Perspectives in Fiscal Decentralization: Challenges and the Unfinished Agenda

Abstract

Fiscal decentralization has received a great deal of academic research attention in the past three decades. Much of this work has been directed toward advising countries on how they should structure their intergovernmental fiscal systems to move government decision making closer to local constituencies. Yet even with all this good work, there are many areas where major questions remain. This paper is about where the next round of research might be focused. It begins with an explanation of why attempts to measure fiscal decentralization are unsatisfactory, and ends with a discussion of what might be done about the equally unsatisfactory state of availability of comparative data. The more detailed discussions in this paper cover tax and expenditure assignments, intergovernmental transfers, debt, and the controversy about whether fiscal decentralization has worked.