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Decentralization And Governance

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  • Jean-Paul Faguet

Abstract

The most important theoretical argument concerning decentralization is that it can improve governance by making government more accountable and responsive to the governed. Improving governance is also central to the motivations of real-world reformers, who bear risks and costs in the interest of devolution. But the literature has mostly focused instead on policy-relevant outcomes, such as education and health services, public investment, and fiscal deficits. This paper examines how decentralization affects governance, in particular how it might increase political competition, improve public accountability, reduce political instability, and impose incentive-compatible limits on government power, but also threaten fiscal sustainability.

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File URL: http://sticerd.lse.ac.uk/dps/eopp/eopp27.pdf
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Bibliographic Info

Paper provided by Suntory and Toyota International Centres for Economics and Related Disciplines, LSE in its series STICERD - Economic Organisation and Public Policy Discussion Papers Series with number 027.

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Date of creation: Jun 2011
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Handle: RePEc:cep:stieop:027

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Web page: http://sticerd.lse.ac.uk/_new/publications/default.asp

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Keywords: decentralization; governance; local government; political competition; accountability; instability;

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References

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  1. Jonathan A. Rodden & Gunnar S. Eskeland (ed.), 2003. "Fiscal Decentralization and the Challenge of Hard Budget Constraints," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262182297.
  2. Pranab Bardhan and and Dilip Mookherjee., 1999. "Relative Capture of Local and Central Governments: An Essay in the Political Economy of Decentralization," Center for International and Development Economics Research (CIDER) Working Papers C99-109, University of California at Berkeley.
  3. Pranab Bardhan, 2002. "Decentralization of Governance and Development," Journal of Economic Perspectives, American Economic Association, vol. 16(4), pages 185-205, Fall.
  4. Faguet, Jean-Paul & Sánchez, Fabio, 2008. "Decentralization's Effects on Educational Outcomes in Bolivia and Colombia," World Development, Elsevier, vol. 36(7), pages 1294-1316, July.
  5. John Joseph Wallis & Wallace E. Oates, 1988. "Decentralization in the Public Sector: An Empirical Study of State and Local Government," NBER Chapters, in: Fiscal Federalism: Quantitative Studies, pages 5-32 National Bureau of Economic Research, Inc.
  6. Luiz R. De Mello Jr., 2004. "Can Fiscal Decentralization Strengthen Social Capital?," Public Finance Review, , vol. 32(1), pages 4-35, January.
  7. Galasso, Emanuela & Ravallion, Martin, 2005. "Decentralized targeting of an antipoverty program," Journal of Public Economics, Elsevier, vol. 89(4), pages 705-727, April.
  8. International Monetary Fund, 2001. "Fiscal Decentralization and Governance: A Cross-Country Analysis," IMF Working Papers 01/71, International Monetary Fund.
  9. Faguet, Jean-Paul, 2001. "Does decentralization increase responsiveness to local needs? - evidence from Bolivia," Policy Research Working Paper Series 2516, The World Bank.
  10. Dillinger, William & Webb, Steven B., 1999. "Decentralization and fiscal management in Colombia," Policy Research Working Paper Series 2122, The World Bank.
  11. Dilip Mookherjee, 2005. "Decentralization, Hierarchies and Incentives: A Mechanism Design Perspective," Boston University - Department of Economics - Working Papers Series WP2005-034, Boston University - Department of Economics, revised Sep 2005.
  12. Wildasin, David E., 1998. "Fiscal aspect of evolving federations : issues for policy and research," Policy Research Working Paper Series 1884, The World Bank.
  13. Kent Eaton & Kai Kaiser & Paul J. Smoke, 2011. "The Political Economy of Decentralization Reforms : Implications for Aid Effectiveness," World Bank Publications, The World Bank, number 2336, October.
  14. Alderman, Harold, 2002. "Do local officials know something we don't? Decentralization of targeted transfers in Albania," Journal of Public Economics, Elsevier, vol. 83(3), pages 375-404, March.
  15. Hurwicz, Leonid, 1973. "The Design of Mechanisms for Resource Allocation," American Economic Review, American Economic Association, vol. 63(2), pages 1-30, May.
  16. Blair, Harry, 2000. "Participation and Accountability at the Periphery: Democratic Local Governance in Six Countries," World Development, Elsevier, vol. 28(1), pages 21-39, January.
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Citations

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Cited by:
  1. Yanez-Pagans, Monica & Machicado, Carlos Gustavo, 2012. "Bureaucratic Delay, Local-Level Monitoring, and Delivery of Small Infrastructure Projects: Evidence from a Field Experiment in Bolivia," IZA Discussion Papers 6687, Institute for the Study of Labor (IZA).
  2. Sridhar, Kala Seetharam, 2011. "The Efficiency of States and Cities: Is There a Case for Public Land Leasing and Sales to Finance India.s Cities?," Working Paper Series UNU-WIDER Research Paper , World Institute for Development Economic Research (UNU-WIDER).
  3. Janvry, Alain de & Sadoulet, Elisabeth, 2004. "Fitting the Facts and Capitalizing on New Opportunities to Redesign Rural Development Programs in Latin America," Brazilian Journal of Rural Economy and Sociology (RESR), Sociedade Brasileira de Economia e Sociologia Rural, vol. 42(3), September.
  4. Pranab Bardhan & Dilip Mookherjee, 2003. "Pro-Poor Targeting and Accountability of Local Governments in West Bengal," Boston University - Department of Economics - The Institute for Economic Development Working Papers Series dp-138, Boston University - Department of Economics.
  5. Bouma, Jetske A. & Joy, K.J. & Paranjape, Suhas & Ansink, Erik, 2014. "The Influence of Legitimacy Perceptions on Cooperation – A Framed Field Experiment," World Development, Elsevier, vol. 57(C), pages 127-137.
  6. Westphal, Nico, 2011. "Political Decentralisation and Local Economic Development: Findings on the pro-poor responsiveness in 5 Cambodian communes," IEE Working Papers 193, Institut fuer Entwicklungsforschung und Entwicklungspolitik, Ruhr-Universitaet Bochum.
  7. Anwar Shah & Theresa Thompson & Heng-fu Zou, 2004. "Decentralising the public sector: The Impact of Decentralisation on Service Delivery, Corruption, Fiscal Management and Growth in Developing and Emerging Market Economies: A Synthesis of Empirical Evi," CEMA Working Papers 492, China Economics and Management Academy, Central University of Finance and Economics.

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