In Argentina, primary education has been decentralized to the intermediate levels of government, while in Chile it has been transferred to municipalities. Major increases in fiscal transfers to subnational governments have also occurred, particularly in Brazil, Mexico and Colombia. But localization can also result in overburdened local governments being unable to provide local infrastructure and services. Localization can threaten macroeconomic stability, and hence economic growth, if local governments borrow and spend heavily and need to be bailed out by national governments. At the extreme, demands for local autonomy or independence can lead to ethnic strife and civil war, as in the Balkans, the Horn of Africa, and in East Timor and Aceh.
Globalization also offers a mix of opportunities and risks.
Expanded markets and the spread of technology can lead to higher productivity and improved living standards. But they can also lead to instability and undesired changes - fear of job losses from the influx of foreign imports, financial instability due to volatile foreign capital flows, and threats to the global environment. As globalization shrinks the world, and localization multiplies the range of policy environments, successful development strategies will pay off more quickly in the new century than in the past. The consequences of flawed strategies will be revealed sooner and more painfully. Macroeconomic stability is essential for achieving the growth needed for development.