New York University
Robert F. Wagner Graduate School of Public Service
Financing Local Governments in Developing Countries
PADM-GP 2245
Spring 2013
Friday (2/1, 2/15, 3/1, 3/8, 3/29, 4/12)
10:00 a.m. – 3:00 p.m.
Global Center/238 Thompson St., Room 275
Paul Smoke
3052 Puck Building
Tel: 212-998-7497
paul.smoke@nyu.edu
Office Hours: Monday 4-6 p.m.
Description:
Many developing countries have been significantly reforming the scope and organization of
the public sector in recent years. This course critically examines the changing structures and
operations of government fiscal systems in developing countries, with particular emphasis on
the growing trend to strengthen subnational levels. Major topics include: understanding
broader national fiscal reform processes; determining an appropriate division of fiscal
responsibilities among levels of government; evaluating major mechanisms for decentralized
government revenue mobilization; and, assessing prospects and options for pursuing
decentralization and intergovernmental fiscal reform. The course focuses on economic
analysis, but attention is also given to political, institutional and cultural considerations that
are critical for effective policy design and implementation.
Main Learning Objectives:
1) To familiarize students with key public finance issues and challenges in developing
countries with an emphasis on the subnational level;
2) To enable students to apply basic public finance principles for analysis of fiscal
decentralization and local government finance in developing countries with diverse
political, institutional, and cultural contexts; and
3) To expose students to the practice of fiscal decentralization and local government
finance reform in developing countries.
Format:
The class will meet on six Fridays (February 1 and 15; March 1, 8 and 29, and April 12) from
10 a.m. until 3 p.m. There will be a break during the class. The format will blend lecture,
discussion and in-class participatory assignments. Class participation is encouraged and
expected.
Requirements:
The grade will be based on the following requirements:
Team Policy Analysis Assignment (20%)
Mid-term Exam (20%)
Individual Policy Analysis Assignment (20%)
Class Participation (10%)
Final Exam or Individual Term Paper (30%)
The team policy analysis assignment involves an evaluation of a public sector fiscal systems
conducted by teams of 2-3 students. Each team produces an analytical policy memo of up to
eight pages.
The midterm exam (take-home) consists of short answer questions with some choice
provided. More information will be provided in class in advance of the exam date.
The individual policy analysis assignment involves an evaluation of a particular aspect of an
intergovernmental fiscal system (some choices will be given). Each individual produces an
analytical policy memo of up to five pages.
Active class participation consists of coming to class prepared to engage in a reflective
discussion and being able to ask good questions. There will be two or three ungraded inclass exercises and your participation in these exercises will also contribute to your class
participation grade.
For the final assignment, students may choose to take a final exam or write a term
paper. The final exam (take home) requires students to answer from a choice of essay
questions that focus on the synthesis of concepts and applications covered in the class. The
term paper may be on the intergovernmental fiscal system or some aspect of it in one or
more countries. Paper topics must be cleared in advance with the instructor.
More details on each assignment will be provided as per the course schedule.
Readings:
For part of the class we use selected chapters from a textbook: R. Bahl and J. Linn, Urban
Public Finance in Developing Countries (Oxford University Press, 1992). This volume
covers basic principles well, but it is not up to date empirically so there are additional
assigned readings. Unfortunately the book is out of print (the authors are rewriting it but it
will not be available until the next academic year) and the publisher charges approximately
$220 for each copy the NYU bookstore makes. Given the excessive expense, the book has
not been ordered, but it is on reserve at Bobst Library. Students who wish to have their own
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copy can sometimes find it for sale online or may be able to get a copy from a Wagner
student who has taken this course in the past.
All required readings that are not from Bahl and Linn are available on the NYU
Classes (which has replaced Blackboard) course site in the appropriate subsection
under the Resources tab. The reading list provides supplementary readings—some are older
publications and others go into more detail on course topics. These can be consulted for those
with an interest in particular issues. Many of these can be found in books and journals
available in Bobst Library or online.
We also use selected material on a few topics from: R. Bahl and P. Smoke, eds.,
Restructuring Local Government Finance in Developing Countries: Lessons from South
Africa (Cheltenham: Edward Elgar Publishing, 2003). This volume covers most aspects of
the intergovernmental fiscal system in one country, so we use various chapters to illustrate
the elements of the system and how they work together in this case, updated for more recent
developments as applicable. The manuscript is posted in the General folder under Resources
on the NYU Classes course site.
