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The study focuses on decentralization, referring to the process of returning the political, fiscal, and administrative powers, to sub-national units of government. It examines the decentralization transformation of government structures in Latin America, which, since 1983, has largely transferred power, resources, and, responsibilities, to the local level. Eight cases are reviewed, within a framework for sub-national government, revising the functions, structures, and revenues assigned, and, the strategies to synchronize the elements of reform. The macroeconomic threat is addressed through hard budget constraints, analyzing the outcomes of major decentralized states in Latin America, as well as the subtle risk, that empowered local governments may use their political power to undermine national interests, in benefit of individual constituencies. Furthermore, the accountability of authority is examined, revising what is at stake with the decentralization of education, health care, and, infrastructure, under new municipal powers. It is further suggested, that successful decentralization is dependent on consistent political culture, thus, broad sets of rules affecting political behavior are analyzed, particularly on electoral systems and political parties.

Publisher: World Bank

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