Causes and Effects
Studies in Fiscal Federalism and State-local Finance series
Edited by Ehtisham Ahmad, Massimo Bordignon and Giorgio Brosio
Chapter 2: Political economy of information generation and financial management for sub-national governments: some lessons from international experience
The issue of managing sub-national liabilities is not only important in the EU, but is also a major concern in other parts of the world, including South Asia, China and Brazil, as much of the public investment needed for sustainable development is taking place at the sub-national level. Different countries and regions have used alternative mechanisms to control subnational liabilities, ranging from the fiscal rules in the EU and Brazil, to administrative control mechanisms in China, cooperative arrangements in Austria and market-based controls in North America (see Ter-Minassian, Chapter 1 in this volume). Although coordination and control mechanisms vary from country to country, none will work effectively without full and timely information on the nature and timing of the liabilities. Indeed, effective management of the liabilities is critical also to ensuring a better buy-in from the private sector and a more credible environment for greater stability for contracts (Minervini and Vinella, Chapter 13 in this volume).
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