Ahmad: Governance and Institutions – The role of multilevel fiscal institutions in generating sustainable and inclusive growth

From the introduction:

This paper focuses on the incentives facing politicians and officials to use public resources efficiently—both their own and from donor agencies, as well as those provided by higher levels of government in the case of sub-national entities. As the recent crisis in Europe has shown, weaknesses in institutions and information flows affect the incentives facing subnational governments and associated central and subnational entities. This has resulted in unsustainable and unproductive investments, leading to a collapse in the overall macroeconomic framework in countries from Ireland to Portugal, Spain, Italy and Greece—and indeed similar influences were at play in the Latin American and Asian crises in the 1990s. The focus had become to attract funds from higher levels, or capital markets, to the detriment of accountability to the relevant electorates, or effectiveness of provision.

An interesting and very valuable paper.  Available for download here.

 

 

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