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Central and Local Government Relations in Asia

Achieving Fiscal Sustainability Edited by Naoyuki Yoshino, Dean and Peter J. Morgan, Senior Consulting Economist, Asian Development Bank Institute, Tokyo, Japan
Sustainable and inclusive growth in emerging Asian economies requires high levels of public investment in areas such as infrastructure, education, health, and social services. The increasing complexity and regional diversity of these investment needs, together with the trend of democratization, has led to fiscal decentralization being implemented in many Asian economies. This book takes stock of some major issues regarding fiscal decentralization, including expenditure and revenue assignments, transfer programs, and sustainability of local government finances, and develops important findings and policy recommendations.
In Association with the Asian Development Bank
Extent: 448 pp
Hardback Price: $180.00 Web: $162.00
Publication Date: 2017
ISBN: 978 1 78643 686 3
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  • Asian Studies
  • Asian Development
  • Asian Economics
  • Development Studies
  • Asian Development
  • Development Economics
  • Development Studies
  • Economics and Finance
  • Asian Economics
  • Development Economics
  • Public Finance
  • Public Sector Economics
Sustainable and inclusive growth in emerging Asian economies requires high levels of public investment in areas such as infrastructure, education, health, and social services. The increasing complexity and regional diversity of these investment needs, together with the trend of democratization, has led to fiscal decentralization being implemented in many Asian economies. This book takes stock of some major issues regarding fiscal decentralization, including expenditure and revenue assignments, transfer programs, and the sustainability of local government finances, and develops important findings and policy recommendations.

The book’s expert contributors assess the current state of the allocation of expenditures and revenues between central and local governments in emerging Asian economies, and discuss their major strengths and weaknesses. They also present relevant case studies of experiences and reform measures related to strengthening and monitoring local government finance, including the implications of expanded fiscal capacity for infrastructure investment and other public spending. Covering the major Asian economies of the People’s Republic of China, India, Indonesia, and Japan, among others, the book focuses on the economic incentives of transfer schemes, how intergovernmental fiscal equalization works, and how subnational government borrowing regulations could influence debt dynamics and the fiscal deficits of local governments.

This book’s insightful analysis will be essential reading for policy makers in Asian economies and academics and researchers in the areas of economic development, public finance, and fiscal policy as well as development aid officials, multilateral banks, and NGOs.
‘This book is characterized by a strong team of authors including international consultants with in-depth experience in the area and regional experts. The combined first two chapters nicely summarize conceptual issues, present key regional facts, and raise issues worthy of further analysis. Of particular interest, in my opinion, is the trifecta of chapters in Part II on the Mechanisms for Promoting Fiscal Sustainability at the Local Government Level that cover much more than Asia. Finally, five countries are examined in some depth. Overall, a worthwhile read for anyone interested in decentralization.’
– François Vaillancourt, Université de Montréal, Canada
Contributors: S. Barrios, S.-i. Bessho, P. Chakraborty, P. Das, Z. Fan, R.K. Goel, S. Li, D. Martínez–López, J. Martinez-Vazquez, P.J. Morgan, A. Nasution, J.W. Saunoris, P. Smoke, L.Q. Trinh, V. Vulovic, G. Wan, N. Yoshino, Q. Zhang

Contents:

Preface

Part I Frameworks for Central–Local Government Relations
1. Frameworks for central–local government relations and fiscal sustainability
Peter J. Morgan and Long Q. Trinh

2. Looking beyond conventional intergovernmental fiscal frameworks: principles, realities, and neglected issues
Paul Smoke

Part II Mechanisms for Promoting Fiscal Sustainability at the Local Government Level
3. Federalism, fiscal space, and public investment spending: do fiscal rules impose hard budget constraints?
Pinaki Chakraborty

4. Fiscal equalization schemes and subcentral government borrowing
Salvador Barrios and Diego Martínez-López

5. How well do subnational borrowing regulations work?
Jorge Martinez-Vazquez and Violeta Vulovic

Part III Country Studies of Central–Local Government Relations
6. The fiscal risk of local government revenue in the People’s Republic of China
Ziying Fan and Guanghua Wan

7. Key issues of central and local government finance in the People’s Republic of China
Qichun Zhang and Shufang Li

8. Government decentralization program in Indonesia
Anwar Nasution

9. Case study of central and local government finance in Japan
Shun-ichiro Bessho

10. Fiscal decentralization and local budget deficits in Viet Nam: an empirical analysis
Peter J. Morgan and Long Q. Trinh

Part IV Behavioral Implications of Central–Local Government Relations
11. Debt dynamics, fiscal deficit, and stability in government borrowing in India: a dynamic panel analysis
Panchanan Das

12. Forms of government decentralization and institutional quality: evidence from a large sample of nations
Rajeev K. Goel and James W. Saunoris

Index