ABSTRACT
The comparative analysis of the politics of local finance is a fairly recent phenomenon in the political science discipline. The economist works within his own framework and on the whole eschews the complications of political choice. The commonality of economics and politics which impinges directly on centre-local financial relationships is resource allocation. Comparison of the centre-local financial exchange, then, presupposes that we have a clear idea of how different political systems direct resources through these three links. The resource allocation effects of centre-local financial links have become one of the major unexplored aspects of centre-local policy-making. A more accurate version of the politics of centre-local finance is that how financial policies are made defines political costs and benefits at both levels of government. The emergence of the welfare state itself has meant that distribution has increased priority.
