Article Politics and Space Spanish fiscal decentralization: A successful (but still unfinished) process Santiago Lago-Pen ˜ as, Xoaquı ´n Ferna ´ ndez-Leiceaga and Alberto Vaquero-Garcı ´a University of Vigo, Spain Abstract Both fiscal and political decentralization have been a worldwide trend in recent decades. Spain is probably the best example of this evolution, insofar as it became one of the most decentralized countries in the world in just over three decades, departing for a highly centralized institutional framework. This paper aims to conduct a detailed analysis of this process, focusing on the fiscal aspects. While we show the successful aspects, we also point out its shortcomings and failures. Those lessons from Spain can be very useful for centralized or low decentralized countries involved in designing institutional reforms to become more decentralized. Our second aim is to review the way in which the Spanish sub-central levels of government have responded to the so-called ‘‘Great recession’’. Again, Spain is a good laboratory for what actually works and what does not in the area of stability and fiscal sustainability in decentralized states, for two reasons. First, it is by far the country which has suffered the brunt of the economic and financial crisis most acutely among those with a federal structure. And second, subsequent different solutions for tackling the fiscal crisis of sub-central governments have been tested. Keywords Fiscal federalism, decentralization, fiscal stability, intergovernmental relations, Spain Introduction As stated in the foreword of a special issue of this journal (Lago et al., 2011), over the last several decades, decentralisation has become one of the most important forms of contemporary policy reform and institutional redesign in both developed and developing countries. However, knowledge about its potential economic and political consequences is limited, and it challenges our capacity to design sound and detailed decentralisation strategies (Martinez-Vazquez et al., 2016). Hence, additionally both cross-sectional and case studies are required to untangle the positive and negative effects of the different formulas and solutions implemented. The accent of the special issue cited above was Corresponding author: Santiago Lago-Pen ˜as, Facultade de Cienciass Empresariais e Turismo, University of Vigo, Campus Universitario, Ourense 32004, Spain. Email: slagop@uvigo.es Environment and Planning C: Politics and Space 0(0) 1–17 ! The Author(s) 2017 Reprints and permissions: sagepub.co.uk/journalsPermissions.nav DOI: 10.1177/2399654417704663 journals.sagepub.com/home/epc