Please note that there is a great deal of reading for this course. Some required readings
are more important than others, and they are generally listed in order of importance
for the material to be covered in class. In addition, although each reading is included
because it makes important points, some of the readings are partly redundant and can be read
more rapidly once you have read others. Guidance about the most important readings and
which to skim will be given in advance of each class.
The professional training volume J. Litvack and J. Seddon, eds. Decentralization Briefing
Notes (World Bank Institute, 2000), is a good resource for students of applied public finance
in developing countries. There are no readings from it required for this course and the
empirical references are out of date, but you may find its concise summaries of
decentralization-related principles we cover during semester useful. It is posted in the
General folder under Resources on the NYU Classes site for this course.
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PADM-GP 2245
Spring 2013
Paul Smoke
3052 Puck, x8-7497
Financing Local Governments in Developing Countries
Outline and Reading List1
I. Fiscal Reform in Developing Countries (February 1)
A. Fiscal Policy and Development
**S. Gupta, B. Clements and G. Inchauste, “Fiscal Policy for Economic
Development,” in S. Gupta, B. Clements and G. Inchauste. eds., Helping Countries
Develop: The Role of Fiscal Policy (Washington, DC: International Monetary Fund,
2004), pp.1-22.
**V. Tanzi, “Globalization and the Need for Fiscal Reform in Developing
Countries,” Institute for the Integration of Latin America and the Caribbean Papers
No. 6 (Washington, DC: InterAmerican Development Bank, 2004).
**S. Fan, “Public Expenditures, Growth and Poverty: Lessons from Developing
Countries.” IFPRI Issue Brief No. 51. (Washington, DC: International Food Policy
Research Institute, 2008).
**M. Brahmblatt and O. Canuto. “Fiscal Policy for Growth and Development,”
World Bank Economic Premise, Volume 91 (October 2012), pp. 1-7.
Supplementary
M. Bayraktar and Blanca Moreno-Dodson. “Can Public Spending Help You Grow?
An Empirical Analysis for Developing Countries.” Policy Research Working Papers
No. 5367. (Washington, DC: The World Bank, 2010).
A Mourmouras and P. Rangazas. “Fiscal Policy and Economic Development,” IMF
Working Papers No. 08/155. (Washington, DC: International Monetary Fund, 2008).
S. Paternostro, A. Rajaram, and E. Tiongson, “How Does the Composition of Public
Spending Matter?” Oxford Development Studies, Vol. 35, No. 1 (2007), pp. 45-82.
1Required
readings are marked as follows: "*" indicates available in the text (Bahl and Linn); “**” indicates
availability on NYU Courses. Unmarked readings are supplementary for those who wish to pursue the topic
further.
4
N. Bose, M. Emranul Haque and D. Osborn. “Public Expenditure and Economic
Growth: A Disaggregated Analysis for Developing Countries.” The Manchester
School, Vol. 75, No. 5 (2007), pp. 533-556.
J. Toye, “Fiscal Crisis and Fiscal Reform in Developing Countries,” Cambridge
Journal of Economics, Vol. 24 (2000), pp. 21-44.
V. Tanzi and L. Schukrecht, Public Spending in the 20th Century: A Global
Perspective (Cambridge: Cambridge University Press, 2000).
D. Lindauer and A. Velenchik, "Government Spending in Developing Countries:
Trends, Causes and Consequences," The World Bank Research Observer, Vol. 7, No.
1 (1992), pp. 59-78.
D.H. Perkins, "Economic Systems Reform in Developing Countries," in D.H. Perkins
and M. Roemer, eds., Reforming Economic Systems in Developing Countries
(Cambridge, MA: Harvard University, Harvard Institute for International
Development, 1991), pp. 11-54.
B. Tax Reform
**M. Keen and A. Simone, “Tax Policy in Developing Countries: Some Lessons
from the 1990s and Some Challenges Ahead,” in Gupta, Clements and Inchauste
(2004), pp. 302-352.
**R. Bird, “The BBLR Approach to Tax Reform in Emerging Countries.”
International Studies Program Working Papers No. 08-06. (Atlanta, GA: Andrew
Young School of Policy Studies, Georgia State University, 2008).
