Local Public Finance and Capacity Building in Asia

Issues and Challenges

Subnational governments’ capacity to effectively fund and deliver public services are crucial for the realisation of the benefits of decentralisation. However, subnational capacities often suffer from significant weaknesses, ranging from inadequate assignments of own-revenues, through to flaws in tax administration, the design of intergovernmental transfers, spending assignments and various aspects of public financial management. The volume discusses how better diagnostics and more strategic reforms can contribute to easing the resource constraints on subnational governments, as well as creating appropriate incentives for these governments to improve performance. The volume includes studies of the enabling conditions for subnational capacity building in Asia, as well as focused studies of China and India's fiscal relations challenges.

Published on December 22, 2020

In series:OECD Fiscal Federalism Studiesview more titles


Executive summary
Challenges of subnational capacity development
Political economy perspectives on intergovernmental fiscal system design and implementation in Asia
Finding the right balance in the use of conditional grants
Subnational capacity building: An international perspective of the Asia Pacific region
Fiscal transfers in Asia: Pitfalls and opportunities for achieving the Sustainable Development Goals
Natural resource taxation and revenue sharing in Asia
Municipal finance and property taxation in China
Fiscal federalism in India
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Strengthening local government capacity

How to strengthen local government capacity?

Effective decentralisation requires a focus on enabling subnational governments' ability to deliver public services through public finance reforms that enhance capacity and strengthen incentives.