Robin Boadway and Anwar Shah. Fiscal Federalism, Principles and Practice of Multiorder Governance.
Article Type: Book review
Subject: Books (Book reviews)
Author: Khan, Abdul Qayyum
Pub Date: 06/22/2009
Publication: Name: Pakistan Development Review Publisher: Pakistan Institute of Development Economics Audience: Academic Format: Magazine/Journal Subject: Business, international; Social sciences Copyright: COPYRIGHT 2009 Reproduced with permission of the Publications Division, Pakistan Institute of Development Economies, Islamabad, Pakistan. ISSN: 0030-9729
Issue: Date: Summer, 2009 Source Volume: 48 Source Issue: 2
Topic: NamedWork: Fiscal Federalism, Principles and Practice of Multiorder Governance (Nonfiction work)
Persons: Reviewee: Boadway, Robin; Shah, Anwar
Accession Number: 242017207
Full Text: Robin Boadway and Anwar Shah. Fiscal Federalism, Principles and Practice of Multiorder Governance. Cambridge University Press. 2009. 620 pages. Hardbound. US$ 26.95.

The concept of fiscal federalism has drawn much attention over the last three decades. Developments like globalisation and conflicts, local as well regional, have made it crucial to revisit the question of the division of responsibilities amongst various tiers of the government, argue the authors. The book evaluates the merits and demerits of decentratisation and highlights the trade-offs involved in making the right choice between centralisation and decentralisation. The standard criticisms of fiscal federalism are; causes macroeconomic instability, augments regional disparities, and promotes corruption. The authors rebut these criticisms convincingly and argue that a decentralised fiscal system presents the most viable way for improving macroeconomic governance and regional fiscal equity.

The authors present various models of federalism by differentiating between unitary forms and federal forms of constitutions. The local governance models of developed countries discussed in the book furnish lessons for fiscal reform in developing countries. The authors point out that the disparity between the revenue means and expenditures needs of the lower tiers of government is common in countries which have adopted a federalist structure. Such fiscal gaps, they argue, should be eased by transferring federal sources of revenue to the sub-national governments. The authors favour lesser reliance on intergovernmental transfers by the sub-national governments. They point out that in OECD countries, inter-governmental transfers, on average, constitute only about one- third of the sub-national expenditures, whereas this figure is as high as 60 per cent for developing countries. The authors recommend lesser inter-governmental transfers as the aim as this allows greater autonomy to the lower tiers of the government.

Talking about the function of sub-national governments, the authors emphasise that local governance not only involves providing local services, like sanitation and street lightning, but also includes protecting the life and liberty of the citizens. The authors view the expenditures on health and education as the most essential amongst the various kinds of public expenditures at the local level. They argue that the decentralised process of decision-making should lead to the kind of public service delivery that is consistent with local preferences

The book summarises the vast and varied literature on the construction of fiscal constitutions and their implementation. It suggests that as the fiscal constitutions sketch the process of revenue generation and expenditures at various tiers of government, therefore, regulatory checks should be part and parcel of the fiscal constitution for responsible, decentralised governance.
Gale Copyright: Copyright 2009 Gale, Cengage Learning. All rights reserved.