**M. Everest-Phillips, “State-Building Taxation for Developing Countries: Principles
for Reform.” Development Policy Review, Vol. 28, No. 1 (2010), pp. 75-96.
** M. Ruiz, R. Sharpe and M.J. Romero, Approaches and Impacts: International
Financial Institution Tax Policy in Developing Countries. (Brussels: European
Network on Debt and Development, 2011).
**R. Bird, “Managing the Reform Process.” International Tax Program
Working Papers No. 301 (Toronto: University of Toronto, 2003)
Supplementary
S. Wagle. “Coordinating Tax Reforms in the Poorest Countries: Can Lost Tariffs be
Recouped?” Policy Research Paper No. 5919. (Washington, DC: The World Bank,
2011).
5
T. Addison and J. Levin, “Tax Policy Reform in Developing Countries,” UNUWIDER Research Papers. (Helsinki: United Nations University, World Institute for
Development Economics Research, 2006).
International Monetary Fund, Organization for Economic Cooperation and
Development, United Nations and World Bank. Supporting the Development of More
Effective Tax Systems .Report to the G-20 Development Working Group, 2011.
J. Di John, “The Political Economy of Taxation and Tax Reform in Developing
Countries.” UNU-WIDER Research Papers. (Helsinki: United Nations University,
World Institute for Development Economics Research, 2006).
V. Tanzi and H. Zee, “Tax Policy for Emerging Markets: Developing Countries,”
IMF Working Papers No. 35 (Washington, DC: International Monetary Fund, 2000).
G. P. Jenkins, "Tax Reform: Lessons Learned" in Perkins and Roemer (1991), pp.
313-340.
C. The Fiscal Crisis and Local Governments
**Local Government Finances: The Challenges of the 21st Century. Executive
Summary of the Second Report of the Global Observatory on Local Democracy and
Decentralization—GOLD II. (Barcelona, United Cities and Local Governments,
2010). Full Executive Summary is posted but please focus on J. Martinez-Vazquez
and P. Smoke, “Introduction” and skim the regional sections and conclusions.
Supplementary
J. Martinez-Vazquez, P. Smoke and F. Vaillancourt. “The Impact of the 2008-2009
Global Economic Slowdown on Local Governments,” in The Impact of the Global
Crisis on Local Governments. (Barcelona: United Cities and Local Governments,
2009), pp. 7-17.
World Bank. Systems of Cities: The World Bank Urban and Local Government
Strategy. (Washington, DC: The World Bank, 2009).
II. Theories and Models of Multi-level Government Finance (February 15)
A. Overview of Fiscal Federalism
**W. Oates, “An Essay on Fiscal Federalism,” Journal of Economic Literature, Vol.
37 (1999), pp. 1120-1149.
6
**W. Oates, “Toward a Second Generation Theory of Fiscal Federalism,”
International Tax and Public Finance, Vol. 12, No. 4 (August 2005), pp. 349-373.
**R. Bird, "Threading the Fiscal Labyrinth: Some Issues in Fiscal Decentralization,"
National Tax Journal, Vol. 46, No. 2 (June 1993), pp. 207-227.
** B. Weingast, “Second Generation Fiscal Federalism: The Implications for Fiscal
Incentives.” Journal of Urban Economics, Vol. 65, No. 3 (2009), pp. 279-293.
Supplementary
W. Oates, Fiscal Federalism (New York, NY: Harcourt, Brace, Jovanovich, 1972),
Chapters 1-2.
E. Gramlich, "A Policymaker's Guide to Fiscal Decentralization," National Tax
Journal, Vol. 46, No. 2 (June 1993), pp. 229-235.
W. Fox and T. Gurley, “Will Consolidation Improve Subnational Governments?”
Policy Research Working Papers No. 3912 (Washington, DC: The World Bank,
2006).
D. Mookherjee, “Decentralization, Hierarchies and Incentives: A Mechanism Design
Perspective,” Journal of Economic Literature, Vol. 44 (June 2006), pp. 367-390.
J. Rodden, G. Eskeland and J. Litvack, Fiscal Decentralization and the Challenge of
Hard Budget Constraints (Cambridge, MA: MIT Press, 2003).
