1945

Decentralization and local government financing

Fiscal decentralization—which entails shifting some responsibilities for expenditures and/or revenues to lower levels of government—has become a mainstream alternative framework for fiscal policy. It is generally a response to unsatisfied political demand for greater regional autonomy, or the result of a large economic divide between rich and poor regions. In a few cases, linguistic and cultural divides explain such trends. In many emerging and low-income countries, all these factors play a role, with tensions among ethnic groups an additional factor exerting pressure for decentralized public service delivery.

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