In the last three decades, many developed and developing countries have embarked on decentralizing and developing local governments for political and economic reasons. On the political level, decentralization increases public participation, involves sharing responsibilities for public decisions, reduces pressure on central government, increases the legitimacy of the state, and improves transparency and accountability. On the economic level, it distributes tax and service burdens, bring services closer to the taxpayer, improves tax paying compliance, and reduces the service burden on central government.

The Arab countries have not been isolated from this world trend. Despite very centralized structures, many Arab states, since the 1960s, began to recognize the importance of local participation and made some efforts to accommodate the trend towards decentralization. The trend was reinforced in the mid-1980s with the decline of the socialist state model, the decline of Arab state legitimacy in general, and the rise of increasing demands for more participation and democratization. Nevertheless, the level of decentralization in the Arab World today remains among the lowest in the world and well behind the world trends.

In light of this, the Lebanese Center for Policy Studies and the Economic Development Institute of the World Bank embarked on a project to examine the level and conditions of decentralization in seven Arab countries: Egypt, Jordan, Lebanon, Morocco, Palestine, Tunisia, and Yemen. More precisely, each country case study provides a general picture of intergovernmental finance arrangements with a special focus on the following:

• Administrative structure of the government
• Current laws and legal developments governing central and local relations
• Assignment of revenue authority and expenditure assignment between central and local governments
• Intergovernmental transfers from central to local governments
• Borrowing and debt

The project is funded by the Economic Development Institute of the World Bank. The first drafts of the papers were presented in a workshop on July 18-19 in Beirut. The papers are currently being redrafted by the authors and will be published in a book entitled: "Fiscal Decentralization in the Arab World".