B. Applications in Developing Countries
*R. Bahl and J. Linn, Urban Public Finance in Developing Countries (Oxford
University Press, 1998), Chapters 1 and 2; skim chapters 3 and 12.
**P. Smoke, "An Overview of Local Government Finance in Developing Countries,"
Chapter 2-3 of Local Government Finance in Developing Countries: The Case of
Kenya (Oxford University Press, 1994), pp. 24-60.
**V. Tanzi, "Pitfalls on the Road to Fiscal Decentralization,” Economic Reform
Project, Global Policy Program Working Papers No. 19. Washington, DC: Carnegie
Endowment for International Peace, 2001.
**P. Smoke, Fiscal Decentralization in Developing Countries: A Review of Current
Concepts and Practice, (Geneva: United Nations Research Institute for Social
Development, 2001), pp. 11-30.
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Supplementary
T. Madies and J. Dethier, “Fiscal Competition in Developing Countries: A Survey of
the Theoretical and Empirical Literature.” Policy Research Working Papers No 5311.
(Washington, DC: The World Bank, 2010).
M. Ivanyna and A. Shah. “Decentralization (Localization) and Corruption: New
Cross-Country Evidence.” Policy Research Working Papers No. 5299. (Washington,
DC: The World Bank, 2010).
R. Prud'homme, "The Dangers of Decentralization," The World Bank Research
Observer, Vol. 10, No. 2 (August 1995), pp. 201-220.
J. Martinez-Vazquez and R. McNab, “Fiscal Decentralization and Economic
Growth,” World Development, Vol. 31, No. 9 (September 2003), pp. 1597-1616.
R. Ebel and S. Yilmaz, “On the Measurement and Impact of Fiscal Decentralization,”
Policy Research Working Paper No. 2809 (Washington, DC: World Bank, 2002).
E. Ahmad and V. Tanzi, eds. Managing Fiscal Decentralization. Oxford, UK:
Routeledge, 2002.
T. Ter-Minassian, ed., Fiscal Federalism in Theory and Practice (Washington, DC:
International Monetary Fund, 1997).
R. Bird and F. Vaillancourt, Fiscal Decentralization in Developing Countries
(Cambridge: Cambridge University Press, 1998).
R. Bahl and P. Smoke, “An Overview of Fiscal Decentralization in South Africa,” in
R. Bahl and P. Smoke, eds., Restructuring Local Government Finance in Developing
Countries: Lessons from South Africa. (Cheltenham, UK: Edward Elgar, 2003).
C. Expenditure and Revenue Assignment in Developing Countries
**C. McClure and J. Martinez-Vasquez, “The Assignment of Revenues and
Expenditures in Intergovernmental Fiscal Relations” (Washington, DC: The World
Bank, 2004).
**R. Bahl and R. Bird, “Subnational Taxes in Developing Countries: The Way
Forward.” Public Budgeting and Finance, Vol. 28, No. 4 (2008), pp. 1-25.
**R. Ebel and R. Taliercio, “Subnational Tax Policy and Administration in
Developing Economies,” Tax Notes International, March 7, 2005, pp. 919-936.
8
**P. Smoke, “Why Theory and Practice Differ: The Gap Between Principles and
Reality in Subnational Revenue Systems.” Prepared for Taxation and Development:
The Weakest Link, a conference in honor of Roy Bahl, September 2012.
Supplementary
R. Bird, B. Dafflon, C. Jeanrenaud and G. Kirchgassner. “Assignment of
Responsibilities and Fiscal Federalism.” Politorbis, No. 32 (2003), pp. 58-78.
L. Schroeder, “Municipal Powers and Functions: The Assignment Question,” in Bahl
and Smoke (2003).
R. Bird, “Subnational Taxation in Developing Countries: A Review of the
Literature.” Journal of International Commerce, Economics and Policy Vol. 2, No. 1
(2011), pp. 139–161.
R. Bahl and M. Cyan, “Tax Assignment: Does the Practice Match the Theory?”
Environment and Planning C: Government and Policy, Vol. 29, (2011), pp. 264-280.
P. Smoke, “Local Revenues under Fiscal Decentralization in Developing Countries:
Linking System Reform, Governance and Capacity,” in G. Ingram and Y. Hong, eds.,
Fiscal Decentralization and Land Policies (Cambridge, MA: Lincoln Institute of Land
Policy Press, 2008), pp. 38-61.
