By Steven B. Webb, Marcelo M. Giugale
The 3 forces of democratization, decentralization, and improvement have swept internationally the decade and redrawn the maps of politics, strength, and prosperity. glossy Mexico has been totally engaged within the trio, making it a wealthy case examine. lately, stronger political pageant has redistributed decisionmaking throughout all degrees of presidency, making the govt extra in charge to the common citizen. It has additionally given subnational governments a renewed function as financial brokers. The taxation, spending, borrowing, and associations of Mexican states and municipalities are actually more and more lower than the rigor of marketplace self-discipline. The mixed, nearer scrutiny of citizens and financiers is making a new incentive framework for policymakers-a framework the place helpful reforms turn into either inescapable and, extra importantly, a perceived resource of capability gift. This booklet is the manufactured from the analytical paintings of a giant variety of specialists, Mexican and international. within the ebook, the specialists record Mexico's decentralization adventure; conceptualize its major tendencies, rules, and recommendations; and convey it into the sunshine of overseas comparability. They distill serious classes and demanding situations which are of relevance for Mexico, for Latin the US and, quite often, for international locations which are embarking on some distance attaining decentralization efforts. This renders the quantity an incredible contribution to our wisdom and pondering during this sector; and a well timed one, considering the fact that decentralization is an irreversible strategy that's more likely to proceed occupying policymakers for years yet to come.
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Additional info for Achievements and challenges of fiscal decentralization: lessons from Mexico
Paying adequate attention to the interactions of various policy areas can avert many problems with decentralization. Although there is no one right path to decentralization, and determining the appropriate extent and nature of decentralization is a political decision for the country, a number of common mistakes can be avoided. For example, it is always a mistake to decentralize revenues without decentralizing a corresponding set of responsibilities, and it is usually wrong to give exactly the same revenue and responsibilities to small and large municipal governments.
Thus far Mexico has improved its intergovernmental and intersectoral coordination largely through top-down mechanisms, such as conditional transfers and federal monitoring. 1. Coordination of Decentralization: Lessons in Latin America The Latin American experience with coordination of the decentralization process indicates the following lessons: 1. Horizontal, intersecretary agreements (national level) or conferences of governors, mayors, or finance secretaries (subnational level) have had only modest effects, generally restricted to a few specific policies.
It is understandable that the initial values of the transfers matched previous cost levels, because the states had neither the authority nor the time and money to change staffing quickly. But now it makes sense to move to a system with better incentives. Evidence from a number of countries indicates that formulas for sectoral transfers are more equitable and encourage efficiency better if they are based on a capitation formula, with adjustments made for population density, age, and gender. Moving toward such a system, as the social security system is starting to do, would improve the efficiency and equity of transfers.