The economy as constitutional argument. The case of fiscal decentralization in Colombia

Abstract

The Colombian Constitution of 1991 stated that the country was organized as a unitarian decentralized republic with autonomous territories. This matched the waves of democratization and also followed the recommendations of the literature on fiscal federalism. Ten years after enacting the constitution, in a moment of deep economic and fiscal crises, a thorough reform to the intergovernmental transfers through which the central government financed subnational governments was enacted. This allowed the central government to recover a considerable portion of the fiscal resources that had previously ceded to subnational governments. It is argued that, in the same way that Latin American constitutions change depending on the reconfiguration of partisan coalitions, the Colombian constitution changed at the pace of economic performance. In consequence, the central government recovered the fiscal resources previously transferred due to constitutional reforms without necessarily solving its fiscal deficit.