Author

Bahl, Roy

1999

Number of Pages:

21

Full Text

Implementation Rules For Fiscal Decentralization

Abstract

The last decade has been a time of rhetoric about fiscal decentralization. It is the rare country that has not

placed the strengthening of local government on its development policy agenda. Despite pronouncements,

plans and even promises, there has not been a rush to endow subnational governments with significant taxing

powers and increased expenditure autonomy. Perhaps economic conditions have not been right for countries

to adopt comprehensive decentralization schemes, perhaps political freedoms were too new in some cases,

and perhaps the idea just takes some getting used to. Whatever the reason, there are signs that some

countries are not more ready to move forward, and the next decade may see as much implementation as

rhetoric.

There are many analyses of fiscal decentralization as a policy strategy. Most focus on evaluating the

decentralization experience around the world, and looking for the match between theory and practice. Far less

attention has been given to implementation strategies. This paper is meant to offer some rough guidelines for

implementation – twelve “rules” that might form the basis of a decentralization strategy. The author begins with

a discussion of a the rational for fiscal decentralization, i.e., with a statement of the objectives that should

lead the design of a decentralization program. The author turns then to the guidelines that might form the

backbone of the strategy.