Fiscal decentralization in Latin America

the long version

To compete in an increasingly global economy, the countries of Latin America must establish fiscal equilibrium and increase the efficiency of their public sectors. Key to achieving those goals is a well-organized system of government in which powers are delegated to maximize efficiency. Fiscal Decentralization in Latin America examines how taxation, spending and regulatory powers can be most effectively distributed among different levels of government. Fiscal decentralization is essential to increase democratic participation and to make governments more accountable to their constituents. Case studies of Argentina, Chile, Colombia and Peru suggest that although these countries are committed to relatively high government spending levels, the effectiveness of those expenditures could be improved through fiscal decentralization. Other recommendations point to the importance of uniform financial administration procedures and fiscal discipline at the lower levels of government. The study recommends that the central government retain its powers regarding macroeconomic policy, income distribution and debt.