International Center for Public Policy

Eastern Europe & CIS (Regional) - A Review of Fiscal Decentralization Reforms in Selected Transition Economies (2005)

The Andrew Young School’s International Studies Program was contracted by the United Nations Development Program (UNDP) Bratislava Regional Centre to to produce a series of country studies on the state of fiscal decentralization in five transition economies, including Armenia, Croatia, the Republic of Georgia, Macedonia, and Serbia.

The principal objective of the study was to accomplish an all-encompassing review that systematically captured the fiscal decentralization processes in each of the five countries. The study covered the formation of subnational governments; the division (assignment) of expenditure responsibilities between the different levels of government; the assignments of revenues sources to subnational governments; the provision of intergovernmental fiscal transfers as well as the development of a framework for subnational government borrowing.

In addition to the five country reports, the study produced a final report that integrated and synthesized the experiences from these five countries and drew lessons for future decentralization reforms in these countries.

Although each of the five countries has taken their own path to decentralization reform, this comparative framework identifies a number of common weaknesses in the decentralization approaches followed in these transition countries. As such, the study provided a snapshot of fiscal decentralization reforms which served as a useful comparison where these countries stand -individually and as a group- in the spectrum of fiscal decentralization reform.With the goal of securing larger benefits from decentralization reform while minimizing the risks from poor policy decisions, the study emphasizes the need for the international organizations and the donor community to support a comprehensive, consistent and sound framework for (fiscal) decentralization in each of the countries.

Professor Jorge Martinez-Vazquez served as Principal Investigator for the study, with substantial contributions from Professor Jamie Boex and Dr. Andrey Timofeev. Additional contributions were provided by Mr. Marjan Nikolov (President of the Center for Economic Analysis, Macedonia), ISP Associate Michael Schaeffer,and Snezana Stojanovic.

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Project Publications:

The complete report can be downloaded in PDF (194 pages: 699KB) from UNDP's website at:
http://europeandcis.undp.org/files/uploads/LG/FiscalDecentralization2005.pdf

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Project Team:

 Jamie Boex - Tax Policy Expert

 Jorge Martinez-Vazquez - Principal Investigator, Tax Policy Expert

Marjin Nikolov - Tax Policy Expert

Michael Schaeffer - Tax Policy Expert

Snezana Stojanovic - Tax Policy Expert

Andrey Timofeev - Tax Policy Expert

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