Handbook of Fiscal Federalism
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Handbook of Fiscal Federalism

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.
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Chapter 6: Functional, Overlapping and Competing Jurisdictions (FOCJ): A Complement and Alternative to Today's Federalism

Reiner Eichenberger and Bruno S. Frey


6 Functional, overlapping and competing jurisdictions (FOCJ): a complement and alternative to today’s federalism Reiner Eichenberger and Bruno S. Frey I. Introduction Traditional types of federalism and decentralization exhibit many important advantages over centralization, but they also face some serious problems. In this contribution we develop a new concept of functional federalism which exploits the advantages of decentralization, but which at the same time avoids the inherent problems. Our concept, called FOCJ as the acronym of functional, overlapping and competing jurisdictions, is well suited to improve politics in industrial as well as developing countries. This new kind of competitive federalism we put forward may seem radical in various respects, but we shall show that the concept has been successful in the past as well as the present. Thus, we believe that it constitutes an idea worthy of serious consideration. The remainder of this chapter is organized as follows. In the next section we discuss the advantages and problems of traditional federalism. The third section specifies the concept of FOCJ, and discusses its main beneficial effects. The fourth section puts it into theoretical perspective. The fifth section shows that some aspects of FOCJ have existed throughout European history and continue to do so today. Furthermore, the relationship to US special districts and in particular to functional communities in Switzerland is emphasized. While the sixth section discusses how FOCJ can be institutionalized in Europe, the seventh section focuses on the relevance of FOCJ for developing countries. The last section concludes. II. Advantages...

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