The political economy of intergovernmental fiscal realtionships : an analysis of the Mexican federal transfer system 1980-2000
This thesis analyses how political factors have influenced the design and
implementation of the Mexican transfer system from 1980 to 2000. Mexico displays several
features that suggest a high possibility of successfully implementing a decentralisation
process. Despite this, its transfer system did not follow the general principles established by
fiscal federalism, fiscal decentralisation and theory of grants. In order to explain this paradox,
the thesis considers the crucial role that intergovernmental transfers have played within the
overall political system.
The thesis addresses three major research questions: How has the transfer system been
designed?; How have political factors been incorporated in the design and implementation of
intergovernmental transfers?; What have been the outcomes from this process? The political
dimension of transfer systems is well recognised but has not been well studied to date. The
thesis uses intergovernmental relations theory (lOR) as a pioneering approach for a systematic
study of this political dimension.
The major argument of this thesis is that, contrary to official wisdom, fiscal
relationships between different levels of government in Mexico have been driven mainly by
political rather than economic considerations. The prevalence of these political factors in the
design and implementation of federal transfers to subnational governments explains to a large
extent the problems experienced in the Mexican process of fiscal decentralisation.