Fiscal Decentralisation and Inclusive Growth in Asia

image of Fiscal Decentralisation and Inclusive Growth in Asia

This report looks at the challenges faced by Asian countries in addressing inclusive growth and fiscal decentralisation. A series of studies examines how policies in the region have evolved in accordance with changes in demography and the economic environment, reflecting country characteristics, history and political economy forces.



Fiscal decentralisation and inclusive growth: The role of institutional context in selected Asian economies

There is increasing interest in the question of whether decentralisation promotes inclusive and equitable development. Evidence is limited and the results are highly variable. The premise of the chapter is that a first step in addressing this question is to document how decentralisation works. Although an important public sector reform in Asia, decentralisation is organized and operates in diverse ways that reflect differences in country characteristics, histories and political economy forces. This chapter briefly examines key aspects of decentralisation in selected Asian countries—the intergovernmental system structure and decentralisation framework, the degree of fiscal empowerment and decision-making autonomy, and the level of accountability reflected in the local political system, among others. Each of these features has potential implications for inclusive development, although how they interact, the results they generate, and their dependence on other public policies may differ across countries.  Given the diversity, complexity and information gaps involved, few policy generalisations beyond relatively broad statements can be made. More work is needed to establish an evidence base on the role that fiscal decentralisation—supported by other institutional and political reforms—can potentially play in inclusive development in Asia.


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