After decentralization: Patterns of intergovernmental conflict in Argentina, Brazil, Spain, and Mexico

Publius: The Journal of Federalism

Volumn 31, Issue 4, 2001, Pages 43-63

  Montero, Alfred P ^a  

^a NONE

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[No Author keywords available]

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EID: 0039299853     PISSN: 00485950     EISSN: None     Source Type: Journal    
DOI: 10.1093/oxfordjournals.pubjof.a004920     Document Type: Article

References (82)

1. See Inter-American Development Bank (IDB), Latin America After a Decade of Reforms (Washington, DC: IDB, 1997); IDB, Economic and Social Progress in Latin America, 1994 Report. Special Report: Fiscal Decentralization (Washington, DC: IDB, 1994); Ricardo López Murphy, ed., Fiscal Decentralization in Latin America (Washington, DC: IDB, 1995).
2. See Inter-American Development Bank (IDB), Latin America After a Decade of Reforms (Washington, DC: IDB, 1997); IDB, Economic and Social Progress in Latin America, 1994 Report. Special Report: Fiscal Decentralization (Washington, DC: IDB, 1994); Ricardo López Murphy, ed., Fiscal Decentralization in Latin America (Washington, DC: IDB, 1995).
3. See Inter-American Development Bank (IDB), Latin America After a Decade of Reforms (Washington, DC: IDB, 1997); IDB, Economic and Social Progress in Latin America, 1994 Report. Special Report: Fiscal Decentralization (Washington, DC: IDB, 1994); Ricardo López Murphy, ed., Fiscal Decentralization in Latin America (Washington, DC: IDB, 1995).
4. Eliza Willis, Christopher da C. B. Garman, and Stephan Haggard, "The Politics of Decentralization in Latin America," Latin American Research Review 34 (1999): 8.
5. Christopher Garman, Stephan Haggard, and Eliza Willis, "Fiscal Decentralization: A Political Theory with Latin American Cases," World Politics 53 (January 2001): 207.
6. Ibid., 209.
7. Arend Lijphart, Patterns of Democracy: Government Forms and Performance in Thirty-Six Countries (New Haven, CT: Yale University Press, 1999), p. 192.
8. Scott Mainwaring and David J. Samuels, "Federalism, Constraints on the Central Government, and Economic Reform in Democratic Brazil," (paper presented at the conference on Federalism, Democracy, and Public Policy, Centro de Investigación y Docencia Económicas, Mexico City, June 1999).
9. David J. Samuels, "Careerism and its Consequences: Federalism, Elections, and Policy-Making in Brazil," (Ph.D. diss., University of California, San Diego, 1998).
10. Garman et al., "Fiscal Decentralization."
11. Kathleen M. O'Neill, "Changing Decentralization in Bolivia: Electoral Incentives and Outcomes," (paper presented at the conference on Decentralization in Latin America, University of Minnesota, Minneapolis, February 2000).
12. Shadid J. Burki, G. E. Perry, and W. R. Dillinger, Beyond the Center: Decentralizing the State (Washington, DC: World Bank, 2000). On the role of "crises effects," see Roy Bahl and Johannes Linn, Urban Public Finance in Developing Countries (New York: Oxford University Press, 1992), pp. 392-393.
13. Shadid J. Burki, G. E. Perry, and W. R. Dillinger, Beyond the Center: Decentralizing the State (Washington, DC: World Bank, 2000). On the role of "crises effects," see Roy Bahl and Johannes Linn, Urban Public Finance in Developing Countries (New York: Oxford University Press, 1992), pp. 392-393.
14. It was not until 1989 that an opposition party assumed control of the first state governorship (the PAN in Baja California Norte). By early 1999, the opposition had won seven more state governorships.
15. Victoria E. Rodríguez, "The Politics of Decentralization in Mexico: From Municipio Libre to Solidaridad," Bulletin of Latin American Research 12 (1993): 134.
