A global view of sub-national governments in Asia

What is it about?

Fiscal Decentralisation; Subnational Government Finance; Asian Economies

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Photo by Drew Dau on Unsplash

Photo by Drew Dau on Unsplash

Why is it important?

This chapter provides insights into the potential impact of sub-national government’s involvement in achieving inclusive growth and sustainable development in the Asia-Pacific Region. Based on data collected by a pilot study entitled “Sub-national governments around the world: structure and finance”, it provides a comparative analysis of subnational government organisation, responsibilities and finances across the 16 selected countries. The preliminary findings highlight the high diversity of the sample in terms of socio-economic characteristics and institutional settings as well as the complex nature of sub-national government structure with many asymmetric situations. They also stress significant fiscal imbalances in the region. While sub-national governments are involved in the provision of a wide range of public goods, services and infrastructure, in particular for social cohesion, they have in practice very limited discretionary power over their revenues, most particularly tax revenues, confirming that fiscal decentralisation is still lagging behind in many countries of the Asia-Pacific Region. This situation delays the empowerment of sub-national governments as key actors in the developing process of their countries, in particular for inclusive growth.