R. Taliercio, “Subnational Own-Source Revenue: Getting Policy and Administration
Right” East Asia Decentralizes: Making Local Governments Work, (Washington,
DC: The World Bank, 2005).
R. Taliercio, “Administrative Reform as Credible Commitment: The Impact of
Revenue Autonomy on Revenue Authority Performance in Latin America,” World
Development, Vol. 32, No. 2 (2004), pp. 213-232.
P. Smoke, “Expenditure Assignment under Indonesia’s Emerging Decentralization:”
in J. Alm, J. Martinez-Vasquez, and S. Indrawati, eds., Reforming Intergovernmental
Fiscal Relations and the Rebuilding of Indonesia (Cheltenham, UK and Northampton,
MA: Edward Elgar, 2005).
O. Fjeldstad and J. Semboja, “Why People Pay Taxes: The Case of the Development
Levy in Tanzania,” World Development, Vol. 29, No. 12 (2001), pp. 2059-2074.
N. Loayza, J. Rigolini, and O. Calvo-Gonzalez. “More Than You Can Handle:
Decentralization and Spending Ability of Peruvian Municipalities.” Policy Research
Papers No. 5763. (Washington, DC: The World Bank, 2011).
9
III. Sub-national Government Own-Source Revenues (March 1)
A. Property Taxation
*Bahl and Linn, Chapter 4, skim Chapters 5-6.
**R. Bahl. J. Martinez-Vazquez and J. Youngman, “The Property Tax in Practice,” in
R. Bahl, J. Martinez-Vazquez and J. Youngman, eds., Making the Property Tax
Work: Experiences in Developing and Transitional Countries Cambridge, MA:
Lincoln Institute of Land Policy, 2008), pp. 3-18 .
**R. Kelly, “Property Taxation in Indonesia: Challenges from Decentralization”,
(Cambridge, MA: Lincoln Institute of Land Policy, 2003).
**B. Lewis, “Property Tax in Indonesia: Measuring and Explaining Administrative
(Under-) Performance,” Public Administration and Development, Vol. 23, No. 2
(2003), pp. 227-239.
Supplementary
R. Bahl and Sally Wallace, “Reforming the Property Tax in Developing Countries: A
New Approach.” International Studies Program Working Papers No. 08-19. (Atlanta,
GA: Andrew Young School of Policy Studies, Georgia State University, 2008).
R. Bahl, “Land Taxes versus Property Taxes in Developing and Transition
Economies,” in D. Netzer, ed., Land Value Taxation: Can It and Will It Work Today?
(Cambridge, MA: Lincoln Institute of Land Policy, 1998).
P. Vaz, “Property Rates,” in Bahl and Smoke (2003).
R. Kelly, “Property Taxation in East Africa,” National Tax Association Proceedings,
1999 and (Cambridge, MA: Lincoln Institute of Land Policy, 2000).
R. Kelly, “Implementing Property Tax Reform in Developing Countries: Lessons
from the Property Tax in Indonesia," Review of Urban and Regional Development
Studies, No. 4 (1992).
R. Bird and E. Slack, “The Role of the Property Tax in Financing Rural Local
Governments in Developing Countries,” International Tax Program Working Paper
No. 608 (Toronto: University of Toronto, 2006).
10
B. Other Subnational Revenues
*Bahl and Linn, Chapters 7-8
**N. Devas and R. Kelly, “Regulation or Revenues: An Analysis of Local Business
Licenses, with a Case Study of the Single Business Permit in Kenya,” Public
Administration and Development, Vol. 21, No. 5 (2001), pp.381-391.
Supplementary
J. F. Due, Indirect Taxation in Developing Countries (Baltimore, MD: The Johns
Hopkins University Press, 1988), Chapters 4, 5 and 8.
R. Bahl and D. Solomon, “The Regional Services Council Levy,” in Bahl and Smoke
(2003).
O.P. Mathur and N. von Einsiedel, Increasing the Income of Cities: Tapping the
Potential of Non-land-based Sources of Revenue (Nairobi: United Nations Center for
Human Settlements, 1996).
