Roy Bahl and Jorge Martinez-Vazquez
© 2007 Lincoln Institute of Land Policy
Lincoln Institute of Land Policy Working Paper
Abstract
Over the past two decades there has been an unprecedented move toward decentralized governance all over the world. These changes have taken special significance in many developing and transitional countries where centralized systems were perceived to have failed to deliver improved general welfare. The promise of political, administrative and fiscal decentralization is that it can strengthen democratic representative institutions, increase the overall efficiency of the public sector and lead to improved social and economic welfare for countries that decide to adopt it. One critical assumption for expecting these results to happen is that decentralized governments will generally be more accountable and responsive to citizens’ needs and preferences. At the same time, there is general agreement among experts in decentralization that the increased accountability associated with decentralization can only be assured when sub-national governments have an adequate level of autonomy and discretion in raising their own revenues.