Association for Public Policy Analysis & Management

Abstract

Latin America and the Caribbean is the most urbanized developing region in the world. Over the last decades, Latin American countries have experienced a strong process of consolidation of cities and human settlements. As a result, challenges such as reducing inequality and poverty, strengthening public infrastructure, promoting local development and caring for the environment have become central responsibilities in the policy agenda of metropolitan governments.

Using information of Local Government Operations from ECLAC database and budget information of the metropolitan governments for the recent period (2000-2015), this paper explores the fiscal responsibilities that are assumed by the governments of the most populated cities in Latin America. The sample of the analysis is conformed by Buenos Aires, Bogotá, Lima, Mexico City, Santiago and Sao Paulo. From a public finance multilevel approach, the analysis takes into account the responsibilities of public spending, public revenues, public debt and Public-Private Partnership.

The aim of this work is to explore and compare the public provision, its financing and legal framework of these cities. The hypothesis is that the responsibilities of public spending are far from what theoretically would be adjusted to "local governments" and typically combine its own responsibilities with intermediate government functions (regional, state or provincial) or even central government functions. This situation generates imbalances that reduce the fiscal space necessary to meet the urban policy challenges, requiring an adequate design of intergovernmental fiscal coordination and metropolitan governance.