ABSTRACT

Argentina and Brazil have very “decentralized federalisms” (in Lijphart’s, 1999, terms) and very long federalist traditions, with subnational governments in charge of several functions (including education, health care, or social programs) and accounting for almost half of the total public expenditures during the 1990s (Dillinger and Webb, 1999, 1; IMF, 2001). Having considerable political power, governors have exerted pressure over Congress, which passed laws decentralizing national resources on several occasions, at times causing fiscal and financial instability at the national level. However, subnational governments are far from invulnerable to central governments; presidents have recently undermined their power by centralizing fiscal resources, decentralizing functions without new resources, and imposing central controls on spending and debt issuing. This has limited subnational units’ autonomy and, in many cases, challenged their capacity to cope with the functions for which they are responsible (especially those recently decentralized to them). How can we account for this changing distribution of resources and functions (from sub-national predation to central dominance) if, out of relatively unvarying federal institutions, we should expect a more or less stable distribution of power between levels of government? Scholars have not yet provided compelling explanations for these (often sharp) changes in the distribution of funds and administrative or policy responsibilities between levels of government and their implications for the functioning of democratic federations.