This book examines the evolution of intergovernmental relations in postwar Japan. These relations are shown to be both complex and dynamic, and the Japanese model is revealed as one in which aspects of both central control and local autonomy have co-existed with the balance shifting graduallyover time towards the latter. The Japanese system has helped to maintain broad-based economic growth since it has at its core a strongly egalitarian fiscal transfer mechanism. At the same time, it has proved to be consistent, to a much greater extent than previously recognized, with politicaldevelopment, or progress in the attainment of such political values as liberty (personal rights) and equality (broad participation in public affairs) for individuals and communities. This is because the national government has proved flexible enough to accommodate, although not always with grace oralacrity, citizen concerns about the quality of life. The Japanese approach to intergovernmental relationships has also been successful in solving coordination problems which often arise between local and central government units and in building capacity to support greater and effectivedecentralization. Coordination problems have been handled through a variety of mechanisms including the practice of agency delegated functions, while local capacity issues have been addressed through such practices as the exchange of personnel across different levels of government and the use ofattractive compensation and training packages to recruit and retain local staff. The Japanese experience thus provides an example of gradual and guided decentralization based on shared responsibilities between local and central governments for mobilizing, managing, and spending public resources inthe pursuit of sustainable development.