Forthcoming in Roy Bahl, Jorge Martinez and Robert Searle, eds., Fiscal Capacity Equalization and Intergovernmental Transfers.
This chapter reviews the evidence on the impact of politics on the distribution of national resources across regions, and on the performance of local jurisdictions in using these resources for service delivery. This evidence is largely “reduced-form” in that it measures political impact on distribution and service delivery for a given system of intergovernmental sharing of resources and responsibilities. The impact of political institutions is of course more fundamental, in that it helps shape the intergovernmental institutions themselves. But the chapter abstracts from this more fundamental interaction, and focuses on the implications of political analysis for technocratic solutions to the problem of equalization transfers, given currently operational intergovernmental institutions.