Abstract:

The decentralization of revenue sources and expenditure responsibilities to subnational levels of government can increase the efficiency of spending, and increase participation in decision making by local constituents. It is also true, however, that decentralization can result in inequities in service delivery among citizens of the same country depending on where they live. While decentralization need not cause these inequities, devolution of re venue sources, combined with disparities in endowments of regions, is likely to lead to disparities in fiscal resources at the subnational level.

If left alone, these disparities could lead to either lower levels of services in fiscally poor regions or higher tax rates for similar levels of government services in those regions. In turn, disparities in service delivery could thwart poverty alleviation efforts, as public services that are usually provided at the subnational level, such as primary health and education, are critical in empowering the poor. Disparities in the level and quality of these services could therefore eventually perpetuate inequalities in income levels, or at least delay conversion of incomes across regions. Large fiscal disparities could also induce migration to regions that have higher revenues and better services, even though the migrants could have been employed more pro- ductively elsewhere. 1 Finally, large disparities in public service delivery may cause social unrest in re gi ons that are left behind, and could undermine the sense of unity in a country. Such diversity, cou- pled with growing disparities across regions, may co nstitute the basis for regional insurrections such as in the Muslim regions of Mindanao in the Philippines, and in West Papua in Indonesia (Hill 2000).

Info

Source Institution	World Bank
Source URL	http://siteresources.worldbank.org/INTEAPDECEN/Resources/Chapter-4.pdf
Page Count	18
Place of Publication	Pasig City
Original Publication Date
Tags	Decentralization, Decentralize, Manual