Good governance is the foundation for economic growth and stability in developing countries. A responsive and efficient government should protect its citizens and deliver such basic services as water, schools, and health care. It should also engage citizens in government.
Urban Institute experts have provided research and technical assistance on local governance in more than 70 countries around the world. The core of our work is in improving delivery and financing of public services, strengthening public management and performance measurement, encouraging civic engagement, combating corruption through accountability and increased transparency, and enhancing local governments' role in economic development.
Decentralization projects in developing and transitional countries are typically accompanied by efforts to increase the own-revenue powers of local governments. Both the literature of fiscal federalism and the practices of donors and domestic reformers often see the strengthening these powers as critically important to the success of local government reform initiatives. The recent history of Albanian intergovernmental finance reform, however, suggests that there can be too much of a good thing: Placing the enhancement of local government tax powers at the center of decentralization projects can not only crowd out—theoretically and practically—critically important efforts to develop stable, predictable, and adequate transfer systems, but can also be politically self-blocking. In this paper, we use the Albanian case to illustrate why in developing countries with highly skewed tax bases there are good reasons to focus first on stabilizing transfer systems, and only secondarily on expanding local government own-revenue powers.
Over the past 10 years, the international development community has often treated decentralization and local governance issues through a narrow lens, focusing exclusively on the devolution of financial resources within the context of elected local governments. This paper seeks to define a more detailed metric of (local) public sector finances, which recognizes that the central authorities in each country interact with residents, civil society, and the private sector in three ways: through the direct or delegated delivery of public services (by central government entities); through deconcentrated departments or jurisdictions; and/or through devolved local governments. Formulating a detailed methodology for measuring local public sector finances will serve as a foundation to better understanding of the production function of public sector outputs and outcomes.
This commentary reflects on a profound impact that the fiscal crisis has on management of public property and overall lack of advanced asset management practices at local governments even though 65-99 percent of the value of the wealth owned on the taxpayers' behalf is concentrated in public land, built-up property and infrastructure.
Land assets have become an important source of financing capital investments by subnational governments in developing countries. Land sales, often with billions of dollars per transaction, rival and sometimes surpass subnational borrowing or fiscal transfers for capital spending. However, the use of land-based revenues for financing infrastructure can entail substantial fiscal risks and requires development of ex ante prudential rules for land financing comparable to those governing borrowing. This paper is part of a larger effort at the World Bank to develop knowledge products on subnational finance and fiscal reforms.
The article discusses the impact that the current international public finance crisis (which coincided with the downturn of real estate markets) has had on government property assets and related services, primarily at the level of sub-national governments. Using examples mainly from North American and European Union countries, the article illustrates how the crisis amplified the risks to which government assets have been exposed, even in more ordinary situations. The central challenge: will governments be able to mobilize the economic value of their assets strategically, to mitigate the crisis impact, or will the government property be wasted on temporary fixes?
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