16. The 1980 reform changed the tax system, granting the states the task of collecting the federal value-added tax (impuesto at valor agregado - IVA), which substituted for the federal sales tax (impuesto sobre ingresos mercantiles - ISIM). The states would then forward IVA revenues to the federal treasury that would then transfer a portion of these resources to the states and municipalities according to a national formula. The states were also required to transfer 20 percent of the federal revenues they collected to the municipalities. Under the new Ley de Coordinación Fiscal, federal transfers were organized into three funds -the Fondo General de Participaciones (FGP), the Fondo Financiero Complementário (FFC), and the Fondo de Fomento Municipal (FFM). A reform in 1990 grouped the FGP and the FFC into a single fund that retained the name FGP. The 1990 reform also centralized collection of the IVA.
17. Alberto Díaz Cayeros, Desarrollo económico e inequidad regional: Hacia un nuevo pacto federal en México (Mexico City: Miguel Ángel Porrúa, 1995), pp. 81-82.
18. Although these contracts were "voluntary," the states' failure to adhere to them would require the surrender of all claims to federal funding. See Emily Edmonds Elías, "Fiscal Decentralization and Municipal Governance in Mexico: The Case of Chihuahua," (paper presented at the annual meeting of the Latin American Studies Association, Guadalajara, Mexico, April 1997).
19. William Dillinger, Guillermo Perry, and Steven B. Webb, "Macroeconomic Management in Decentralized Democracies: The Quest for Hard Budget Constraints in Latin America," (paper presented at the annual meeting of the Latin American Studies Association, Miami, March 2000), 20-21.
20. Alberto Díaz Cayeros, "Do Federal Institutions Matter? Rules and Political Practices in Mexico" (paper presented at the conference on Federalism, Democracy, and Public Policy, Centro de Investigación y Docencia Económicas, Mexico City, June 1999).
21. Victoria E. Rodríguez, Decentralization in Mexico: From Reforma Municipal to Solidaridad to Nuevo Federalismo (Boulder, CO: Westview Press, 1997).
22. Peter M. Ward and Victoria E. Rodríguez, New Federalism and State Government in Mexico: Bringing the States Back In (Austin, TX: University of Texas, 1999), pp. 97-124.
23. These were initially organized as Convenios Unicos de Desarrollo (CUDs) but were later renamed Convenios de Desarrollo Social (CDSs) during the Salinas sexenio.
24. Díaz Cayeros, "Do Federal Institutions Matter?"
25. SEDESOL was created to replace SPP in 1992. During the Salinas sexenio both PRONASOL, and the CDSs and their "planning cells" functioned simultaneously. Once funded by the Treasury with federal transfers, SEDESOL, along with governors and federal agency officials involved with the local "planning cells," selected candidate municipalities for PRONASOL funding. The Zedillo administration slashed SEDESOL funding and redirected funds to municipal governments through targeted federal grants (ramo 33). For more on federal and partisan control over PRONASOL/SEDESOL, see Juan Molinar Horcasitas and Jeffrey A. Weldon, "Electoral Determinants and Consequences of National Solidarity," Transforming State-Society Relations in Mexico: The National Solidarity Strategy, eds. Wayne Cornelius, Ann L. Craig, and Jonathan Fox (La Jolla: University of California, San Diego, 1994); Kathleen Bruhn, "Social Spending and Political Support: The 'Lessons' of the National Solidarity Program in Mexico," Comparative Politics 28 (January 1996): 151-177.
26. SEDESOL was created to replace SPP in 1992. During the Salinas sexenio both PRONASOL, and the CDSs and their "planning cells" functioned simultaneously. Once funded by the Treasury with federal transfers, SEDESOL, along with governors and federal agency officials involved with the local "planning cells," selected candidate municipalities for PRONASOL funding. The Zedillo administration slashed SEDESOL funding and redirected funds to municipal governments through targeted federal grants (ramo 33). For more on federal and partisan control over PRONASOL/SEDESOL, see Juan Molinar Horcasitas and Jeffrey A. Weldon, "Electoral Determinants and Consequences of National Solidarity," Transforming State-Society Relations in Mexico: The National Solidarity Strategy, eds. Wayne Cornelius, Ann L. Craig, and Jonathan Fox (La Jolla: University of California, San Diego, 1994); Kathleen Bruhn, "Social Spending and Political Support: The 'Lessons' of the National Solidarity Program in Mexico," Comparative Politics 28 (January 1996): 151-177.
