Contents -- Preface -- 1 EAST ASIA DECENTRALIZES -- 2 THE RULES OF THE INTERGOVERNMENTAL GAME IN EAST ASIA: DECENTRALIZATION FRAMEWORKS AND PROCESSES -- 3 ACHIEVING FISCAL SUSTAINABILITY -- 4 FISCAL DISPARITIES IN EAST ASIA: HOW LARGE AND DO THEY MATTER? -- 5 PUBLIC EXPENDITURE ON THE FRONTLINE: TOWARD EFFECTIVE MANAGEMENT BY SUBNATIONAL GOVERNMENTS -- 6 SUBNATIONAL OWN-SOURCE REVENUE: GETTING POLICY AND ADMINISTRATION RIGHT -- 7 MANAGING HUMAN RESOURCES IN A DECENTRALIZED CONTEXT -- 8 DECENTRALIZING HEALTH: LESSONS FROM INDONESIA, THE PHILIPPINES, AND VIETNAM -- 9 EDUCATION REFORMS IN EAST ASIA: POLICY, PROCESS, AND IMPACT -- 10 DECENTRALIZING BASIC INFRASTRUCTURE SERVICES -- 11 GOVERNANCE GONE LOCAL: DOES DECENTRALIZATION IMPROVE ACCOUNTABILITY? -- 12 COMMUNITY-DRIVEN DEVELOPMENT: DECENTRALIZATION'S ACCOUNTABILITY CHALLENGE -- BOXES -- 1.1 Variants of Decentralization: Pros and Cons -- 1.2 Hard Budget Constraints -- 5.1 The Backdoor Route to Decentralization in China -- 5.2 China: Devolution by Default Rather Than by Design -- 5.3 The Block Grant Experiment in Ho Chi Minh City -- 6.1 Revenue Assignment across Subnational Governments in China's Gansu Province -- 6.2 Improving Tax Administration in Quezon City, Philippines -- 6.3 Local Revenue Administration in Action in East Asia -- 7.1 Personnel Exchange in India and Japan: Whose Capacity Is Being Strengthened? -- 7.2 Lessons from Uganda's District Service Commissions -- 8.1 Local Innovations in Health Service Delivery in the Philippines -- 9.1 School Report Cards in Paraná: A New Incentive System -- 10.1 Vietnam's Red River Delta: Efficiency Gains from Decentralizing Irrigation -- 10.2 Vietnam: Watershed Management -- 10.3 Indonesia: When Transport Regulations Distort Trade -- 10.4 The Philippines: Toll Road Management -- 12.1 CDD Projects in Three East Asian Countries.

12.2 Funds Arriving in Cambodian Schools -- FIGURES -- 1.1 Subnational Expenditures as a Share of Total Public Spending -- 4.1 Percentage of Population Living below PPP2 a Day in 2002, East Asia and Pacific -- 4.2 Disparity in Provincial per Capita Revenues Before and After Transfers -- 7.1 Subnational Employees as a Share of Total Government Employment -- 7.2 Personnel Spending as a Share of Total Subnational Government Expenditures -- 9.1 Net Enrollment Rates in East Asia, 2000 -- 9.2 Central and Local Government Education Spending in the Philippines -- 9.3 Literacy and Enrollment Rates in China, by Province -- 9.4 Literacy and Enrollment Rates in the Philippines, by Region -- 9.5 Enrollment Rates in Indonesia, by Province -- 11.1 The Accountability Framework -- 11.2 Decentralization and the Accountability Framework -- 11.3 The Negative Impact of Decentralization, as Cited by Firms in Indonesia -- 11.4 Obstacles to Business, as Cited by Firms in Indonesia -- 11.5 Informal Payments after Decentralization, as Cited by Firms in Indonesia -- 12.1 Project Disbursement in Indonesia by Ratio, Fiscal Years 2000-2 -- 12A.1 Bankwide CDD Lending for Fiscal Years 2000-3 -- 12A.2 Regional Trends-CDD Investments by Fiscal Year -- 12A.3 CDD Project Breakdown by Country -- 12A.4 CDD Project Breakdown by Sector -- 12A.5 Sectoral Breakdown of CDD Projects by Country -- TABLES -- 1.1 Economic and Demographic Trends in East Asia, 1975-2002 -- 1.2 Expenditure Shares and Functional Allocations in East Asia -- 1.3 Vertical Organization of Intergovernmental Systems in East Asia -- 1.4 Subnational Fiscal Structure of Selected East Asian Countries -- 2.1 Levels of Government Administration -- 2.2 Decentralization Policy -- 2.3 Decentralization Frameworks -- 2.4 Basic Features of Political Systems -- 2.5 Subnational Assemblies and Elections.

