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 19: Corruption and Decentralized Public Governance

Anwar Shah


Anwar Shah Introduction In their quest for responsive, responsible and accountable public governance a large number of countries have recently taken steps to re-examine the roles of their various levels of government. This re-examination has resulted in a silent revolution sweeping the globe, slowly but gradually bringing about rearrangements that embody diverse features of supra-nationalization, confederalization, centralization, provincialization and localization. Note that localization implies home rule, that is, decision making and accountability for local services at the local level. Fundamental elements of home rule are: local political autonomy with elected officials accountable to local residents; local administrative autonomy – ability for local officials to hire and fire local government employees; and local fiscal autonomy – discretionary ability to raise revenues and authority and flexibility in the use of local resources. The vision of a governance structure that is slowly taking hold through this silent revolution is the one that indicates either a gradual shift from unitary constitutional structures to federal or confederal form of governance for the large majority of people or strengthening local governance under a unitary form of government (25 federal and 20 decentralized unitary countries with a combined total of 60.4 per cent of the world’s population).1 This trend is a current source of concern among certain academic and policy circles that are worried that localization may adversely affect the quality of public governance through an increase in the incidence of corruption. This chapter examines the conceptual and empirical basis of these concerns. The next section defines corruption...

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