Conclusion: Redefining the Magic Money Tree

This concluding chapter returns to the concept of embedded autonomy and sets out what it can add to local government finance and questions of reform. Embedded autonomy provides a way to overcome the tension between local government financial autonomy and local government financial resilience. These two principles can be perceived as a trade-off against one another and even a point of conflict. However, learning from the international case studies, the authors argue for a more progressive view of co-dependent autonomy and resilience, with each reinforcing the other in a well-functioning local government finance system. Resilience is an underpinning factor in complex adaptive systems, where disruption is considered inevitable. This provides an alternative to an adversarial pattern of relationships. More autonomy and certainty at the local level would allow local authorities to build adaptive capacity to prepare for and respond to budget pressures and shocks to the system. But that capacity is reliant on intergovernmental collaboration, rule-based interactions, developing flexible funding mechanisms, promoting integrated planning, and establishing supportive legislative frameworks.