Federal reform strategies: lessons from Asia and Australia

Abstract

In large countries with multilevel fiscal systems, effective pursuit of reforms relating to integration, deregulation and natural resource management requires active participation of and coordination with subnational governments. While most of the existing literature is about the reform of federalism, the volume is about reform through federalism. It explores federal reform strategies, that is, ways in which central governments can motivate, influence and ensure coordination of subnational policies. It covers such mechanisms as the imposition of conditions on earmarked funding from central to subnational governments, the provision of incentive funding awarded if certain reforms are undertaken, the development of cross-government agreements, and centralization of power from the subnational level to the central government. The study examines both successes and failures by analysing a range of case-studies, drawn mainly from India and Australia but also covering Indonesia and China. It not only fills the existing gap in the literature relating to federal reform strategies, but also attempts to build a typology of strategies and draws lessons from experience.