This book explores the politics of fiscal authority, focusing on the centralization of taxation in Latin America during the twentieth century. The book studies this issue in great detail for the case of Mexico. The political (and fiscal) fragmentation associated with civil war at the beginning of the century was eventually transformed into a highly centralized regime. The analysis shows that fiscal centralization can best be studied as the consequence of a bargain struck between self-interested regional and national politicians. Fiscal centralization was more extreme in Mexico than in most other places in the world, but the challenges and problems tackled by Mexican politicians were not unique. The book thus analyzes fiscal centralization and the origins of intergovernmental financial transfers in the other Latin American federal regimes, Argentina, Brazil, and Venezuela. The analysis sheds light on the factors that explain the consolidation of tax authority in developing countries.
• Systematic comparison of the variation in fiscal centralization and authority among the Latin American federations • Eclectic methodological approach tracing historical processes, applying game theory and providing statistical tests • Understanding of the link between political incentives, institutions, and fiscal outcomes in federal arrangements
1. Federalism, party hegemony and the centralization of fiscal authority; Part I. Fiscal Centralization in Mexico: 2. Regional fragmentation and failed commitment; 3. The official party as a regional compromise; 4. Nominations, veto players and gubernatorial stability; 5. Transfers and redistribution in the Mexican States; Part II. Centralization and Revenue-sharing in the Latin American Federations: 6. Venezuela: unitarianism in disguise; 7. Argentina: regime change and fragile credibility; 8. Brazil: the retention of fiscal authority; 9. State building, political institutions, and fiscal authority.
' … a major contribution to our understanding of how federalism has developed in the largest Latin American countries over the past century.' Journal of Latin American Studies
'… will undoubtedly form part of the burgeoning canon on fiscal federalism from a political economy perspective.' Political Studies Review
'Federalism, Fiscal Authority, and Centralization in Latin America provides important insights into the process of fiscal centralization and nation building. It includes a thorough review of the history of Mexico's fiscal federal relationship and a useful comparison with the other federations in Latin America. Because of the central importance of fiscal policy and state capacity, this book will be of interest to all scholars of federations in the developing world.' Journal of Politics
'The book covers a long swath of history for the four Latin American federations. It provides theoretical insights that could be applied to other regions of the world, to other fields of inquiry, and to the more recent events in these and other countries undergoing changes in their federal fiscal arrangements. For all these reasons, Federalism, Fiscal Authority, and Centralization in Latin America is a must-read for students and researchers of federalism and of Latin America, and a thought-provoking piece for those interested in institutional dynamics more generally.' Perspectives on Politics
'Diaz-Cayeros's study of fiscal centralization is an especially welcome corrective to the rapidly expanding literature on decentralization, which has perhaps overstated the recent decentralizing trend by focusing overwhelmingly on changes in revenue-sharing systems that have expanded the size of transfers to subnational governments. The earlier decisions to centralize tax bases that Diaz-Cayeros explains have proved to be remarkably sticky, and for the most part they have not been reversed by the recent wave of decentralization. … Diaz-Cayeros's book is significant for a number of other reasons as well, including the finding that democratization in Argentina and Venezuela improved the center s compliance with its revenue commitments and the argument that particularly high levels of regime instability in Argentina are in part responsible for the incredible complexity of that country's version of fiscal federalism. But one of the greatest merits of Diaz-Cayeros's work is the analytical leverage that his bargaining model provides on redistribution within federal systems.' World Politics
'Because studies on fiscal policy remain largely detached from the politics of taxation, a major strength of the works reviewed here is that they take into account the viability of proposed policy changes. Federalism, Fiscal Authority, and Centralization in Latin America, by Díaz-Cayeros, represents the best of this emergent literature. … Overall this book is a must-read for students of political economy and those interested in the politics of fiscal policy reform in Latin America.' Latin American Research Review