility for local beneficiaries to set their priorities. UIF projects operate in more than one city. Perhaps the most important distinctive feature is that these projects use local institutions to do the work of identifying, appraising and channeling finance to subnational entities (municipalities, local utilities, or community groups) on behalf of the World Bank. This arrangement makes it feasible to reach beyond the major capitals or business centers such as Chongqing, Mumbai, or Sao Paulo, or even regional capitals, to fund much smaller subprojects, suited to the needs and capacities of smaller cities and towns, because local agents are tasked with identifying and appraising these projects. Delegating these functions makes it practicable not only for a large International Financial Institution (IFI) such as the World Bank but also for national governments to reach small municipalities. Providing support to large numbers of municipalities with relatively small investment needs is a complex task, but it is fundamental to scaling up beyond small pilot projects to programs improving urban services countrywide.

Ichiro Aoki

Japans mid-nineteenth century opening-up to Western influence, the so-called Meiji Restoration, drove political leaders to form a politically modern centralized country. Although Japan experienced a number of major decentralization processes under the post World War II Allied occupation, the Japanese government reviewed these reforms after the occupation. In fact during the post WWII era, the centralized system played a major role in establishing a national minimum standard of living. While political trends in the 1990s favored government decentralization, promotion of decentralization became a challenge for successive Cabinets. In 1999, the Diet enacted the Package Promoting Decentralization Act; this law repealed the delegation system under which local governments are subordinate to the central government. In 2003, the Koizumi Administration created the Trinity Reform plan. Trinity means the decentralization reform process that involves three factors : 1) A local allocation tax grant; 2) A national subsidy for local governments, and 3) A local tax. The package included reducing national subsidies to local governments and transferring tax revenue sources from the central government to local governments. Both Japans central government and local governments are financially closely connected and both face severe fiscal conditions. Japan has an aging population and the coming increase of social security related expenditures is a huge fiscal challenge. It is financially questionable whether the central government can continue to provide the local allocation tax grants which guarantee financial resources to cover revenue shortfalls of local governments. The central and local governments have to review their budgets with a concerted effort to improve government efficiency. The theorem on fiscal federalism argues that local governments can provide public services more efficiently and be more responsible to their residents through competition among local governments. However, decentralization in Japan contains two fundamental challenges : heavy duplication of roles and ambiguous fiscal responsibility across levels of government. What is necessary for decentralization in Japan is to narrow the role of the central governments. Furthermore, the central government revenue guarantee function should be limited; it is imperative to establish hard budget constraints at the local government level. The author would like to emphasize decentralization should be compatible with reconstruction of the public finance system. In the first chapter, the author explores the historical background of the relationship between Japans central government and local governments. Then, in the second chapter, the author introduces the recent Japanese government promotion of decentralization. Thereafter, the author provides an overview of financial relationships across levels of government in the third chapter. In the fourth chapter, the author surveys economic theories on fiscal federalism, whereby the author would like to clarify the advantages of decentralization. Then, in the fifth chapter, the author summarizes the two fundamental challenges between the central and local government in Japan : duplication of roles and ambiguous expenditure responsibility. Finally, the author makes suggestions for promoting Japanese government decentralization mainly focusing on the use of fiscal instruments.

Sandra Krtalić, Alessandro Gasparini

Most modern countries, whether they are unitary or federal, have several levels of territorial government as one of the imperatives of the modern organization of the state, operating in order to meet the most disparate needs encountered at lower levels of government.Different countries have different levels of government, and each of them a different hierarchy of public administration bodies where citizens decide on the offer of public services and their financing through elections.While the role of the central level of government is today in the creation of a national infrastructure and development of a better qualified workforce in order to make the state competitive internationally, the importance of the local government is before all in the creation of the entrepreneurial infrastructure, transport and communications.Therefore, it becomes clear that lower levels of government have an increasingly important role in the development of the country so that a growing number of countries worldwide are implementing reforms in the area of fiscal decentralization.Nevertheless, although desirable, fiscal decentralization is not an easy task for any state.There are numerous problems and obstacles in that process, which influence the decision on decentralization, fiscal smoothing and the issue of state intervention.

