Fiscal Federalism and Decentralization

Fiscal federalism involves the use of multiple levels of government to perform public sector activities. Most countries have at least some degree of fiscal federalism, since their public sectors are typically organized into localities, provincial (regional or state) governments, and a national government. However, the precise structures differ from country to country. In some, such as France, the central (national) government has substantial fiscal and administrative control over regional and local governments. In others, such as Brazil, India, and the United States, state governments have considerable authority and account for a large share of all government sector activity. In every nation, legal rules and history play a major role on the pattern of fiscal federalism…