The Korea Local Administration Review

This study analyzes the fiscal decentralization of the Participation Administration by setting the policy instrument selection process as game situation between state and local government. This study shows that the fiscal decentralization policy of the Participation Administration had an ambiguity of the policy goals and this caused the conflict on equalizing instrument in terms of vertical and horizontal equity. Also, this study shows that the Participation Administration continued to select the vertical equalizing instrument after her inauguration. This study has a purpose of addressing the reason of continuous selecting certain policy instrument among conflicted instruments. The results show that the establishment of fiscal benefits is prior to rather the political interest in the process of instrument selection between state and local government under the context of equivocal policy goals. Moreover, this study states that state government as policy implementing group makes a selection on strategy minimizing his damages or losses when the local governments, as group of benefiting from policy implementation, come to conflict on the policy instrument selection.