Handbook of Multilevel Finance
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Handbook of Multilevel Finance

Edited by Ehtisham Ahmad and Giorgio Brosio

This Handbook explores and explains new developments in the “second generation” theory of public finance, in which benevolent rulers and governments have been replaced by personally motivated politicians and the associated institutions. Following a comprehensive introduction by the editors, the renowned contributors present fresh and original perspectives on the key multi-level issues, along with recent developments in theory and practice, as they relate to taxes, budget systems, the management of liabilities and macroeconomic stability. The book also explores special issues concerning the poor and marginalized, structural change and the environment, natural disasters, and the task of overcoming conflicts whilst keeping countries together.
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Chapter 23: Fiscal federalism and conflict prevention

Paul Castañeda Dower and Shlomo Weber


Few trends in the world today are more arresting than the increasing number of internal conflicts. In 1950, the total number of active armed conflicts was less than 10. In 2009, this number rose to 27, all of which were internal conflicts (Hewitt et al. 2012). Currently, separatist movements, not necessarily of a violent nature, are active all across the globe in Africa, Asia, Europe, and North and South America. These conflicts have resulted in both peaceful and violent rewritings of the political map, with the number of independent countries in the world nearly tripling since World War II. Less extreme demands that center on internal conflicts over fiscal redistribution and regional autonomy are growing as well. During the period of 1950–2006, Hooghe et al. (2010) study the rise of regional authority in 42 democratic countries: the authors find that 31 of these countries experienced a total of 393 reforms to regional government and 86 percent of these reforms increased regional authority. However, many demands do not result in greater autonomy for the aggrieved group. The ‘Minorities at Risk Organizational Behavior’ dataset, which tracks the behavior of 118 ethnopolitical organizations in 16 countries of the Middle East and North Africa, reports not less than 1299 separate incidences between 1981 and 2000 in which the state has not even attempted to meet the demands of the organization (Asal et al. 2008).

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