Local Governance in Developing Countries

492 Pages·2006·3.07 MB·English

by  Anwar Shah

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

LOCAL GOVERNANCE
IN
DEVELOPING 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 ser-
vice 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
Intergovernmental Fiscal Transfers: Macrofederalism and Local Finances
Principles and Practice Citizen-Centered Governance
PUBLIC SECTOR
GOVERNANCE AND
ACCOUNTABILITY SERIES
LOCAL GOVERNANCE
IN
DEVELOPING COUNTRIES
Edited by ANWAR SHAH
THE WORLD BANK
Washington,D.C.
©2006 The International Bank for Reconstruction and Development / The World Bank
1818 H Street,NW
Washington,DC 20433
Telephone:[phone]
Internet:www.worldbank.org
E-mail:[email protected]
All rights reserved
1 2 3 4 09 08 07 06
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
Bank or the governments they represent.
The World Bank does not guarantee the accuracy ofthe data included in this work.
The boundaries,colors,denominations,and other information shown on any map in this
work do not imply any judgement on the part ofThe World Bank concerning the legal
status ofany territory or the endorsement or acceptance ofsuch boundaries.
Rights and Permissions
The material in this publication is copyrighted.Copying and/or transmitting portions or all
ofthis work without permission may be a violation ofapplicable law.The International Bank
for Reconstruction and Development / The World Bank encourages dissemination ofits
work and will normally grant permission to reproduce portions ofthe work promptly.
For permission to photocopy or reprint any part ofthis work,please send a request with
complete information to the Copyright Clearance Center Inc.,222 Rosewood Drive,Danvers,
MA 01923,USA;telephone:[phone];fax:[phone];Internet:www.copyright.com.
All other queries on rights and licenses, including subsidiary rights, should be
addressed to the Office ofthe Publisher,The World Bank,1818 H Street,NW,Washing-
ton,DC 20433,USA;fax:[phone];e-mail:[email protected].
ISBN-10:0-8213-6565-7
ISBN-13:978-0-8213-6565-6
eISBN-10: 0-8213-6566-5
eISBN-13: 978-0-8213-6566-3
DOI:10.1596/978-0-8213-6565-6
Library ofCongress Cataloging-in-Publication Data
Local governance in developing countries / edited by Anwar Shah.
p.cm.– (Public sector governance and accountability series)
Includes bibliographical references and index.
ISBN-13:978-0-8213-6565-6
ISBN-10:0-8213-6565-7
1.Local finance–Developing countries.2.Local government–Developing countries.
3. Finance, Public–Developing countries. 4. Public administration–Developing
countries.I.Shah,Anwar.II.Series.
HJ9695.L63 2006
320.809172'4-dc22
2005057767
Contents
Foreword xvii
Preface xix
Acknowledgments xxi
Contributors xxiii
Abbreviations and Acronyms xxvii
CHAPTER
1 The New Vision of Local Governance and the
Evolving Roles of Local Governments 1
by Anwar Shah with Sana 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 26
A Comparative Overview ofLocal
Government Organization and Finance
in Selected Developing Countries 33
Concluding Remarks 42
Acknowledgments 44
References 44
v
vi Contents
Africa
2 Local Government Organization and Finance:
South Africa 47
by Chris Heymans
A BriefHistory 47
The Legal Status and Autonomy ofLocal Government 51
Composition ofRevenues and Expenditures:General Patterns 55
The Structure and Administration ofLocal Government 59
Local Government Expenditure Responsibilities 64
Local Governments’Own Taxes and Charges 67
Intergovernmental Transfers 73
Local Government Borrowing 80
Assessment 83
Lessons for Developing Countries 87
Notes 90
References 91
3 Local Government Organization and Finance:
Uganda 93
by Jesper Steffensen
Background 94
Legal Status and Autonomy 94
Structure ofLocal Governments 98
BriefOverview ofRevenue and Expenditures 101
Local Government Expenditures 104
Local Government Revenues 109
Financial Management Capacity 128
Overall Assessment and Lessons 129
Notes 133
References 134
Asia
4 Local Government Organization and Finance:
China 137
by Baoyun Qiao and Anwar Shah
Local Government Expenditure Responsibilities 142
Contents vii
Local Revenues 149
Intergovernmental Fiscal Transfers 155
Local Government Borrowing 160
Local Government Administration 162
An Impressionistic View ofLocal Government
Finances in China 163
Lessons for Developing Countries 165
Notes 166
References 166
5 Local Government Organization and Finance:
Urban India 169
by Om Prakash Mathur
Expenditure Domain ofMunicipalities 172
Revenue Base ofMunicipalities 179
Center-State-Municipal Fiscal Relations 181
Borrowing by Municipal Governments 190
The Finances ofMunicipalities:An Assessment 195
Concluding Remarks 201
Notes 201
References 203
6 Local Government Organization and Finance:
Rural India 205
by V.N.Alok
Evolution ofRural Local Government 205
The Legal Framework 208
Functional Domain 211
Own-Source Taxes 213
Borrowing 219
Intergovernmental Fiscal Transfers 219
National Finance Commission 220
Centrally Sponsored Schemes 224
Fiscal Autonomy versus Dependency 225
Issues and Lessons 227
Notes 229
References 230
viii Contents
7 Local Government Organization and Finance:
Indonesia 233
by Sebastian Eckardt and Anwar Shah
A BriefHistory ofLocal Government in Indonesia 233
Current System ofLocal Governments:Legal,Fiscal,
and Political Overview 235
Local Government Expenditure Responsibilities 240
Local Government Own-Source Taxes and Charges 246
Shared Taxes and Revenues 249
Intergovernmental Fiscal Transfers 250
Local Government Borrowing 260
Local Government Administration 262
An Overall Assessment ofLocal Government
Finances and Organization Reforms 265
Lessons for Developing Countries 268
Notes 271
References 273
Europe and Central Asia
8 Local Government Organization and Finance:
Kazakhstan 275
by Meruert Makhmutova
Local Government Structure in the New Republic 276
Local Government Expenditure Responsibilities 281
Local Governments’Own Taxes and Charges 283
Shared Taxes 285
Intergovernmental Fiscal Transfers 286
Local Government Borrowing 288
Local Government Administration 289
An Overall Assessment ofLocal Government Finances 290
Lessons for Other Developing Countries 291
Annex 8A:Oblast Budget Expenditures 294
Annex 8B:Rayon Budget Expenditures 296
Annex 8C:Oblast Budget Tax and Nontax Revenues 299