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Decentralization and Reform in Latin America

Improving Intergovernmental Relations Edited by Giorgio Brosio, Department of Economics and Statistics, University of Turin, Italy and Juan Pablo Jiménez, Economic Commission for Latin America and the Caribbean (ECLAC), Chile and School of International and Public Affairs (SIPA), Columbia University, US
Decentralisation and Reform in Latin America analyses the process of intergovernmental reform in Latin America in the last two decades and presents a number of emerging issues. These include the impacts of decentralization and the response of countries in the region to challenge such as social cohesion, interregional and interpersonal disparities, the assignment of social and infrastructure expenditure, macrofinancial shocks, fiscal rules and the sharing of natural resources revenue. The main aim of the book is to assess the effective working of decentralized arrangements and institutions, with a view of suggesting corrections and reforms where the system is not working according to expectations.
In Association with the Economic Commission for Latin America and the Caribbean (ECLAC)
Extent: 464 pp
Hardback Price: $201.00 Web: $180.90
Publication Date: 2013
ISBN: 978 1 78100 625 2
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  • Development Studies
  • Development Economics
  • Development Studies
  • Economics and Finance
  • Development Economics
  • Public Finance
Decentralisation and Reform in Latin America analyses the process of intergovernmental reform in Latin America in the last two decades and presents a number of emerging issues. These include the impacts of decentralization and the response of countries in the region to challenge such as social cohesion, interregional and interpersonal disparities, the assignment of social and infrastructure expenditure, macrofinancial shocks, fiscal rules and the sharing of natural resources revenue. The main aim of the book is to assess the effective working of decentralized arrangements and institutions, with a view of suggesting corrections and reforms where the system is not working according to expectations.

Policymakers, researchers and academics with an interest in subjects related to public policy, fiscal rules, intergovernmental relations, governance and decentralization will find this book invaluable.
‘This volume provides a splendid and wide-ranging collection of studies analyzing the political-economy of decentralization in Latin-America. It’s a fascinating story with numerous and profound insights into how fiscal decentralization actually works in the context of a variety of fiscal institutions and in a setting with a high degree of inequality in the distribution of income and territorial disparities.’
– Wallace E. Oates, University of Maryland, US

‘The volume on Decentralization and Reform in Latin America is an important addition to the growing literature on decentralization. Some of the issues in the implementation and effectiveness of decentralization are similar all over the world, but there are issues of particular salience to Latin America, a region where decentralization reforms have come sometimes in the wake of major political reforms. This volume pays special attention to the complexity of issues (both relating to equity and efficiency) arising in the context of vertical fiscal imbalance and inter-governmental transfers, in the delivery of social services or investment spending, in the sharing of rent from natural resources among social and regional groups and in macro-fiscal stabilization. I expect the volume to receive widespread attention.’
– Pranab Bhardan, University of California, Berkeley, US

‘When it comes to fiscal decentralization in developing countries, Latin America has long led the way. In the two decades prior to the mid-1990s, some countries in the region extensively decentralized expenditures, especially social expenditures, and to a much lesser extent revenues to subnational governments. Some excesses and distortions resulted from these initial efforts and over the next decade major attempts were made to offset such problems, primarily by changing fiscal rules and transfer systems. The recent boom in natural resource revenues has again exacerbated pressure on the intergovernmental fiscal system in many countries, leading to further attempts to adjust the flow of finance between governments in order to maintain macroeconomic balance while achieving both more effective service delivery and greater social cohesion. This book, which provides both description and analysis of the rich Latin American experience, should be required reading not only for all those interested in the region but for scholars and policy-makers anywhere who are concerned with the complex and many-faceted issues associated with decentralization.’
– Richard M. Bird, University of Toronto, Canada

‘Giorgio Brosio and Juan Pablo Jiménez have made a remarkable job in preparing the best comprehensive treatment of comparative decentralization experiences in Latin America. The volume reviews all aspects of the decentralization process: its constitutional roots and its contribution to social cohesion; the provision of social services and infrastructure; taxation, sharing in natural resource revenues and the design of the intergovernmental transfers; and its macro-financial implications and associated fiscal rules. It will be essential reading for analysts of fiscal and local government issues in the region and a very useful tool for Latin Americanists in general.’
– José Antonio Ocampo, Professor, Columbia University. Former Executive Secretary of the Economic Commission for Latin America and the Caribbean and Finance Minister of Colombia
Contributors: J.R. Afonso, E. Ahmad, V. Almeida, G. Arballo, G. Brosio, K. Castro, O. Cetrángolo, S. Dain, L. de Mello, A.C. Faveret, R. Gargarella, A. Goldschmit, J.C. Gómez Sabaini, V. Grembi, J.P. Jiménez, A. Manoel, J. Martinez-Vasquez, F. Rezende, C. Sepulveda, T. Ter-Minassian, J. Veloso
Contents:

Preface

1. Introduction: Approaching Recent Transformations of Intergovernmental Relations from Multiple Profiles
Giorgio Brosio and Juan Pablo Jiménez

2. Federalism and Fiscal Federalism: The Emergence and Distortion of the Centro-federalist Constitutional Model in its Political and Fiscal Manifestations
Roberto Gargarella and Gustavo Arballo

3. Fiscal Decentralization: Increasing Social Cohesion Among Widely Disparate Territorial Units
Oscar Cetrángolo and Ariela Goldschmit

4. Reflections on Two Decades of Social-spending Decentralization
José Roberto Afonso, Sulamis Dain, Vivian Almeida, Kleber Castro and Ana Cecília Faveret

5. Fiscal Decentralization and Public Investment
Luiz de Mello

6. The Financing of Subnational Governments
Juan Carlos Gómez Sabaini and Juan Pablo Jiménez

7. Explaining Property Tax Collections in Developing Countries: The Case of Latin America
Cristian Sepulveda and Jorge Martinez-Vazquez

8. Intergovernmental Transfers in Subnational Finances
Fernando Rezende and João Veloso

9. Intergovernmental Transfers: A Policy Reform Perspective
Jorge Martinez-Vazquez and Cristian Sepulveda

10. The Intergovernmental Allocation of Revenue from Natural Resources: Finding a Balance between Centripetal and Centrifugal Pressure
Giorgio Brosio and Juan Pablo Jiménez

11. Macroeconomic Challenges of Fiscal Decentralisation
Juan Pablo Jiménez and Teresa Ter-Minassian

12. Fiscal Rules for Subnational Governments? Evidence from Latin America
Veronica Grembi and Alvaro Manoel

13. Intergovernmental Reforms in Latin America, ‘Asian Transplants’ and the Role of International Agencies
Ehtisham Ahmad

Index