ABSTRACT
Federations and unitary systems financing local units with massive fiscal transfers need to have effective sub-national units as well. In order for fiscal transfers and subsidies to produce maximum results, they must be allocated according to transparent formulae criteria as part of calendar-driven budget processes by central governments. Unitary systems allocate transfer funds to deconcentrated units of their central governments; federations allocate them to independent sub-national tiers of their governments. Even without ethnic and populist nationalist forces that destabilize states, challenges to creating effective governments would still exist. For there are many complex problems in developing institutional rules and processes and establishing sensible structures with which to organize planning and implementation of public services, programs, and projects. Public administration experts from around the world frequently offer models of their often home-country methods and processes for adaptation to local routines. City government policies are distorted by politically connected firms and unions seeking generous favors and financial gains through public contracts.
