Municipal and Intergovernmental Finance

Decentralization and intergovernmental finance have been a common element in international development efforts for many years. However, the success of fiscal decentralization as a development strategy is decidedly unclear, and there is growing skepticism about the effectiveness of (fiscal) decentralization as an international development strategy. This short essay explores the current state of knowledge with respect to fiscal decentralization and assesses the relevance of fiscal decentralization to the wider international development agenda, using the fiscal aspects of decentralization as an entry-point into the broader discussion of decentralization.

The purpose of this note is to help both local and national government officials think through possible strategies for addressing one of the fundamental issues facing Serbian municipalities today: How do Serbian local governments increase the revenues they need to improve their public infrastructure while simultaneously creating an environment favorable to private investment and local economic development? This is a dilemma that local governments face throughout the world but which is particularly pressing in many developing and transition countries where local governments must address huge deficits in urban infrastructure without at the same time over taxing their business communities upon which their future growth depends. It is also of particular importance in Nis, the third largest city in Serbia and the economic engine of the southern and least developed part of the country.

For the public sector to deliver public services and achieve its policy objectives, it is critical that public finances are managed well. Critics of decentralization point out that local governments are often administratively weak, and that poor local financial management can negate the potential benefits from decentralization. While the available research suggests that local financial management outcomes are influenced by more than a local government’s financial management practices, little is known in the literature about the determinants of effective local financial management in developing and transition economies. The empirical analysis in this paper uses data for local government authorities in Tanzania in order to explore the relationship between local financial management performance on one hand, and local management practices, local governance, and other local characteristics on the other hand.

The area of government property asset management is relatively new in public management. Most public wealth is concentrated in public property, and expenses associated with it constitute a substantial part of public budgets. The chapter ventures into two international "hot topics": practical enhancement of public financial resources through better management of property asset and curbing corruption in the historically corrupt area of government-owned property. The chapter provides a conceptual and methodological framework for governmental decision-makers and their advisors and ends by formulating and discussing a number of issues that require further professional and public debate.

Charles Cadwell, a University of Maryland expert on the political economy of reform in developing nations, the relationship of institutions to economic development, and the implementation of legal and judicial reforms, has joined the Urban Institute as the director of its International Activities Center.