Political Economy of Multilevel Information Generation and Liability Management

The issue of managing sub-national liabilities is not only an issue in the EU, but is also being a major concern in South Asia, China and Brazil as much of the public investment needed for sustainable development is taking place at the sub-national level. Different countries and regions have used alternative mechanisms to control sub-national liabilities, ranging from the fiscal rules in the EU and Brazil, to the administrative control mechanisms in China, cooperative arrangements in Austria and market based controls in North America (see Ter-Minassian 2014). Although coordination and control mechanisms vary from country to country, this paper argues that none will work effectively without full and timely information on the nature and timing of the liabilities. Indeed, effective management of the liabilities is critical also to ensuring a better buy-in from the private sector and a more credible environment for greater stability for contracts (Minervi and Vinella, 2014).