J. Mikesell, “Developing Options for the Administration of Local Taxes: An
International Review” Public Budgeting and Finance, Vol. 27, No. 1 (2007), pp. 4168.
C. User Charges
*Bahl and Linn, Chapter 9, skim Chapters 10-11.
**R. Bird, “User Charges in Local Government Finance,” Washington, DC: World
Bank Institute, 2000.
**A. Hillman and E. Jenkner, “User Payments for Basic Education in Low-Income
Countries,” in Gupta, Clements and Inchauste (2004), pp. 233-264.
Supplementary
A. Sepehri and R. Chernomas, “Are User Charges Efficiency- and Equity-Enhancing?
A Critical Review of Economic Literature with Particular Reference to Experience
from Developing Countries. Journal of International Development, Vol. 13 (2001),
pp. 183–209.
R. Bird and T. Tsiopoulos. “User Charges for Public Services: Potentials and
Problems.” Canadian Tax Journal Vol. 45, No. 1 (1995), pp. 25-86.
11
R. Kattan and N. Burnett. User Fees in Primary Education. (Washington, DC: The
World Bank, 2004).
A. Sepheri and R. Chernomas, “Are User Charges Efficiency- and Equity-Enhancing?
A Critical Review of Economic Literature with Particular Reference to Experience
from Developing Countries,” Journal of International Development, Vol. 13 (2001),
No. 2, pp. 183-209.
E. Jimenez, "Social Sector Pricing Policy Revisited: A Survey of Some Recent
Controversies," Proceedings of the World Bank Annual Conference on Development
Economics (Washington, D.C.: The World Bank, 1990).
P. Gertler and J. van der Gaag, The Willingness to Pay for Medical Care: Evidence
from Two Developing Countries, A World Bank Publication (Baltimore, MD: Johns
Hopkins University Press, 1990).
D. Anderson, "Infrastructure Pricing Policies and the Public Revenue in African
Countries," World Development, Vol. 17, No. 4 (1989), pp. 525-542.
IV. Intergovernmental Transfers (March 8)
*Bahl and Linn, Chapter 13.
**R. Bird and M. Smart, “Intergovernmental Fiscal Transfers: International Lessons
for Developing Countries,” World Development, Vol. 30, No. 6 (2002), pp. 899-912.
**L. Schroeder and P. Smoke, “Intergovernmental Fiscal Transfers: Concepts,
International Practice and Policy Issues,” in P. Smoke and Y.H. Kim, eds.,
Intergovernmental Fiscal Transfers in Asia: Current Practice and Challenges for the
Future (Manila: Asian Development Bank Press, 2003)
**A. Shah, “A Practitioners Guide to Intergovernmental Transfers,” in A. Shah and
R. Boadway, eds. Intergovernmental Fiscal Transfers: Theory and Practice.
(Washington, DC: The World Bank, 2007), pp. 1-55.
**A. Reschovsky, “Intergovernmental Transfers: the Equitable Share,” in Bahl and
Smoke (2003).
Supplementary
A. Shah and R. Boadway, eds. Intergovernmental Fiscal Transfers: Theory and
Practice. (Washington, DC: The World Bank, 2007).
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R. Bahl, “Intergovernmental Fiscal Transfers in Developing Countries: Principles and
Practice,” Urban and Local Government Background Series, No. 2 (Washington, DC:
The World Bank, 2000).
J. Martinez-Vazquez and J. Boex, “The Design of Equalization Grants: Theory and
Practice,” (Washington, DC: The World Bank Institute, 2002).
J. Boex and J. Martinez-Vazquez, “Designing Intergovernmental Equalization
Transfers with Imperfect Data: Concepts, Practices, and Lessons.” In J. MartinezVazquez and R. Searle, eds. Challenges in the Design of Fiscal Equalization and
Intergovernmental Transfers. (New York, NY: Springer, 2007).
E. Caldeira, “Does the System of Allocation of Intergovernmental Transfers in
Senegal Eliminate Politically Motivated Targeting?” Journal of African Economies,
Vol. 21, No. 1 (2011).
J. Ma, “Intergovernmental Fiscal Transfers in Nine Countries: Lessons for
Developing Countries.” Policy Research Working Papers No. 1822 (Washington, DC:
The World Bank, 1997).
