Intergovernmental Transfers in Federations

Edited by Serdar Yilmaz, Practice Manager, Public Finance and Procurement, Global Governance Practice, The World Bank, USA and Adjunct Faculty, Marmara University, Istanbul, Türkiye and Farah Zahir, Senior Economist, Governance Global Practice, The World Bank

'Scholars and practitioners alike will find this comprehensive volume invaluable. The analytical framework and the accompanying country case studies provide constructive insights and lessons on how to successfully design and implement intergovernmental transfers within federal countries. Definitely a book that will help shape future central-local fiscal systems.'--Roy Kelly, Duke University, US'This excellent volume brings together most of the world's leading experts on intergovernmental fiscal relations. They provide important contributions to both the conceptual and practical literature on the design of intergovernmental transfers. Building on three insightful discussions of the principles of effective transfer design, the volume contains a dozen in-depth descriptions and critical analyses of grant systems in mature federations, evolving federations, and multi-level unitary governments. Policymakers, scholars, and students will all profit from the lessons about the design of intergovernmental transfers provided in this timely volume.'--Andrew Reschovsky, University of Wisconsin-Madison, US'When it comes to designing intergovernmental transfers in a federation, there is no one model that stands above the rest. This book clearly illustrates this point with case studies from ten mature and maturing federations, written by leading scholars. Even though transfers differ across countries, there are important lessons to be learned from these case studies. For policymakers, researchers, and practitioners interested in understanding the theoretical considerations in designing transfers, what works and what does not work, and how to design a better system, this book is essential reading.'--Enid Slack, University of Toronto, Canada

• Contents:Foreword by Richard Bird xiii1 Introduction to the volume 1Serdar Yilmaz and Farah ZahirPART I CONCEPTUAL ISSUES2 The architecture of intergovernmental transfers: principles andpractice in low- and middle-income countries 7Roy W. Bahl Jr3 Issues in intergovernmental fiscal transfers: public finance andpolitical economy considerations 21Serdar Yilmaz and Farah Zahir4 The practice of fiscal equalization: a political economyclarification 41Bernard Dafflon and François VaillancourtPART II INTERGOVERNMENTAL TRANSFERS INMATURE FEDERATIONS5 The German model of addressing vertical and horizontal fiscalimbalances 64Paul B. Spahn6 The United States grant system 86Howard A. Chernick7 Federal finance arrangements in Canada: the challenges offiscal imbalance and natural resource rents 109Marcelin Joanis and Fran.ois Vaillancourt8 Revenue and expenditure needs equalization: the Swiss answer 134Bernard Dafflon9 Intergovernmental fiscal relations in Australia 163Bob Searle10 The economic impacts of horizontal fiscal equalization aspractised in Australia 185Jonathan CoppelPART III INTERGOVERNMENTAL TRANSFERS INEVOLVING FEDERATIONS11 Intergovernmental fiscal transfers and performance grants inBrazil 204Deborah L. Wetzel and Lorena Viñuela12 Intergovernmental fiscal transfer system in Argentina:historical evolution, current performance and reform optionsto promote efficiency, equity and transparency 224Marco Larizza and Julian Folgar13 Evolving role of the Finance Commissions in India in thelast 25 years 248Farah Zahir14 Emerging trends in fiscal transfer systems in selectedfederations: implications for India 275Jorge Martinez-VazquezPART IV INTERGOVERNMENTAL TRANSFERS INUNITARY FEDERATIONS15 Intergovernmental fiscal transfers in Kenya: the evolution ofrevenue sharing under new devolution in a quasi-federalsystem 296Jamie Boex and Paul Smoke16 Reforming vertical programmes: the case of South Africanlocal government 323David SavageIndex 345