Based on experience with attempts at decentralization in postconflict or fragile
states such as Cambodia, Papua New Guinea, and Indonesia, they argue that
if poverty reduction rather than participatory democracy were the overriding
concern of Western donors then much more development financing would be
directed to promoting administrative deconcentration.
In chapter 8 Paul Smoke reviews what is known conceptually and empirically
about fiscal decentralization in developing countries. He focuses on lessons
derived from cases in which some progress has been made in overcoming
common obstacles to decentralizing fiscal systems. He illustrates through the
cases how some governments have been able to make elements of an intergovernmental
fiscal system function in tandem and how to better link them to
political and institutional reform.
Enrique Cabrero, in chapter 9, reviews the main theoretical arguments about
the decentralization process in Latin America. He also attempts to explain how
decentralization had been executed in the region and how the process has specifically
affected fiscal management. He argues that Latin American reforms promote
expenditure decentralization (mainly through fiscal transfers) better than
revenue decentralization (broadening the fiscal attributions of subnational
governments). Analyzing cases in Brazil, Chile, Peru, and Mexico, Cabrero
describes how decentralization has allowed local governments to develop innovative
capacities to manage the ever-growing public policy agenda and to interact
with citizens