V. Subnational Government Borrowing and Privatization (March 29)
A. Subnational Government Borrowing
**M. Friere and J. Petersen, eds., Subnational Capital Markets in Developing
Countries: From Theory to Practice (Oxford University Press, 2004), Chapters 1,13.
**G. Peterson, “Building Local Credit Institutions,” Urban and Local Government
Background Series, No. 3 (Washington, DC: The World Bank, 2000).
**B. Lewis, “On-lending in Indonesia: Past Performance and Future Prospects,”
Bulletin of Indonesian Economic Studies, Vo. 43, No. 1 (2007), pp. 35-57.
**P. Smoke, "Improving Infrastructure Finance in Developing Countries through
Grant-Loan Linkages," International Journal of Public Administration, Vol. 22, No.
12 (1999), pp. 1561-1585.
Supplementary
C. Martell and G. Guess, “Development of Local Government Debt Financing
Markets: Application of a Market-Based Framework.” Public Budgeting & Finance,
Vol. 26 (2006), pp. 88–119.
13
P. Venkatachalam, “Innovative Approaches to Municipal Infrastructure Financing: A
Case Study on Tamil Nadu, India.” Development Studies Institute Working Papers,
No. 05-68. (London: London School of Economics and Political Science, 2005).
J. Leigland and R. Thomas. “Municipal Bonds as Alternatives to PPPs: Facilitating
Direct Municipal Access to Private Capital.” Development in Southern Africa, Vol.
16. No. 4 (1999), pp. 729-750.
T. Ter-minassian and J. Craig, "Control of Subnational Borrowing," in Ter-minassian
(1997), pp. 156-174.
J. Peterson with J. Crihfield, “Linkages between Local Governments and Financial
Markets: A Tool Kit for Developing Sub-sovereign Credit Markets in Emerging
Economies,” Urban and Local Government Background Series, No. 1 (Washington,
DC: The World Bank, 2000).
B. Privatization of Local Public Services
**I. Kessides, “Infrastructure Privatization and Regulation: Promises and Perils,”
World Bank Research Observer, Vol. 20, No. 1 (Spring 2005), pp. 81-108.
**D. Rondinelli and J.D. Kasarda, "Privatization of Urban Services and Infrastructure
in Developing Countries" in J. Kasarda and A. Parnell, Third World Cities: Problems,
Policies and Prospects (Newbury Park, CA: Sage Publications, 1993), pp. 134-160.
**J. Tan, Infrastructure Privatization: Oversold, Misunderstood and Inappropriate.”
Development Policy Review, Vol. 20, No. 1 (2011), pp. 47-74.
Supplementary
M. Warner. “Reversing Privatization, Rebalancing Government Reform: Markets,
Deliberation and Planning.” Policy and Society, Vol. 13 (2008).
Public-Private Infrastructure Advisory Facility and the World Bank. Approaches to
Private Participation in Water Services. (Washington, DC: The World Bank, 2006).
J. Prager, "Is Privatization a Panacea for LDCs? Market Failure versus Public Sector
Failure" The Journal of Developing Areas (April 1992), pp. 301-322.
J.D. Donahue, The Privatization Decision: Public Ends, Private Means (New York:
Basic Books, 1989).
G. Roth, The Private Provision of Public Services in Developing Countries (Oxford:
Oxford University Press for the World Bank, 1988).
14
VI. Prospects and Strategies for Fiscal Decentralization (April 12)
A. Linking Components of Intergovernmental Fiscal Reform
**J. Litvack, J. Ahmed, and R. Bird, “Rethinking Decentralization in Developing
Countries,” Poverty Reduction and Economic Management Sector Study Series.
(Washington, DC: The World Bank, 1998).
**K. Eaton and L. Schroeder, “Measuring Decentralization.” In E. Connerley, K.
Eaton and P. Smoke, eds., Making Decentralization Work: Democracy, Development
and Security. (Boulder and London: Lynne Rienner Publishers, 2010), pp. 167-190.
**P. Smoke, R. Bahl, et. al., “Integrating Fiscal Decentralization Reforms and the
Challenge of Implementation,” in Bahl and Smoke (2003).
B. Strategically Implementing Broader Intergovernmental Reform
**R. Bahl and J. Martinez-Vazquez, “Sequencing Decentralization.” Policy Research
Working Papers, No. 3914 (Washington, DC: The World Bank, 2006).
