No AccessStand Alone Books1 Feb 2013Rethinking Decentralization in Developing CountriesAuthors/Editors: Jennie Litvack, Junaid Ahmad, Richard BirdJennie Litvack, Junaid Ahmad, Richard Birdhttps://doi.org/10.1596/0-8213-4350-5SectionsAboutPDF (0.2 MB) ToolsAdd to favoritesDownload CitationsTrack Citations ShareFacebookTwitterLinked In Abstract:This paper draws on the growing experience with decentralization in developing countries, to explore how a wide range of variables can affect decentralization efforts, and, how policies, and incentives can be designed to improve outcomes. The paper highlights the fact that decentralization is neither good, nor bad for efficiency, equity, or macroeconomic stability; but rather that its effects depend on institution-specific design. It discusses the building blocks of fiscal federalism (expenditure and revenue assignment, intergovernmental transfers, and sub-national borrowing), to then discuss the means through which decentralization policy, and institutions interact. These are the regulatory framework for sub-national borrowing, information systems and competitive governments, asymmetrical decentralization, and policy synchronization. The paper ' s starting point is the traditional fiscal federalism approach, though the primary measures for local/central accountability, assumed in most decentralization discussions, may not hold, or are different in many developing countries. The paper suggests the need for stronger focus on institutions, enhancing accountability, governance, and capacity in the context of designing decentralization policies. 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