2.6 Subnational Budgetary and Personnel Autonomy -- 2.7 Subnational Transparency -- 2.8 Subnational Civic Participation and Civil Society -- 2.9 Subnational Functional Assignments and Expenditure Shares -- 2.10 Subnational Revenues -- 2.11 Intergovernmental Transfers -- 2.12 Responsibility for Managing Decentralization -- 2.13 Decentralization Strategies -- 2.14 Building Decentralization Capacity -- 3.1 Subnational Borrowing Practices -- 3.2 Subnational Fiscal Risks -- 4.1 Disparities in Provincial Revenues before Grants, per Capita -- 4.2 Disparities in China's Provincial Fiscal Outcomes, per Capita, 1979-2002 -- 4.3 Variation in Revenues across Provinces in Indonesia, 1994-2002 -- 4.4 Equalization in Intergovernmental Transfer Systems -- 4.5 Disparities in Province-Level Revenues After Grants, per Capita -- 4.6 Evidence of Equalization -- 4.7 Disparities in Province-Level HDI Indices, 1997-2002 -- 4.8 Disparities in Province-Level Persons per Hospital Bed, 1997-2002 -- 4.9 Disparities in Province-Level Life Expectancy, 1996-2002 -- 4.10 Disparities in Province-Level Literacy Rates, 1994-2002 -- 4.11 Expenditure Disparities and Service Outputs and Outcomes at the Subnational Level -- 4.12 Fiscal Disparities and Public Services Outputs and Outcomes in China, 1985-2000 -- 5.1 Expenditure Decentralization in East Asia in Comparative Perspective -- 5.2 Expenditure Assignments in East Asian and Comparison Countries -- 5.3 Strength of Core Expenditure Management Processes at Subnational Levels -- 5.4 Do EA5 Countries Meet Conditions for Effective Decentralization of Expenditure Management? -- 5.5 Distribution of Expenditures and Revenues in China, by Administrative Level -- 6.1 Estimated Own-Source Revenue of Subnational Governments -- 6.2 Classification of Subnational Taxes by Degree of Central vs. Local Control.

6.3 Tax Assignment by Local Government in the Philippines -- 6.4 Own-Source Revenue Assignment -- 6.5 Highest-Yield Fees and Sources of Operating Revenues of Subnational Governments in the Philippines, 2000 -- 6.6 Most Significant Charges by Local and Provincial Governments in Indonesia, 2002 -- 6.7 Own-Source Revenue Composition by Type of Local Government in the Philippines, 2001 -- 6.8 Composition of Regional Revenue in Indonesia, 2002 -- 6.9 Annual Nominal Growth in Local Own-Source Revenue in Indonesia, 1996-2002 -- 6.10 Tax Administration Models in East Asia -- 7.1 Key Features of Administrative Decentralization -- 7.2 Central Authority over the Subnational Civil Service -- 7.3 Staffing Authority among Subnational Governments -- 8.1 Selected Health Status Indicators -- 8.2 Health Status of the Poorest and Richest Population Groups in Selected East Asian Countries -- 9.1 Student Performance on Mathematics and Science Tests -- 9.2 Percentage of Decisions Related to Lower Secondary Education at Each Level of Government, 1998 and 2003 -- 9.3 Locus and Mode of Key Decisions in Lower Secondary Education, 1998 and 2003 -- 9.4 China: Education as a Share of Total Fiscal Expenditures -- 9.5 China: Per-Student Educational Expenditure, 1989, 1997, and 2000 -- 9.6 Philippines: Median Values of SEF Resources per Pupil -- 9.7 Indonesia: Per Capita Education Spending, 2001-2 -- 9A.1 Cross-Study Comparison of Functions -- 10.1 Road and Highway Investment in China -- 10.2 Road and Highway Investment in China, by Type -- 10.3 Piped Water Coverage within the Urban Population, Vietnam -- 10.4 Capital Spending as a Share of Local Government Expenditure, Philippines -- 10.5 Citizen Perceptions of Corruption in Different Layers of Government in Indonesia -- 10A.1 Water Supply Coverage Rates -- 10A.2 Sanitation Coverage Rates.

10A.3 Median Investment in Water Supply and Sanitation, 1990-2000 -- 10A.4 Median Urban Tariff Rate -- 11.1 Regulatory Burdens on Firms in Indonesia -- 11.2 Perceptions of Corruption in the Philippines -- 11.3 Sources of Information on Politics, as Cited by Households in the Philippines -- 11.4 Correlation between Funding Priorities of Public Officials and Households in the Philippines -- 11.5 Responses from Facilities on Administrative Delays in the Philippines -- 12.1 Points of Local Government Engagement in CDD Projects -- 12A.1 World Bank Lending in Support of CDD, Fiscal Years 2000-3 -- 12A.2 World Bank-Funded CDD Projects Open in the East Asia Pacific Region, as of June 30 2003.