27. Wayne A. Cornelius, "Subnational Politics and Democratization: Tensions between Center and Periphery in the Mexican Political System," Subnational Politics and Democratization in Mexico, eds. Wayne A. Cornelius, Todd A. Eisenstadt, and Jane Hindley (La Jolla: University of California, San Diego, 1999), pp. 3-16.
28. Evidence of this is the fact that the major contenders for the presidency in 2000, including the two primary candidates of the PRI in 1999, held gubernatorial office prior to their campaigns.
29. Díaz Cayeros, "Do Federal Institutions Matter?"
30. Miguel Centeno, "The Failure of Presidential Authoritarianism: Transition in Mexico," Politics, Society, and Democracy: Latin America, eds. Scott Mainwaring and Arturo Valenzuela (Boulder, CO: Westview Press, 1998), pp. 39-43.
31. Jeffrey Weldon, "Political Sources of Presidencialismo in Mexico," Presidentialism and Democracy in Latin America, eds. Scott Mainwaring and Matthew Soberg Shugart (New York: Cambridge University Press, 1997), pp. 225-258.
32. Delia Boylan, "Democratization and Institutional Change in Mexico: The Logic of Partial Insulation" (paper presented at the annual Latin American Studies Association, Chicago, September (revised), 1999).
33. Carol Wise, "NAFTA, Mexico, and the Western Hemisphere," The Post-NAFTA Political Economy: Mexico and the Western Hemisphere, ed. Carol Wise (University Park: Pennsylvania State University Press, 1998), pp. 14-15.
34. Denise Dresser, "Falling From the Tightrope: The Political Economy of the Mexican Crisis," Mexico 1994: Anatomy of an Emerging-Market Crash, eds. Sebastian Edwards and Moisés Naím (Washington, DC: Carnegie Endowment, 1997), pp. 55-79.
35. Denise Dresser, "Post-NAFTA Politics in Mexico," The Post-NAFTA Political Economy: Mexico and the Western Hemisphere, ed. Wise, p. 225.
36. Ward and Rodríguez, New Federalism, pp. 159-170.
37. Paul Heywood, "Governing in a New Democracy: The Power of the Prime Minister in Spain," West European Politics 14 (April 1991): 97-115.
38. Nancy Bermeo and José García-Durán, "Spain: Dual Transition Implemented by Two Parties," Voting For Reform: Democracy, Political Liberalization, and Economic Adjustment, eds. Stephan Haggard and Steven B. Webb (New York: Oxford University Press, 1994), pp. 118-120.
39. Raymond Carr and Juan Pablo Fusi, Spain: Dictatorship to Democracy (London: Allen and Unwin, 1981).
40. Robert Agranoff, "Federal Evolution in Spain," International Political Science Review 17 (1996); César Enrique Diaz-López, "The State of the Autonomic Process in Spain," Publius: The Journal of Federalism 11 (Summer 1981): 385-401.
41. Robert Agranoff, "Federal Evolution in Spain," International Political Science Review 17 (1996); César Enrique Diaz-López, "The State of the Autonomic Process in Spain," Publius: The Journal of Federalism 11 (Summer 1981): 385-401.
42. The latter included extensive responsibilities in education and health care in addition to housing, transportation, environmental protection, infrastructure, welfare, and economic development, areas in which all 17 autonomous regions share responsibility with the central government. For a thorough review of shared and exclusive powers, see Robert Agranoff and Juan Antonio Ramos Gallarín, "Toward Federal Democracy in Spain: An Examination of Intergovernmental Relations," Publius: The Journal of Federalism 27 (Fall 1997): 1-38.
43. 38 Beginning with a landmark decision in August 1983 and continuing in a series of subsequent cases, the Constitutional Tribunal, the supremejudicial body of Spain, interpreted the Constitution as granting the regional statutes the status of "higher law," thereby limiting national control over regional policy-making.
44. José Luis Curbelo, "Las regiones en la transición española," Revista Latinoamericana de Estudios Urbano Regionales (EURE) 20 (December 1994): 7.
