Table of Contents

Handbook of Fiscal Federalism

Handbook of Fiscal Federalism

Elgar original reference

Edited by Ehtisham Ahmad and Giorgio Brosio

This major Handbook addresses fiscal relations between different levels of government under the general rubric of ‘fiscal federalism’, providing a review of the latest literature as well as an invaluable guide for practitioners and policy makers seeking informed policy options. The contributors include leading lights in the field, many of whom have themselves made seminal contributions to the literature.

Chapter 21: Institutions of Federalism and Decentralized Government

Brian Galligan

Subjects: economics and finance, public finance, politics and public policy, public policy


Brian Galligan Introduction Twentieth-century concerns with nationalism and state sovereignty tended to buttress unitary systems of government, and especially after the Second World War established federations became more centralized, while some federations thrown together by retreating colonial powers often failed (Franck 1961). Harold Laski (1939) pronounced ‘[t]he obsolescence of federalism’, and his prognostication was echoed by a generation of post-war scholars in established federations like Australia (Greenwood 1976). Despite these tendencies and warnings, established federations like the United States, Canada, Australia and Switzerland flourished, and federal systems were successfully established in India, and re-established in Germany and Austria. There has been renewed interest in decentralization in general and federalism in particular as ways of organizing government for complex societies in the modern world. The twin waves of democratization and marketization have eroded centralized rule and national planning in countries as diverse as Russia, South Africa and Brazil. At the same time, globalization has internationalized aspects of governance, especially rule making and standard setting in policy areas that have international dimensions. The formation of regional associations of nations such as the European Union has further restricted the traditional sovereignty of the nation state. Twenty-first century processes of globalization and supranational associations, however, are producing a ‘paradigm shift from a world of sovereign nation states to a world of diminished state sovereignty and increased interstate linkages of a constitutionally federal character’ (Watts 1999, ix). In many countries this is accompanied by popular pressure for the downward devolution of power to regions....

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