This report states that the future of East Asian countries depends on the capacity and performance of local and provincial governments. Decentralization has unleashed local initiative and energy, with new ways to deliver services to people, with potential for continued improvement. The report, which focuses on six countries, notes the differences in the approach to decentralizing government in Cambodia, China, Indonesia, the Philippines, Thailand, and Vietnam

"East Asia Decentralizes is the first attempt to look systematically at the decentralization phenomenon that is occurring throughout East Asia. It assesses what has happened thus far, distills key messages, highlights positive experiences, and identifies areas where priority action is needed." "Although intended primarily for central and local government policy makers, East Asia Decentralizes will also be a useful resource for academics, businesspeople, and development practitioners concerned with the unfolding process of intergovernmental reform in the region." --Résumé de l'éditeur.

This publication discusses the decentralization issues faced by countries of Asia and the Pacific. It includes practical suggestions on how to proceed in this area to achieve economic growth, macroeconomic stability, poverty and income distribution, services delivery improvements, and political accountability. This note elaborates on adequacy of local revenues and autonomy, expenditure management and clear service delivery mandates, horizontal imbalances and limited use of incentives in intergovernmental transfers, financing needs and local government borrowing, and local management capacities as the major challenges in a decentralized fiscal architecture. The recommendations to address the above challenges also note the long- term nature of these reforms.

"Takes a close look at people's involvement in the new framework of state decentralization. By focusing on the potential as well as the limitations of citizens managing local budgets, the goal is to improve the process of democratization of the state and society. The contributors explore the achievements of the process of decentralization, which is the backdrop for the emerging process of citizen participation in public decisionmaking at the local government level. The volume approaches this issue from a general perspective and up close through case studies. The broad perspective generates a framework for analytical understanding of fiscal decentralization and participation. The case studies highlight local experiences in East Asia - Indonesia, Malaysia, and the Philippines - and Latin America - Bolivia, Brazil, Colombia, and Peru. Each case illustrates a particular leadership style and type of participation. Important similarities emerge in the areas of trust, political will, unity among actors, intergovernmental coordination, capacity of government and citizen organizations to generate participatory public policies, and redistribution of power and responsibility between the state and civil society."--Publisher's web site.

In the early 1990s, a host of unitary states in Southeast Asia began pursuing, at their own pace, the process of decentralizing their systems of governance. The form and function of these reforms were documented in the World Bank's report, East Asia Decentralizes: Making Local Government Work, published in 2005. The analysis in this discussion paper updates the findings and data from this foundational work and widens the lens to new countries embarking on similar reforms. The aim is to chart the overall trajectory of reforms, examine the political dynamics behind them, and help countries locate their place in the process. Each country is taking its own path, shaped by its history, size, and political system, though there are some similarities. In general, reforms are heavily and predictably influenced by political dynamics, managed from the central government, and driven by its priorities. They result in an unsynchronized and, at times, messy transfer of funds, functions, and functionaries to lower levels. Central governments continue to wield considerable influence over subnational governments through a combination of tight political controls, concurrent functional assignments, budgetary measures, and continued bureaucratic control. Nonetheless, with all their limitations, the countries of the region are finding ways to muddle through with the general trajectory toward more, not less, decentralization. In large part, this process is happening organically and incrementally without any big bang reforms and with the direct involvement of central governments. Variously, it is helping to nudge governments toward greater political pluralism, innovation, and improved service delivery within otherwise tightly controlled states. As decentralization deepens, so too does the importance of effective coordination.

Decentralization is the transfer of responsibilities from the central government to subnational agencies empowered to act as increasingly autonomous entities within their geographical and functional domains. In theory, decentralizing infrastructure services can deliver efficiency gains when service benefits accrue mainly to the local population-such as in water and sanitation, urban transit, and waste management. Subnational agencies are indeed better placed than the central government to tailor infrastructure services to the needs of local constituencies (allocative efficiency) and deliver them at lower costs (productive efficiency). In practice, the economic benefits of decentralized infrastructure services are by no means a given, as they are contingent upon effective coordination among tiers of governments (regional coordination) and accountability mechanisms for results achieved.

This book explores the important topic of fiscal decentralization in Asian countries, and focuses on how government finance and administration are being reformed to bring budgetary decisions closer to voters. The focus on Asia is especially important because all countries in this region have been undergoing serious fiscal reforms in the past decade. They include one of the biggest decentralization reforms in Indonesia, significant reforms in democratic Philippines and Vietnam which are in transition, and Japan, whose fiscal reconstruction program is covered extensively. India and China, which are also covered, are very special cases because of their size and because their policies must fit decentralization into a significant economic growth scenario.

World Bank Discussion Paper No. 286. This report was commissioned as part of a project on the effectiveness of credit policies in East Asian countries. In the Republic of Korea, the government has played a pervasive role in promoting industrialization and economic development. The report documents the use of directed credit programs and highlights what made government intervention effective: its close consultation with industry, the existence of a competitive business environment, and a strong monitoring and evaluation system. The report notes the risk-sharing arrangements developed by Korean policymakers and the flexible adaptation of directed credit programs to the changing needs of the Korean economy. The authors also emphasize the long-term costs of reliance on directed credit programs and the measures taken in recent years to redirect the programs' objectives and redress the imbalances that have arisen along Korea's path to economic development.