This article provides an analytic framework to guide regimes that are designing or implementing decentralization programs. It is based on a comparison of three Asian cases of fast-track decentralization. The framework suggests that regimes contemplating devolution must face fundamental issues of (1) background support, (2) culture and institutions, and (3) technical design and sequencing. It can be used by regimes to compare the relative difficulty of fundamental challenges to decentralization with their own capacity and potential for effective response. The three regimes responded similarly to the first two issues and differed in how they performed technical activities to implement the decentralization programs. Within this technical sequence, the regimes varied widely in performance. In that the Philippine program has attained better performance so far, the different responses of that regime are significant. More research is required to explain differences in technical performance in the Philippines and other similar programs and to attribute measures of decentralization success to these differences.

Needed is clear guidance on how to develop market-based debt financing systems in transitional and developing countries. We propose an analytical framework useful for identifying constraints to financial development and providing recommendations to overcome constraints to develop municipal financing capacity. The proposed framework is applied to five country case studies: Indonesia, Mexico, Philippines, Poland, and South Africa. The thesis of this paper is that municipal credit market development is related to improvements in the legal/regulatory framework governing local borrowing, the capacity of financial institutions to assess risk, and borrower capacity to support and manage debt.

Policy proposals to balance the budget and to limit government spending assume that budget deficits cause substantial harm, either increasing inflation or crowding out private borrowing from credit markets. These assertions have the support of policymakers across the breadth of the political spectrum, and dominate current political debate on macroeconomie policy. However, macroeconomic theory fails to provide a clearcut causal connection between budget deficits and larger economic problems such as inflation and recession. Thus, policies could be enacted that attack the symptoms instead of the causes of the deficit.We use the Granger causality test to find the causal relationships between budget deficits and inflation, GNP, and private investment respectively, for seventeen OECD countries for the period 1949-1981. Deficits do not cause changes in these variables; rather there is weak evidence that inflation and recession cause deficits. This implies that deficits are a symptom rather than a cause of inflation and reduced national output. So, if our goal is to reduce inflation and increase output, we should look to more direct policies than reducing deficits.

This paper examines the important challenge to effective public financial management (PFM) of fiscal risk. In the case of China, a middle-income country with space to borrow, a major source of risk to the central government is exposure from subnational government debts. In order to control this exposure and manage it properly, it is important that the level of debt be included in consolidated balance sheets and that liabilities be recognized. This is important not only for narrow maintenance of financial position (or PFM discipline) purposes but also to increase national welfare. Managing fiscal risks from this broader perspective suggests that governments may want to absorb particular risks for purposes such as: unemployment, old age, and poverty spending. Governments often need to cost-effectively bear some of these risks in order lower social costs and maximize national wellbeing. But to do this properly, the government must know first the stock and flow of its total debt. To date, subnational debts in China have not been properly quantified, and available donor tools such as the Public Expenditure and Financial Accountability (PEFA) framework are weak.key words-measuring public sector fiduciary or fiscal risk; Chinese local government debt; Chinese subnational government; PEFA; aid devolution public administration and development Public Admin. Dev. 35, 128-139 (2015) Published online in Wiley Online Library (wileyonlinelibrary.com)

The failure of forestry to contribute to poverty reduction in Central America is due to public policies which inhibit its profitability. Absence of public regulation of harvesting and competing subsidies to agriculture keep forestry stumpage prices artificially low. This encourages destruction of the forest resource, which damages both the environment and the potential to reduce poverty. A comparison of Costa Rica and Honduras reveals two dissimilar approaches toward forest policy. While Costa Rica attempts to raise producer and grower stumpage prices by tax credits, soft loans and differential species fees, Honduras enforces price ceilings and uses centralized authority to control forest production and export. Both countries exhibit weaknesses in the management control cycle of programming, budgeting, implementing and evaluating their forest policies. Yet the Costa Rican approach has increased stumpage prices already, which bodes well for their forest sector. By contrast, the major beneficiary of Honduran forest policy has been COHDEFOR, the state enterprise responsible for forestry management, controlling production, and running its national system of agroforestry cooperatives. Despite greater public authority and resources than the Costa Rican forest service (DGF), the Honduran forest policy is not likely to increase producer profitability or reduce poverty in the near future.