PENFOLD, Michael <br/><br/>
Descentralization y mercado en America Latina=Decentralization and market in Latin america 

 -  Centro Latinoamericano de Administracion para el Desarollo,  feb. 2000 
<br/><br/> The process of decentralisation that began in Latin America in the 1980's has been seen traditionally as a state reform consistent with market reforms. However, based on the recent Argentinean, Brazilian, and Colombian experiences, linking decentralization and market has become questionable. The purpose of this paper is analysing, against the wide Latin American background and from an institutional viewpoint, when decentralisation may hinder the progress of economic conducted in the hemisphere over the last few decades. The main argument in this study is that this conflict comes form the institutional framwork chosen by Latin American countries to regulate transfer of duties and responsibilites - particularly fiscal in  nature - to sub national governments. Although significant, such conflicts do not mean that decentralisation should be reversed. On the contrary, what they mean is that there is a need for reforms and an adequate institutional design in order to regulate inter-government relations and aboid new problems that may hamper the link between  decentralisation and market. Such reforms include basically decreasing state and municipal indebtedness; increasing the transfer of tax instruments needed to reduce dependence on inter-government transfers, and reducing fiscal restrictions nation-wide. Also, this study is aimed at reviewing recent literature on potential benefits and shortcomings of decentralisation