Higher-Order Fiscal Transfers to Local Governments: An Overview of Worldwide Practices

  • Harry KitchenEmail author
  • Melville McMillan
  • Anwar Shah


This chapter presents an overview of worldwide practices in higher-order fiscal transfers to local governments with a view to deriving lessons of interest to countries contemplating fiscal system reforms. The chapter presents an overview of the international practice in central/state fiscal transfers to local governments. It draws both positive and negative lessons from the international practice and provides pathways to design such transfers for state governments contemplating reform of their fiscal transfers to local governments.


  1. Adeyemi, Oluwatobi. 2013. Local Government and the Challenges of Service Delivery: The Nigerian Experience. Journal of Sustainable development in Africa 15 (7): 84–98.Google Scholar
  2. Alok, V.N. 2006. Local Government Organization and Finance: Rural India. Chap. 6 in Local Governance in Developing Countries, ed. Anwar Shah, 205–230.Google Scholar
  3. ———. 2008. The Role of State Finance Commissions in Fiscal Decentralization in India. In Fiscal Decentralization in India. New Delhi: Cambridge University Press.Google Scholar
  4. Boadway, Robin, and Anwar Shah. 2007. Intergovernmental Fiscal Transfers: Theory and the Practice. Washington, DC: The World Bank.Google Scholar
  5. ———. 2009. Fiscal Federalism: Principles and Practice of Multi-order Governance. New York and London: Cambridge University Press.CrossRefGoogle Scholar
  6. Boothe, Robert, Shabih Mohib, and Anwar Shah. 2011. Central-Local Fiscal Relations in Thailand. Bangkok: World Bank.Google Scholar
  7. Deryugin, Alexander, and Galina Kurlyandskaya. 2007. Russian Federation. In ed. Shah. op.cit. 235–261.Google Scholar
  8. Kim, Junghun, and Jorgen Lotz, eds. 2008. General Grants Versus Earmarked Grants: Theory and Practice. The Copenhagen Workshop, 2007. Chap. 1, 35–60. Copenhagen: Schultz Grafisk a/s.Google Scholar
  9. Kim, Junghun, Jorgen Lotz, and Niels Jorgen Mau, eds. 2010. General Grants Versus Earmarked Grants: Theory and Practice. The Copenhagen Workshop, 2009. Chap. 2, 74–106. Copenhagen: Rosendahls- Schultz Grafisk a/s.Google Scholar
  10. Mathur, Om Prakash. 2006. Local Government Organization and Finance: Urban India. Chap. 5 in Local Governance in Developing Countries, ed. Anwar Shah, 169–204.Google Scholar
  11. Mohanty, P.K. 2015. Intergovernmental Fiscal System in India. Presentation at the International Seminar on Management of Intergovernmental Fiscal Relations, Thimphu, Bhutan, December 7.Google Scholar
  12. Shah, Anwar. 1991. The New Fiscal Federalism in Brazil. Washington, DC: World Bank.Google Scholar
  13. ———. 1994. The Reform of Intergovernmental Fiscal Relations in Developing and Emerging Market Economies, 1994. Policy and Research Series 23. Washington, DC: World Bank.Google Scholar
  14. ———. 2003. The Reform of Provincial-Local Fiscal Transfers in Pakistan. Unpublished Report, Word Bank, Washington, DC.Google Scholar
  15. ———. 2007a. A Practitioner’s Guide to Intergovernmental Fiscal Transfers. Chap. 1 in Intergovernmental Fiscal Transfers, ed. Robin Boadway, and Anwar Shah, 1–54. Washington, DC: World Bank.Google Scholar
  16. ———, ed. 2007b. The Practice of Fiscal Federalism: Comparative Perspectives. Montreal and London: McGill-Queen’s University Press.Google Scholar
  17. ———. 2012. Autonomy with Equity and Accountability: Towards a More Transparent, Objective, Predictable and Simpler (TOPS) System of Central Financing of Provincial-Local Expenditures in Indonesia. World Bank Policy Research Working Paper Series WPS6004, March, World Bank, Washington, DC.Google Scholar
  18. ———. 2014. The Reform of Fiscal System of the People’s Republic of China (PRC): An External Perspective. Unpublished Paper, Southwestern University of Finance and Economics, Chengdu and Wenjiang.Google Scholar
  19. ———. 2015. Financing Subnational Governments in Ethiopia: Options to Enhance Fairness, Objectivity. Transparency and Simplicity of Federal and Regional Fiscal Transfers. June 2015 Report, Governance Global Practice, World Bank, Washington, DC.Google Scholar
  20. ———. 2017. Reforming Local Governments to Work Better, Cost Less, Facilitate Urbanization and Inclusive Economic Growth: An Emerging Success Story From Hubei ‘Province-Managing County’ Reforms. Unpublished Paper, World Bank, Beijing Office.Google Scholar
  21. Shah, Anwar, Riatu Qibthiyyah, and Astrid Dita. 2012. General Purpose Central-provincial-local Transfers (DAU) in Indonesia: From Gap Filling to Ensuring Fair Access to Essential Public Services for All. Policy Research Working Paper No. 6075, World Bank, Washington, DC.CrossRefGoogle Scholar
  22. Slack, Enid, Melville McMillan, Harry Kitchen, and Francois Vaillancourt. 2007. Roles, Responsibilities, Resources and Relationships. Report to the Provincial. Territorial and Municipal Associations. Toronto, June 15.Google Scholar
  23. South Africa, Government of. 2006. Budget, 29006: National Budget Review. Pretoria: Government Printing Office.Google Scholar
  24. Zulkarnay, Ildar. 2003. Fiscal Equalization in the Russian Federation. In Dilemmas and Compromises: Fiscal Equalization in Transition Countries, ed. Sergei Slukhai, 65–106. Budapest: Open Society Institute.Google Scholar

Copyright information

© The Author(s) 2019

Authors and Affiliations

  1. 1.Department of EconomicsTrent UniversityPeterboroughCanada
  2. 2.University of AlbertaEdmontonCanada
  3. 3.Governance StudiesBrookings InstitutionWashington, DCUSA

Personalised recommendations