**K. Eaton, K. Kaiser and P. Smoke. The Political Economy of Decentralization:
Implications for Aid Effectiveness. (Washington, DC: The World Bank, 2011).
**T. Falleti, “A Sequential Theory of Decentralization: Latin American Cases in
Comparative Perspective,” American Political Science Review Vol. 99, No. 3 August
2005, pp. 327-346.
**P. Smoke, Fiscal Decentralization and Intergovernmental Fiscal Relations:
Navigating a Viable Path to Reform,” in Decentralized Governance: Emerging
Concepts and Practice, edited by G. Shabbir Cheema and Dennis Rondinelli
(Washington, DC: Brookings Press, 2007).
Supplementary
R. White and P. Smoke, “East Asia Decentralizes,” in East Asia Decentralizes:
Making Local Governments Work, (Washington, DC: The World Bank, 2005), pp. 123.
R. Ebel and D. Weist, “Sequencing Subnational Revenue Decentralization,”
(Washington, DC: The World Bank, 2006).
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G. S. Cheema and D. Rondinelli, eds. Decentralized Governance: Emerging Concepts
and Practice (Washington, DC: Brookings Institution Press, 2007).
P. Bardhan and D. Mookherjee, eds., Decentralization and Local Governance in
Developing Countries (Cambridge, MA: MIT Press, 2006).
J. Tendler, Good Government in the Tropics (Baltimore, MD: Johns Hopkins
University Press, 1997).
P. Smoke and B. Lewis, "Fiscal Decentralization in Indonesia: A New Approach to
an Old Idea," World Development, Vol. 24, No. 8 (1996), pp. 1281-1299.
P. Smoke, E. Gomez and G. Peterson, eds. Decentralization in Asia and Latin
America: Towards a Comparative Interdisciplinary Perspective. (Cheltenham:
Edward Elgar Publishing, 2007).
C. Zinnes, Tournament Approaches to Policy Reform: Making Development
Assistance More Effective. (Washington, DC: Brookings Institution Press, 2009).
E. Connerley, K. Eaton and P. Smoke, eds. 2010. Making Decentralization Work:
Democracy, Development and Security, (Boulder, CO: Lynne Rienner Publishers,
2010).
J. Martinez-Vazquez and F. Vaillancourt. eds., Decentralization In Developing
Countries Global Perspectives on the Obstacles to Fiscal Devolution. (Cheltenham,
UK: Edward Elgar Publishing, 2010).
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PADM-GP 2245: Financing Local Governments in Developing Countries
Course Meeting Schedule: Spring 2013
I. Economic and Fiscal Reform in Developing Countries (February 1)
(In-Class Exercise 1 distributed for use on February 15)
Topic 1:
Topic 2:
Topic 3:
Fiscal Policy and Development
Tax Reform
The Fiscal Crisis and Local Governments
II. Theories and Models of Multi-level Government Finance (February 15)
(Team Policy Analysis Assignment distributed; Due March 4 by 12 noon.)
Topic 4:
Topic 5:
Topic 6:
An Overview of Fiscal Federalism
Relevance of Fiscal Federalism for Developing Countries
Expenditure and Revenue Assignment in Developing Countries
III. Sub-national Government Own-Source Revenues (March 1)
(Mid-Term Exam distributed; Due March 11 by class time)
(In-Class Exercise 2)
Topic 7:
Topic 8:
Topic 9:
Property Taxation
Other Local Own-Source Revenues
Local Government User Charges
IV. Intergovernmental Transfers (March 8)
(Individual Policy Assignment distributed; Due March 26 by 12 noon)
(In-Class Exercise 3)
Topic 10:
Intergovernmental Transfers
V. Subnational Government Borrowing and Privatization (March 29)
Topic 11:
Topic 12:
Subnational Borrowing
Privatization of Local Public Services
VI. Prospects and Strategies for Fiscal Decentralization (April 12)
(Final Exam Distributed; Due April 26 by 12 noon)
Topic 13:
Topic 14:
Linking Components of Intergovernmental Fiscal Reform
Strategically Implementing Decentralization and Intergovernmental Reform
Take-home Final Exam or Final Paper: due Friday April 26 by 12 noon.
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