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This article critically evaluates hypotheses that attribute decentralisation
in Latin America to democratisation and economic liberalisation. It examines
these hypotheses in historical perspective by looking at the experience over time
with revenue decentralisation and recentralisation in Argentina, one of Latin
America's early decentralisers. Because neither the democratic election of
subnational officials nor the pursuit of economic liberalisation is unique to the
contemporary period in Argentina, the Argentine case represents an opportunity
to gain analytical leverage on the theories emerging in the contemporary period.
The paper presents qualified support for the argument that democratisation
drives decentralisation and confounding evidence for the liberalisation hypothesis.

AbstractThis study evaluates the role played by the legislature in one of Argentina's most important economic reforms of recent decades: the reform of tax incentives for regional development. As implemented by the last military government, this sytem of tax incentives provoked sharp distributive conflicts among provinces. Although a majority of legislators favored reform after the return to democracy in 1983, interprovincial conflicts created bargaining problems that prevented the passage of reform legislation through regular channels. Pro-reform legislators decided instead to delegate reform authority to President Raúl Alfonsín because he shared their interest in containing the fiscal cost of tax incentives. Subsequent uses of this delegated authority by two presidents promoted the interests of the enacting coalition that supported delegation. These findings support the usefulness of delegation models when carefully applied to Latin America and challenge theories that neglect the different ways that legislators shape economic reform.

Decentralization has swept across the developing world in recent years. Although the speed and scope of the shift toward more decentralized practices is striking, decentralization is neither inevitable nor irreversible. Rather, it faces enormous political obstacles and can be subject to serious setbacks. This article accounts for attempts by national politicians to thwart decentralization in two countries that recently adopted some of the most significant decentralizing changes in their respective regions: Argentina and the Philippines. Based on fieldwork in each country, it suggests that even after the political decision to decentralize has been made, national politicians may face deep‐seated incentives to preserve centralized control over fiscal policy. In Argentina, President Carlos Menem partially reversed the previous decentralization of revenue because fiscally‐independent provincial governors were a challenge to his political interests and capabilities. In the Philippines, legislators attempted to reverse and then circumvent decentralization since it threatened their status as brokers claiming personal credit for negotiating fiscal transfers from the centre. The article identifies an intermediate outcome in both countries, according to which decentralizing policies are neither entirely reversed nor implemented as initially designed.