Local borrowing is one of the fundamental pillars of fiscally decentralized systems—together with the assignment of functional expenditure responsibilities, revenue assignments, and transfers. However, undisciplined use of local debt can lead to disruptions in public service delivery at the subnational level and, more significantly, have important negative externality effects on the macroeconomic stability of the entire country. This paper surveys the actual practice with debt governance of Non-Asian Emerging Economies (NAEE) for the last several decades with the main objective of extracting lessons (both positive and negative) for the development of best practice around the world.
Martinez-Vazquez, Jorge and Civelek, Yasin, "Subnational Government Debt Governance: Lessons from Non-Asian Emerging Economies" (2019). ICEPP Working Papers. 147.