An Interactive and Cross-Temporal Framework to Explain Recentralisation

Abstract

The boundaries between the stages of decentralisation and recentralisation in a country's history are not always clear. The policies and legal reforms promoted by the Brazilian President Fernando Henrique Cardoso to deal with a serious fiscal crisis in the 1990s are a good example of the scholarly contention that has been taking place among the leading academics in Latin American subnational politics.The Cardoso administration promoted significant fiscal policies and reforms (Arretche 2006;Eaton and Dickovick 2004;Falleti 2010;Fenwick 2009). As Eaton explains, Cardoso negotiated with the states a "Social Emergency Fund" to cut the amount of revenues the federal government was obliged to send to the states and municipalities through the automatic transfer programmes. This measure was institutionalised through the "Fiscal Stabilisation Fund". Then, Cardoso moved to "withhold revenue sharing from states that default on debt repayment agreements". He exempted Brazil's exports from the payment of one of the most important state taxes. He also promoted the limitation of personal expenditures in subnational governments to 60 per cent of revenues, specific percentages devoted to education and health, and the privatisation of enterprises and banks owned by states (Eaton 2004, 162).