The New Vision of Local Governance
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finance about 20 percent of local expenditures. Transportation, community amenities, and recreation and culture command two-thirds of local expenditures. Local government in New Zealand bears a close resemblance to the Australian model.
A Comparative Overview of Local Government Organization and Finance in Selected Developing Countries The conceptual literature argues for a strong role of local governments in local development, thereby improving public services and quality of life at the local level. It would therefore be instructive to learn about the role of such governments in developing countries. The following paragraphs provide a bird’s-eye view of local government organization and finance in 10 selected developing countries.
Legal Status of Local Governments The legal status of local governments varies across developing countries. In Brazil, Chile, India, South Africa, and Uganda, local governments have a constitutional status. In Indonesia, Kazakhstan, and Poland, local governments were created by national legislation, in Argentina by provincial legislation, and in China by an executive order of the central government. It is interesting to note that there is no clear pattern in the autonomy and range of local services provided by local governments deriving their status from national and state constitutions or legislation. However, local governments that are created through legislation, in general, are significantly weaker—with the notable exception of Poland.
Relative Importance of Local Governments The relative importance of local governments in developing countries is compared using two indicators: share of consolidated public sector expenditures (figure 1.1) and local expenditures as a percentage of GDP (figure 1.2). According to both criteria, local governments in China command the largest share—more than 51 percent of consolidated public expenditures and 10.8 percent of GDP—whereas in India, it is the smallest share—3 percent of the expenditures and 0.75 percent of GDP. The rank order of some countries, however, is not consistent across both criteria. For example, South Africa does better than Brazil on the first and worse on the second criterion. On average in sample countries, local government
