Decentralization and Reform in Latin America

Decentralization and Reform in Latin America

Improving Intergovernmental Relations

Edited by Giorgio Brosio and Juan P. Jiménez

Decentralisation and Reform in Latin America analyses the process of intergovernmental reform in Latin America in the last two decades and presents a number of emerging issues. These include the impacts of decentralization and the response of countries in the region to challenge such as social cohesion, interregional and interpersonal disparities, the assignment of social and infrastructure expenditure, macrofinancial shocks, fiscal rules and the sharing of natural resources revenue. The main aim of the book is to assess the effective working of decentralized arrangements and institutions, with a view of suggesting corrections and reforms where the system is not working according to expectations.

Chapter 3: Fiscal decentralization: increasing social cohesion among widely disparate territorial units

Oscar Cetrángolo and Ariela Goldschmit

Subjects: development studies, development economics, economics and finance, development economics, public finance


Latin America is a heterogeneous region marked by a high degree of inequality and wide disparities that are also found at the country level. While it is known to be the region with the sharpest income inequalities, it is also subject to serious imbalances in terms of territorial development. Decentralization of the public sector’s delivery of various goods and services has been carried out in differing ways from one country to the next, and it is therefore quite probable that the process has heightened some of the region’s pre-existing differences, heterogeneities or inequalities. There are, nonetheless, a number of cross-cutting issues, similarities and shared features that provide a basis for an analysis of these processes at the regional level. Decentralization has posed a new kind of challenge for societies that wish to plot a course towards a genuine equality of rights. The countries that are at the forefront of this effort must therefore take steps to meet the public policy challenges involved in ensuring equal economic, social and cultural rights for all their citizens and in achieving convergence among the different territorial units in which social expenditure has been decentralized. In order for them to do so, they must understand the importance of rebuilding the sense of society, of belonging and of commitment to shared societal objectives. That is an essential component of any cohesive society that embraces the principle of shared responsibilities (Hopenhayn, 2007).

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