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subnational government participate in general public expenditures in about the same proportion of GDP as that applicable to all developing countries (about 5 percent in Table 4.16a) but this percentage is considerably lower than the 10 percent value recorded for the industrial markct economies, even when expenditures supported by borrowing are included (Table 4.16b). Expressed in percentage of general government expenditu-;es, the split of responsibilities between central and subnational authorities is definitely unfavorable to the latter, which control directly only some twenty percent of total public outlays. (Table 4.16c) This picture gets even worse if one considers separately subnational expenditures in social services (Table 4.16a). During the year examined (1982), expenditures by lower tier governments for education, health, social security, housing and community facilities were much lower in Latin American countries (3.5 percent of GDP) than they were in the industrial market economies (6.~ percent of GDP).

4.1.7 The Composition of Subnational Expenditures. Some indications in this respect can be derived from the time series available for Argentina, Chile, Colombia, and Panama. In Table 4.17a (Annex) one can note that social services generally account for the largest share of the subnational budgets. fluctuating between 28 percent (Panama) and 68 percent (Colombia). Also significant is the fact that this kind of expenditure has kept growing over the 1980's in constant terms, at an even if not faster pace than the resources of the subnational government (See the variation Tables 4.lPa to 4.18d in Annex). Expenditures for education command in general the first place and can be as high as 42 percent of total in the case of Colombia where they grew rapidly, as they did in Argentina, and hovered about 20 percent in other countries (except for Panama, where the subnational role in education appears minor). Health expenditures are of the order of 16 percent in Colombia but seem to be far less of a subnational charge in other countries. Social Security and Welfare are significant in Argentina and Brazil (13 and 9 percent respectively), due to the relative decentralization of their systems, but account for 5 percent or less of total subnational expenditures elsewhere. Housing and Community faeilities grew quite rapidly in the subnational budgets of Colombia and Panama, and averaged some 5 to 10 percent of subnational budgets. General Services (Administration and public order) command a considerable share of subnational outlays, ranging from 19 percent in Colombia up to 65 percent in Chile. In real terms this ty-pr of expenditure has been growing quite steeply in Colombia, where their weight is still moderate, but remained constant in Panama where they are very high (68 percent). Outlays for Economic Services, generally in the order of 15 percent, experienced lower than average growth, with transportation investments accounting for the main share. Obviously, this generalized picture tends to blur structural differences between regional and local level budgets and between the expenditure patterns of metropolitan areas and those of small rural communities. Detailed expenditure studies for Brazil, for instance, show that significant correlations exist between the level of urbanization of local jurisdictions and the composition of their expenditures.