45. Agranoff, "Federal Evolution in Spain," 388-389.
46. The "autonomous communities" receive their financing from five sources stipulated by the Constitution and then later elaborated upon by LOFCA: 1) taxes ceded by the central state in part or completely; 2) autonomously administered regional taxes; 3) fiscal transfers from the central state that are either earmarked in the annual budget of Spain or are unearmarked; 4) all profits and capital produced by firms and agencies owned by the regional governments; and 5) all financial operations administered by the regional governments, including debt, which cannot exceed 25 percent of total revenues. In turn, the regional governments are required to transfer 20 percent of the federal grants they receive to the municipalities.
47. Agranoff and Ramos Gallarín, "Toward Federal Democracy in Spain."
48. Jordi Rosell and Lourdes Viladomiu, "La política regional en los ochenta: ¿coutinuidad o ruptura?" La reestructuración del capitalismo en España, 1970-1990, ed. M. Etxezarreta (Barcelona: Economía Crítica, 1991), pp. 286-287.
49. A. Jiménez-Blanco, "La distribución de competencias económicas entre el estado y las Comunidades Autónomas," La reestructuración del capitalismo en España, 1970-1990, ed. Etxezarreta, pp. 381-410.
50. José María Serrano Sanz, "La intervención económica en el Estado de las Autonomías," España: Economía, ed. José Luis García Delgado (Madrid: Espasa-Calpe, 1988), pp. 511-512.
51. Miquel Navarro Arancegui, Política de reconversión: balance crítico (Madrid: EUDEMA, 1990); W. Rand Smith, The Left's Dirty Job: The Politics of Industrial Restructuring in France and Spain (Pittsburgh: University of Pittsburgh Press, 1998).
52. Miquel Navarro Arancegui, Política de reconversión: balance crítico (Madrid: EUDEMA, 1990); W. Rand Smith, The Left's Dirty Job: The Politics of Industrial Restructuring in France and Spain (Pittsburgh: University of Pittsburgh Press, 1998).
53. Segundo Brú Parra, "La dimensión espacial de la política industrial," Economía Industrial (March-April 1988): 42.
54. Author interview with Óscar Fanjul, REPSOL chief and former advisor to Solchaga, July 18, 1994, Madrid; author interview with Gervásio Cordero Mestanza, Subdirector General of Regional Planning, Ministry of Economy, July 11, 1994, Madrid; and author interview with César Molinas Sans, Director General of Planning, Ministry of Economy, July 11, 1994, Madrid.
55. Juan F. Corona, Luis M. Alonso, and Pedro Puy, Hacia un federalismo competitivo: Propuesta para reformar el sistema de financiación autonómica (Madrid: Círculo de Empresarios, 1998), p. 52.
56. Carlos Monasterio Escudero, "Los límites al endeudamiento de los gobiernos subcentrales: Teoría y evidencia para el caso español," Papeles de Economía Española 67 (1996): 279.
57. Corona et al., Hacia un federalismo competitivo, p. 55.
58. El País, 14 October 1992.
59. "Survey: Spain, A Country of Many Faces," The Economist 25 November 2000, pp. 6-7.
60. The federal government collects most taxes and distributes revenues according to a formula.
61. In 1987, victories in 12 of 22 governorships and provincial assemblies, which elect two delegates each to the Senate, allowed the Peronists to control the upper house.
62. Dillinger et al., "Macroeconomic Management in Decentralized Democracies," 13.
63. Kent Eaton, "Political Obstacles to Decentralization in Argentina and the Philippines" (paper presented at the annual meeting of the Latin American Studies Association, Chicago, September 1998), 4-5.
64. Kent Eaton, "Decentralization, Democratization, and Liberalization: The History of Revenue Sharing in Argentina" (paper presented at the conference Decentralization and Democracy in Latin America, University of Minnesota, Minneapolis, February 2000), 27; Larry Sawers, The Other Argentina: The Interior and National Development (Boulder, CO: Westview Press, 1996), pp. 241-248.
65. Kent Eaton, "Decentralization, Democratization, and Liberalization: The History of Revenue Sharing in Argentina" (paper presented at the conference Decentralization and Democracy in Latin America, University of Minnesota, Minneapolis, February 2000), 27; Larry Sawers, The Other Argentina: The Interior and National Development (Boulder, CO: Westview Press, 1996), pp. 241-248.
