Brazil is a three-tiered federation of 24 states, two federal territories, a federal district, and 4,300 municipalities. In 1989 less than half of all government spending was controlled by the federal government. Brazil's new constitution gave autonomous broad powers to states and municipalities...

Tax sensitivity of foreign direct investment (FDI) has important policy implications. If FDI is not responsive to taxation, then it may be an appropriate target for taxation by the host country, which can raise revenue without sacrificing any economic benefits FDI produces. This paper examines...

The authors contend that in evaluating and designing investment incentives in developing economies, analysts should consider their effect on: the marginal effective tax rate (METR). Even simple tax incentives can perversely affect the METR. Many schemes have relatively generous write-offs to...

Despite decades of studies, tax incidence analyses for developing countries continue to be based on the same shifting assumptions used in developed country studies - despite obvious pitfalls. Taxes are assumed to be shifted forward to consumers or backward onto factor incomes. Developing...

The way taxing and spending authorities are delineated and the manner in which intergovernmental transfers are structured in a country have come to be recognized as fundamentally important in the efficient and equitable provision of public services. The objective of this paper is to provide a...

The author reviews the conceptual basis for fiscal equalization transfers, analyzes the theoretical implications for optimal design of equalization transfers, and suggests quantitative approaches for assessing the fiscal needs of subnational governments and determining their entitlement to...

This paper specifies a microeconomic model to estimate the impact of investment in public infrastructure on private industrial profitability. Empirical results based on time series data for 34 industries characterize the Mexican industrial structure as having involuntary unemployment, deficient...

The author discusses the revolution in public sector thinking that is transforming the public sectors of developing and transition countries. Countries are reconsidering their fiscal systems and searching for the right balance between central government control and decentralized governance....

Tax policy instruments are often used to stimulate private investment in developing countries. But researchers have not explored how well such policies have met stated policy objectives. To evaluate the cost-effectiveness of tax incentives for industrial and technological development, the...

A resurgence of recent interest in fiscal federalism has been a source of concern among macroeconomic stabilization experts. They argue that a decentralized fiscal system poses a threat to macroeconomic stability as it is incompatible with prudent monetary and fiscal management. The author...