Diversity and Asymmetric Arrangements as Drivers of Fiscal Federalism: A Comparative Overview

“Diversity” and “asymmetry” are intimately intertwined with multilevel governance. Asymmetric arrangements often help accommodate various characteristics of diversity in a federation. In turn, asymmetric arrangements may have an impact on scope and level of diversity. This chapter provides an overview on the prevalence of asymmetric arrangements in multilevel governance, particularly fiscal decentralisation, to help address issues of diversity in a federation. The chapter also addresses measurement limits in this area, and presents the framework developed within the OECD to overcome these limits, thereby focusing on expenditure and revenue arrangements, intergovernmental transfers, as well as fiscal constitutions.