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Usted está aquí: Inicio Acerca del CLAD Publicaciones Revista del CLAD Reforma y Democracia Artículos por número publicado 003, Enero 1995 Fiscal decentralization in Latin America

Fiscal decentralization in Latin America

Fernando Rojas Hurtado

Decentralization processes in Latin America -including their origin, purpose and accomplishments; and the pitfalls and conditions which restrict their results- are described. Political, organizational and fiscal contexts of the fiscal decentralization processes, based on the analysis of the Brazilian, Colombian, Peruvian and Venezuelan cases, are tackled.

Motivations and goals of fiscal decentralization are varied in the cases of the countries studied. There is a global economic cause, but concomitantly the total dismantling of the welfare state is resisted. Particularly with regard to the Venezuelan case, the initial purpose of decentralization was political, rather than economical. In Venezuela, decentralization has been entrusted to a technical, ministerial agency in charge of political reform -the Presidential Commission for State Reform, COPRE. Decentralized actors gain special relevance, with the states taking part in the decentralization process. But the other side of the coin is the weak support of the Central Government to decentralization in Venezuela, as opposed to other Latin American countries.

In the organizational context, there is a crowded variety of institutional settlements towards fiscal decentralization. Organizational reforms stumble upon hierarchic local structures, the demands of scale economies, the lack of an appropriate training by the officials from the most segregated levels, and the advantage of the central, national or federal level to give priorities to external expense in the country. The interaction between fiscal decentralization and institutional development in the Latin American experience can be studied with reference to the Venezuelan case. In this regard, the following aspects can be seen: contractual flexibility of the process; competencies distribution; support to institutional development; inter-sectorial coordination and coordination with the private sector; and the role of the states and townships in the process. Concerning the fiscal context itself, there are two ways for resource re-allocation, in accordance with the priorities and demands of the users of public utilities. The first way is strengthening the own sub-national resources, while the second way is transfer. Achieving a balance between own resources and transfers; combining conditional and unconditional transfers, and framing a diversified package of state or municipal funding is advised. The experience reveals that, among the countries in the hemisphere, Peru is more likely to give autonomy to territorial entities and the private sector. On the contrary, the Colombian central government has transferred huge amounts to regions and townships. In Venezuela, state resources are scarce, and the transfers have left the state and municipal level with little autonomy.

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