Local Governance in Industrial Countries (Public Sector Governance and Accountability)

398 Pages·2006·1.87 MB·English

by  Anwar Shah

PUBLIC SECTOR
GOVERNANCE AND
ACCOUNTABILITY SERIES
LOCAL GOVERNANCE
IN
INDUSTRIAL COUNTRIES
Edited by ANWAR SHAH

LOCAL GOVERNANCE
IN
INDUSTRIAL COUNTRIES
Introduction to the Public Sector Governance and Accountability Series
Anwar Shah,Series Editor
A well-functioning public sector that delivers quality public services consistent with citizen pref-
erences and that fosters private market-led growth while managing fiscal resources prudently is
considered critical to the World Bank’s mission ofpoverty alleviation and the achievement of
the Millennium Development Goals.This important new series aims to advance those objec-
tives by disseminating conceptual guidance and lessons from practices and by facilitating
learning from each others’experiences on ideas and practices that promote responsive(by
matching public services with citizens’preferences),responsible(through efficiency and equity
in service provision without undue fiscal and social risk),and accountable(to citizens for all
actions) public governance in developing countries.
This series represents a response to several independent evaluations in recent years that
have argued that development practitioners and policy makers dealing with public sector
reforms in developing countries and,indeed,anyone with a concern for effective public gov-
ernance could benefit from a synthesis ofnewer perspectives on public sector reforms.This
series distills current wisdom and presents tools of analysis for improving the efficiency,
equity,and efficacy ofthe public sector.Leading public policy experts and practitioners have
contributed to this series.
The first 13 volumes in this series, listed below, are concerned with public sector
accountability for prudent fiscal management;efficiency,equity,and integrity in public serv-
ice provision;safeguards for the protection ofthe poor,women,minorities,and other dis-
advantaged groups;ways ofstrengthening institutional arrangements for voice,choice,and
exit;means ofensuring public financial accountability for integrity and results;methods of
evaluating public sector programs,fiscal federalism,and local finances;international prac-
tices in local governance;and a framework for responsive and accountable governance.
Fiscal Management Participatory Budgeting
Public Services Delivery Budgeting and Budgetary Institutions
Public Expenditure Analysis Local Budgeting and Financial
Management
Local Governance in Industrial Countries
Tools for Public Sector Evaluations
Local Governance in Developing
Countries Accountability for Performance
Macrofederalism and Local Finances
Intergovernmental Fiscal Transfers:
Principles and Practice Citizen-Centered Governance
PUBLIC SECTOR
GOVERNANCE AND
ACCOUNTABILITY SERIES
LOCAL GOVERNANCE
IN
INDUSTRIAL COUNTRIES
Edited by ANWAR SHAH
THE WORLD BANK
Washington,D.C.
©2006 The International Bank for Reconstruction and Development / The World Bank
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Washington,DC 20433
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This volume is a product ofthe staffofthe International Bank for Reconstruction and
Development / The World Bank.The findings,interpretations,and conclusions expressed
in this volume do not necessarily reflect the views ofthe Executive Directors ofThe World
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ISBN-10:0-8213-6328-X
ISBN-13:978-0-8213-6328-7
eISBN-10: 0-8213-6329-8
eISBN-13: 978-0-8213-6329-4
DOI:10.1596/978-0-8213-6328-7
Library ofCongress Cataloging-in-Publication Data
Local governance in industrial countries / edited by Anwar Shah.
p.cm.– (Public sector governance and accountability series)
Includes bibliographical references and index.
ISBN-13:978-0-8213-6328-7
ISBN-10:0-8213-6328-X
1. Local finance–OECD countries. 2. Local administration–OECD countries. 3.
Finance,Public–OECD countries.4.Public administration–OECD countries.I.Shah,
Anwar.II.Series.
HJ9105.L618 2006
336'.0141722-dc22
2005057766
Contents
Foreword xv
Preface xvii
Acknowledgments xix
Contributors xxi
Abbreviations and Acronyms xxv
CHAPTER
1 A Comparative Institutional Framework for
Responsive, Responsible, and Accountable
Local Governance 1
by Anwar Shah
Introduction:Local Government and
Local Governance 1
The Theory:Conceptual Perspectives on Local
Governance and Central-Local Relations 3
The Practice: Alternative Models ofLocal Governance
and Central-Local Relations 21
A Comparative Overview ofLocal Government
Organization and Finance in Industrial
Countries 27
Concluding Remarks 36
Acknowledgments 36
References 38
v
vi Contents
2 Local Government Organization and Finance:
Canada 41
by Melville L.McMillan
Municipal Government Responsibilities Associated
with Expenditures 45
Municipal Government Revenues 49
Municipal Government Borrowing 60
Recent Developments 62
An Overall Assessment ofMunicipal Government Finances 70
Lessons for Developing and Other Countries 75
Notes 78
References 80
3 Local Government Organization and Finance:
France 83
by Rémy Prud’homme
Jurisdictions 83
Economic Weight 85
Governance 87
Local Government Expenditure Responsibilities 89
Local Government Own-Source Taxes and Charges 93
Central-Local Fiscal Transfers 100
Local Government Borrowing 106
Local Government Administration 110
Conclusion 111
Notes 114
References 115
4 Local Government Organization and Finance:
Germany 117
by Jan Werner
Historical Development 119
Financial Situation ofthe Local Administrative Bodies:Problems
and Reform Proposals Presented So Far 122
Contents vii
Local Financial Equalization between the Federal States and
Municipalities 135
Illustration:The Equalization System in Hesse 135
Local Government Borrowing 138
Local Government Administration 141
Local Tax Administration 141
Conclusion and Policy Implications 142
Notes 144
References 146
5 Local Government Organization and Finance:
Japan 149
by Nobuki Mochida
An Overview ofJapan’s Local Government 150
Expenditure Responsibilities 152
Tax Assignment between Central and Local Governments 155
Specific-Purpose Grants 165
Fiscal Equalization System 169
Local Bond and Borrowing 179
References 187
6 Local Government Organization and Finance:
New Zealand 189
by Brian Dollery
Overview ofthe Current Local Government System 189
Local Government Expenditure Responsibilities 194
Local Government Own-Source Taxes and Charges 196
Shared Taxes 198
Intergovernmental Fiscal Transfers 199
Local Government Borrowing 200
Local Government Administration 201
Overall Assessment ofLocal Government Finances 202
Lessons for Developing Countries 209
Notes 221
References 221
viii Contents
7 Local Government Organization and Finance: Nordic
Countries 223
by Jørgen Lotz
Legal and Organizational Frameworks:The Development
ofNordic Decentralization 226
Size and Structure ofLocal Governments:Amalgamations and the
Alternatives 230
Decentralizing Expenditure 234
Decentralizing Revenues 235
Borrowing 243
The Role ofGeneral,Specific,and Discretionary Grants 245
Horizontal Imbalances and Equalization 249
The Calculation ofExpenditure Needs 252
Summary and Conclusions 255
Notes 259
References 261
8 Local Government Organization and Finance:
United Kingdom 265
by David King
The Component Countries ofthe United Kingdom 265
A Comment on Recent Reforms 266
An Overview ofthe Current Local Government System 267
Local Government Expenditure Responsibilities 281
Local Government Own-Source Taxes and Charges 285
Intergovernmental Fiscal Transfers 291
Local Government Borrowing and Other Capital Revenues 303
Local Government Administration 306
An Overall Assessment 306
Lessons for Developing Countries 309
Notes 311
References 311
9 Local Government Organization and Finance:
United States 313
by Larry Schroeder
Organization ofSubnational Governments 314