Pitfalls on the Road to Fiscal Decentralization

Publication Date: April 2001

Publisher: Carnegie Endowment for International Peace

Author(s): Vito Tanzi

Research Area: Economics

Type: Report

Abstract:

Recently, pressures for fiscal decentralization have increased in various parts of the world. When cultural, ethnic, or linguistic diversity characterizes a country's population, the justification for giving different regions more control over their political and economic decisions seems to acquire more legitimacy.

In Pitfalls on the Road to Fiscal Decentralization, Vito Tanzi discusses issues relevant to the question of whether or not fiscal decentralization would generate the positive results that its supporters claim. Tanzi argues that if countries meet certain conditions before the process of decentralization begins, positive outcomes are more likely to occur because of decentralization. Likewise, Tanzi notes that there may be alternatives preferable to decentralization that countries should first carefully consider before making any final decisions.