Federalism, Fiscal Authority, and Centralization in Latin by Alberto Diaz-Cayeros

By Alberto Diaz-Cayeros

This ebook explores the politics of financial authority, concentrating on the centralization of taxation in Latin the United States throughout the 20th century. The e-book stories this factor in nice aspect for the case of Mexico. The political (and economic) fragmentation linked to civil struggle in the beginning of the century was once ultimately remodeled right into a hugely centralized regime. The research indicates that monetary centralization can top be studied because the final result of a discount struck among self-interested neighborhood and nationwide politicians. financial centralization used to be extra severe in Mexico than in so much different areas on the earth, however the demanding situations and difficulties tackled by means of Mexican politicians weren't specific. The ebook hence analyzes monetary centralization and the origins of intergovernmental monetary transfers within the different Latin American federal regimes, Argentina, Brazil, and Venezuela. The research sheds gentle at the elements that specify the consolidation of tax authority in constructing nations.

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8 The PRI system protected local politicians from electoral challenges and ensured them attractive political careers. Local politicians surrendered their fiscal authority because they were protected from competition in local electoral and economic markets. An institutional solution to the federal commitment problem was attempted in Argentina through the delegation of enforcement of the fiscal bargain to a third party, namely the central bank. This solution turned out not to be self-enforcing given the shifts between democracy and authoritarianism that the country witnessed throughout the 20th century.

Centralized fiscal bargains that are produced on the left branch of the game can occur only if the value of conflict on the unitary path is sufficiently large for the states to be able to play it credibly, hence forcing the federal government to seek a compromise. This means that in this game, in contrast to models of threat of secession, transfers depend on the underlying economic base of the state, which becomes reflected in local taxation, not in the political or military might of states. Of course, it is possible that economic and political power are correlated, but the game highlights that they need not be.

I discuss the nature of the federal bargain as a commitment dilemma and the limits of fiscal redistribution within federal systems. I then outline the organization of the chapters in the rest of the book. 4. The Federal Bargain: Delegation and Commitment Under what conditions would regional politicians bestow power on a higher authority in order to achieve their common ends? Can the center be prevented from overawing, to use Riker’s (1964) term, the constituent parts? In this section, I argue that a fiscally centralized federation is created when 13 In my view, too much of the literature on federalism written after 1990 highlights the threat of secession, which in most developing countries would probably require the use of military force.

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