ABSTRACT
This chapter discusses the development of intergovernmental relations (IGR) and its state from four perspectives: historical and legal, political, fiscal, and public policy. It considers the effects of political competition at local levels and the forces affecting the further development of IGR in Taiwan. The increased complexity of governance has made the management of IGR urgent. The most important character of IGR during that time was direction and supervision from central government. IGR in Taiwan has undergone a significant transformation from central dominance to pluralist decentralization since 1987. The most important tool for centralized control in IGR is the fiscal instrument. In Taiwan, problems of reform in fiscal relationships in IGR come from two directions: revenue shortages and distributional inequality. The tax redistribution fund is the source of one of the key conflicts in fiscal IGR in Taiwan. The vertical collaboration in IGR sometimes might degenerate into conflict between the central and local governments.
