Fiscal and political decentralization have transformed several Latin American countries over the past two decades, but the transformation has hardly been smooth. At times, unbridled expansion of unconditional transfers has led to macroeconomic instability and principal-agent problems have made public sector management cumbersome. Most worrisome, despite a consensus that decentralization can strengthen public sector performance, social development and democracy, its results have not matched expectations. Fiscal Federalism in Latin America: From Entitlements to Markets examines decentralization policies that work as well as those that do not. The aim is to help Latin American policymakers meet the challenge of decentralization to improve publicsector performance at all levels of government by appropriately assigning jurisdiction over public goods, services, tax authority and user charges. The book offers "building blocks" towards decentralization, including new theoretical...