David W. Edgington

Cities, Autonomy, and Decentralization in Japan, Carola Hein and Philippe Pelletier (eds), London and New York, Routledge, 2006, 224 pp., £65.00 (h/b) During the early years of this decade the Japanese government set out a comprehensive agenda of reforms, including cuts in public works expenditure and fiscal reforms designed to reduce the country's public sector debt of nearly US$6.4 trillion, equal to about 150 per cent of the country's gross domestic product, the worst ratio among industrial countries. The process of reform also encompassed urban and regional development as in 2003 the administration of Prime Minister Junichiro Koizumi (2001-2006) created the so-called 'Trinity Reform Package'. In this context, 'trinity' means the decentralisation reform process that involves three factors: reform of local taxes, reform of the local allocation tax grant (the redistribution of funds to local governments) and reform of tied funds and national government disbursements to cities and local prefectures more generally. These fiscal decentralisation measures are still being worked through, but are likely to be significant as Japan has pursued one of the most active and consistent centrally directed regional policies in the OECD over the past 40 years. In light of these new policies a booklength study examining the background to central-local government relations, decentralisation, and city-community relations is most welcome. Hein and Pelletier's collection of essays dates from a 2000 conference and so does not cover in depth the more recent policy initiatives (see however OECD, 2005). Nevertheless, they incorporate an evaluation of earlier moves by the Japanese government set out in the Law for the Promotion of Decentralisation, 1995 (extended by further legislation in 2000). Four essays, including the introduction provided by the editors, deal with aspects of central government-local government relations. Planning historian Ishida Yorifusa examines why Japan differs from a more decentralised model of local government planning practised in the United States, Canada and most European countries. He charts urban and regional policy-making from Meiji Japan (1968-1911) to the current decade in terms of the relative shift of power relations between the central and local governments (and citizens), noting that until Japan's first City Planning Law in 1919, local governments were primarily responsible for urban improvement schemes and local zoning ordinances. The extremely centralised system that was established in 1919 survived the democratic reforms following World War II but led eventually to more administrative (if not financial) power for local government planning enshrined in the 1968 'new' City Planning Law. Since that time, the overall tenor of land use planning in Japan has emphasised (however slowly) both increased powers for local government and citizen involvement, mirroring wider moves in other industrialised countries. Another feature of decentralisation in Japan surrounds the power of the capital, Tokyo, relative to surrounding regions. In recent years politicians and bureaucrats have favoured complete removal of national government functions away from Tokyo to districts in Japan that are (slightly) less vulnerable to earthquakes. Urban planning scholar Nakabayashi Itsuki provides a historical overview of the various schemes to manage the growth of Japan's national capital. These include the ill-fated 'greenbelt' plan of 1939 and the five National Capital Region Development Plans of the national government, as well as the local plans of the Tokyo Metropolitan Government. The removal of national capital functions away from Tokyo has now been abandoned, mainly due to opposition from the Tokyo governor, Ishihara Shintaro, and a lack of finance. …

Susana Peralta

Abstract We present a spatial model of a city with two unequally productive jurisdictions. City residents bear a commuting cost to work in either of the two jurisdictions. Each jurisdiction must finance a public budget with a wage and a head tax. We compare the first best optimum to tax decentralization. From the total welfare viewpoint, tax competition is always inefficient. However, majoritarian local governments may prefer the inefficient tax decentralization to the first best.

Purwanto Subroto

This study examined the current decentralized system in Indonesia for increased disparities in educational expenditures across districts. It also examined the impact of these on the quality of education at public junior secondary education. The study used the most recently available data from the Ministry of National Education (MONE) and Central Bureau of Statistics (BPS) covering 1999/00 and 2002/03. These data measured district level school expenditures, demographic and socio-economic variables.The study found that the current decentralized system in Indonesia increased fiscal capacities for education at districts. Unfortunately, increases in the fiscal capacities for education led to increased disparities in education expenditures per student, creating growing gaps in fiscal capacities for education across districts. Districts which received larger general allocation funds (DAU) per capita were also more likely to allocate more funding for education, whether or not they were poor or wealthy districts. This fact was reflected by the finding that district GRDP per capita in sub-national regions of Java-Bali and Sumatera had no impact on districts' education expenditures per student. In addition, the sub-provincial districts of the Kota (more urban) and Kabupaten (less urban) also differed in the way that they allocated funding for education. The Kota in the Sumatera region tended to allocate significantly more for education than did the Kabupaten. At the same time, the Kota in Java-Bali did not allocate significantly more for education than the Kabupaten. Teacher compensation was national, so funding variance was measured by locally controlled variables. The most significant impact on student achievement were teaching and learning process expenditures (textbooks, libraries, labs, field trips, etc.). The study concluded that increased funding, combined with more efficient budget allocations, were keys to quality improvement. Policy recommendations include: a) targeting DAU transfers to reduce the gaps in fiscal capacity for education across districts; b) rewarding districts with effective budget allocations that support improved student achievement; and c) placing education closer to the center of development and security policy. Better government monitoring and district transparency is needed for this major investment. Improved policy research and reporting capacities are needed, including annual reports on decentralization policy implementation.

