Descentralización fiscal y capacidad de gobiernos locales: los casos de México y Argentina 1990-2010.

Can local governments play a proactive role in the economic development and poverty reduction in Latin America? Apparently, decentralization reform processes during the 80s and 90s are unfinished (Finot, 2001; Tulchin and Selee, 2004 and Wiesner, 2003). Those accountable for fiscal policy issues do not follow a coherent fiscal federalism treatment (Rondinelli, 1981 and Falleti, 2005). Political scientists and economists point out that the lack of development of local governments to increase their fiscal autonomy is the result of local administrative incompetence (Campbell, 2003; Tulchin y Selee, 2004; Rosenbaum and Rodriguez, 2006). This paper analyzes the effects of the decentralization process in Latin America, describes the role of local governments in the implementation of conditional cash transfer programs, and offers recommendations with respect to municipal bond issue policies in Mexico and Argentina to show how some municipalities fund their local budgets. The outcomes of this research are based on a considerable number of interviews carried out with experts on finances, municipal presidents and local authorities.