Gas-fired funding for local government : Cusco and Tarija compared

Abstract

Much has been written and debated over the past five years about the impact that extractive industries have had within the Andean region, particularly mining and natural gas development. Less attention has been given to how the fiscal resources generated by these industries have affected development within the region, particularly through mechanisms such as the canon and royalties. One of the advantages of the exploitation of natural resources has been the amount of tax revenue to which it gives rise. In this chapter, we seek to show how this has impacted on Peru and Bolivia, specifically in those departments or regions where decentralisation has been accompanied by a fiscal «boom» from extractive industries: Cusco in Peru and Tarija in Bolivia. We seek to identify how these resources have been used, and the extent to which they have had beneficial effects in terms of poverty alleviation and in helping to build democratic and participative institutions at the local level.