William McCluskey, Igor Bevc

Purpose The purpose of this research is to show how the Slovenian government has recognised the need for local government fiscal autonomy and to enhance this has instigated the introduction of an ad valorem property tax. Since independence in 1991 Slovenia has embarked on a path of administrative and fiscal decentralization. Local government has been subject to significant reform in terms of the creation of additional municipalities and the allocation of devolved expenditure responsibilities. Design/methodology/approach The paper provides an in‐depth analysis of central and local government statistics to demonstrate the potential role of the property tax in any future decentralisation of responsibilities and funding to the local level. Findings This study finds that in terms of both municipal revenue and expenditure there remains a high degree of centralised control by the state. On the positive side with the introduction of the new property tax there is an expectation for greater local fiscal autonomy, however, on the negative side progess towards the introduction of the new tax has been extremely slow. The study concludes that while the proposals are likely to provide for a more stable and uniform local tax, there appears to be lethargy in implementing the property tax. Originality/value It is argued in this paper that accession to the EU has created pressures for Slovenia to adopt a financing model which gives greater fiscal autonomy to local government. Currently, the high level of centralization is seen as a barrier to greater devolution of powers which in turn has a negative effect on the introduction of the new property tax.

Weena Gera

Across the broad issues of decentralized governance in the Philippines, the process of fiscal decentralization continues to require thoroughgoing analysis vis-à-vis the incessant protests against purportedly unfair distribution and use of the country’s fiscal resources. This paper analyzes the institutional framework defining the country’s intergovernmental fiscal relations that would highlight the critical role of central-local political structures in shaping fiscal decentralization. It examines how the policy standardization, resource coordination and allocation, and monitoring and evaluation in the country’s intergovernmental finance affect the distribution, generation and use of fiscal resources. Key issues noted include : 1) limited devolution of budget; 2) constrained intergovernmental fiscal transfer system (insufficient and unlawful allocation of funds; lack of transparency and exercise of discretionary powers in the use of fiscal resources); and 3) low levels of local revenue generation. These issues intersect along a contradiction of powers between the local and central government politicians which predominates in an intergovernmental fiscal structure evaluated in this study as lacking in meaningful institutionalization. The basic paradigm of this paper is based on the assumption that decentralization as a political process can best be operated within the framework of centrally-led institutionalization.

M. Freitag, A. E. Vatter

This article analyses the relationship between decentralization and the extent of fiscal discipline in the Swiss cantons between 1984 and 2000. From a theoretical point of view, decentralization and federalism can be associated with both an expansive and a dampening effect on government debt. On the one hand, decentralized structures have been argued to lead to a reduction of debt due to inherent competition between the member states and the multitude of veto positions which restrict public intervention. On the other hand, decentralization has been claimed to contribute to an increase of public debt as it involves expensive functional and organizational duplications as well as cost-intensive, often debt-financed, compromise solutions between a large number of actors that operate in an uncoordinated and contradictory way. Our empirical results show that in periods of prosperous economic development, the architecture of state structure has no impact on debt. However, the degree of decentralization influences debt in economically poor times: In phases of economic recession, administratively decentralized cantons implement a more economical budgetary policy than centralized Swiss member states.

Rosario Manasan

A decade and a half since the Philippines embarked on a major program of decentralization, the authors of this book have undertaken a detailed examination of all aspects of the nation’s regional dynamics and policies. Their analysis extends to comparable experiences in East Asia, particularly China and Indonesia. The lessons of this book are relevant not only for an audience interested in the Philippines – a large developing nation with a population soon to exceed 100 million people – but also for many other developing countries now embarking on decentralization programs. The book therefore has broad international appeal.

Larry Schroeder

The Government of Albania embarked on a comprehensive program to decentralize decision‐making powers with the passage of the Law on Organization and Functioning of Local Governments in 2000. A centerpiece of the policies undertaken to implement that legislation was an unconditional transfer program which, using a formula‐based allocation mechanism, transferred substantial financial resources to the local communes and municipalities beginning in 2002. This paper describes that system and its evolution. It illustrates how the transfer was designed to take into account the transition from a centralized system to a decentralized arrangement for provision of local public services and how the formula has undergone some “fine‐tuning” while retaining its simplicity. Analysis of the outcomes reveals how it has achieved its mandated objective of equalizing resources across local governments; however, it does so while running the risk of substantially discouraging local governments from mobilizing resources of their own.