progress on the devolution agenda, such as regional government in England, will also bring
the issue of needs assessments to the fore.
Borrowing Constraints and Local and Regional Government
The extent to which sub-national governments in different OECD countries can borrow also
varies substantially. Figure 5, which plots an index of borrowing autonomy taken from
Rodden (2001), shows that the UK imposes relatively strict controls on borrowing by sub-
central governments.
Denmark
UK
Norway
Ireland
Austria
Netherlands
Italy
Portugal
Australia
Germany
Spain
Finland
France
Sweden
Switzerland
USA
Canada
Figure 5: Index of Borrowing Autonomy - Sub-Central Government
Notes: The index is bounded between 1 and 5 where 1 = no borrowing autonomy and 5=high
borrowing autonomy and the period assessed is 1986-1996 where feasible. The light bar relates to
the local level of government where these figures are available. The darker bars relate to
state/regional level government.
To some extent these differences hide the fact that, in most countries, the state exerts
considerable control on total borrowing. For instance, in Germany, Lander and local
29
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