66. Dillinger et al., "Macroeconomic Management in Decentralized Democracies, 14.
67. Steven Levitsky, "From Laborism to Liberalism: Institutionalization and Labor-Based Party Adaptation in Argentina (1983-1997)" (Ph.D. diss., University of California, Berkeley, 1999).
68. Eaton, "Political Obstacles to Decentralization in Argentina and the Philippines."
69. Karen L. Remmer and Erik Wibbels, "The Subnational Politics of Economic Adjustment: Provincial Politics and Fiscal Performance in Argentina," Comparative Political Studies 33 (May 2000): 419-451.
70. Dillinger et al., "Macroeconomic Management in Decentralized Democracies," 14. A significant difference between federal intervention in this case and in Brazil was that the Argentine central government did not bail out indebted states by assuming their debt. It financed provincial service payments at market rates. The one exception was the federalization of provincial pension funds.
71. The Argentine government has made steady progress since the 1994-1995 crisis in getting the provinces to privatize their banks. Only a few have yet to be sold off.
72. David J. Samuels, "The Gubernatorial Coattails Effect: Federalism and Congressional Elections in Brazil," The Journal of Politics 62 (February 2000): 240-253.
73. The 'S' stood for "services," which were subsequently included in the tax.
74. By the end of the 1980s, the Brazilian states had garnered significant control over tax revenues and transfers. Federal tax revenues fell from 70.4 percent of the national share in 1985 to 66.2 percent in the 1990-94 period. By comparison, state tax revenues expanded from 27 to 29.1 percent in the same period. State discretion over resources also expanded. Over 90 percent of intergovernmental transfers went unearmarked and funds generally earmarked for health and education were spent largely at the discretion of the governors. See Celina Souza, Constitutional Engineering in Brazil: The Politics of Federalism and Decentralization (New York: St. Martin's Press, 1997); José Roberto Rodrigues Afonso, "Descentralização Fiscal: Revendo Idéias," Ensaios FEE 15 (1994).
75. By the end of the 1980s, the Brazilian states had garnered significant control over tax revenues and transfers. Federal tax revenues fell from 70.4 percent of the national share in 1985 to 66.2 percent in the 1990-94 period. By comparison, state tax revenues expanded from 27 to 29.1 percent in the same period. State discretion over resources also expanded. Over 90 percent of intergovernmental transfers went unearmarked and funds generally earmarked for health and education were spent largely at the discretion of the governors. See Celina Souza, Constitutional Engineering in Brazil: The Politics of Federalism and Decentralization (New York: St. Martin's Press, 1997); José Roberto Rodrigues Afonso, "Descentralização Fiscal: Revendo Idéias," Ensaios FEE 15 (1994).
76. Lourdes Sola, Christopher Garman, and Moises Marques, "Central Banking, Democratic Governance and Political Authority: The Case of Brazil in a Comparative Perspective," Revista de Economia Política 18 (April/June 1998): 117-121.
77. Between 1997 and 2000, seven state-owned or recently federalized state banks sold (Banerj, Credireal, Bemge, Bandepe, Beneb, Banestado, and Banespa) for $5 billion. Seven more, with assets totaling $8 billion, awaited sale at the end of 2000.
78. Author interview with Levy Pinto de Castro, ex-Finance Director of Rio de Janeiro's and director of state task force on privatization, June 4, 1995, Rio de Janeiro, RJ.
79. For example, Mato Grosso do Sul's governor, José Orcírio Miranda dos Santos ("Zeca") of the Workers' Party, launched a sweeping reform in November 2000 that cut the civil service by 50 percent, capped salary increases, and reduced the number of state secretariats for an annual savings of R$74 million. See "Finanças públicas-Austeridade vira lei no ano do ajuste," Estado de São Paulo, 30 December 2000, p. 4.
80. Liliana Lavoratti, "Atitude paternalista da União prejudica Lei Fiscal," Estado de São Paulo, 4 May 2000.
81. Ricardo Mignone, "Marta diz que goveruo faz 'Carnaval' sobre mudanças em LRF," Folha de São Paulo, 22 March 2001, p. 6.
82. See Steven L. Solnick, "Hanging Separately? Cooptation, Cooptation, and Cheating in Developing Federations" (paper presented at the annual meeting of the American Political Science Association, Boston, MA, September 1998).