By Steven B. Webb, Marcelo M. Giugale
The 3 forces of democratization, decentralization, and improvement have swept internationally the decade and redrawn the maps of politics, energy, and prosperity. sleek Mexico has been totally engaged within the trio, making it a wealthy case examine. lately, greater political pageant has redistributed decisionmaking throughout all degrees of presidency, making the govt extra dependable to the common citizen. It has additionally given subnational governments a renewed function as monetary brokers. The taxation, spending, borrowing, and associations of Mexican states and municipalities are actually more and more lower than the rigor of marketplace self-discipline. The mixed, nearer scrutiny of citizens and financiers is making a new incentive framework for policymakers-a framework the place priceless reforms develop into either inescapable and, extra importantly, a perceived resource of power present. This e-book is the manufactured from the analytical paintings of a giant variety of specialists, Mexican and international. within the ebook, the specialists rfile Mexico's decentralization event; conceptualize its major tendencies, guidelines, and techniques; and convey it into the sunshine of foreign comparability. They distill serious classes and demanding situations which are of relevance for Mexico, for Latin the USA and, quite often, for nations which are embarking on some distance achieving decentralization efforts. This renders the quantity a tremendous contribution to our wisdom and considering during this quarter; and a well timed one, considering decentralization is an irreversible method that's more likely to proceed occupying policymakers for years yet to come.
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Extra info for Achievements and challenges of fiscal decentralization: lessons from Mexico
The federal transfer system may need to provide extra support there. Faced with these economic realities, the teachers may see the necessity and benefit of having their union focus less on negotiating national raises and more on setting standard negotiating frameworks for local branches. Separating the assignment of responsibilities for maintenance and operation of infrastructure facilities from responsibility for capital investment has been a persistent problem in Mexico. For example, municipalities are in charge of maintaining school buildings, while the federal and state governments carry out most capital investments.
This involves, primarily, having control over marginal (incremental) revenuewhat a subnational government can affect by its own actions, especially by changing tax rates, but also by imposing new taxes or repealing old ones, by changing the tax base, and by varying administrative effort. Third, and related to the second, states that borrow need to have some source of funds to repay their debts. If they experience an unexpected adverse shock, relative to their fiscal plan at the time of borrowing, they need to be able to raise additional revenue (or cut costs) by enough to sustain their debt service.
Although the agreements for these funds were not transparent or by uniform formula, they represented an advance of the earlier pattern of the President personally allocating major resources to states, also via Ramo 23. In 1998-99, as the fiscal reform agreements ended, the fund was phased out, with a residual going to a national disaster relief fund with transparent rules of access. In 1999, a few incidents, especially with Chihuahua and Nuevo Leon, demonstrated power of states to demand ad hoc resource transfersdebt relief or federal spending on state-priority projects.