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GOVERNANCE FROM BELOW A Theory of Local Government With Two Empirical Tests

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  • Jean-Paul Faguet

Abstract

I examine decentralization through the lens of the local dynamics that it unleashes. The national effects of decentralization are simply the sum of its local-level effects. Hence to understand decentralization we must first understand how local government works. This paper proposes a theory of local government as the confluence of two quasi-markets and one organizational dynamic. Good government results when these three elements - political, economic and civil - are in rough balance, and actors in one cannot distort the others. Specific types of imbalance map into specific forms of government failure. I use comparative analysis to test the theory's predictions with qualitative and quantitative evidence from Bolivia. The combined methodology provides a higher-order empirical rigor than either approach can alone. The theory proves robust.

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File URL: http://sticerd.lse.ac.uk/dps/pepp/PEPP12.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 - Political Economy and Public Policy Paper Series with number 12.

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Date of creation: Aug 2005
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Handle: RePEc:cep:stipep:12

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

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Keywords: local government; civil society; democratic theory; good governance; decentralization; Q2 (Q-square); Bolivia;

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  1. Keith Poole & Thomas Romer, 1985. "Patterns of political action committee contributions to the 1980 campaigns for the United States House of Representatives," Public Choice, Springer, vol. 47(1), pages 63-111, January.
  2. Anthony Downs, 1957. "An Economic Theory of Political Action in a Democracy," Journal of Political Economy, University of Chicago Press, vol. 65, pages 135.
  3. Olivier Blanchard & Andrei Shleifer, 2000. "Federalism with and without Political Centralization: China versus Russia," NBER Working Papers 7616, National Bureau of Economic Research, Inc.
  4. Weingast, Barry R, 1995. "The Economic Role of Political Institutions: Market-Preserving Federalism and Economic Development," Journal of Law, Economics and Organization, Oxford University Press, vol. 11(1), pages 1-31, April.
  5. Hart, Oliver, 1995. "Firms, Contracts, and Financial Structure," OUP Catalogue, Oxford University Press, number 9780198288817, September.
  6. K. Palda & Kristian Palda, 1985. "Ceilings on campaign spending: Hypothesis and partial test with Canadian data," Public Choice, Springer, vol. 45(3), pages 313-331, January.
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Cited by:
  1. Faguet, Jean-Paul & Ali, Zulfiqar, 2009. "Making Reform Work: Institutions, Dispositions, and the Improving Health of Bangladesh," World Development, Elsevier, vol. 37(1), pages 208-218, January.
  2. Llanto, Gilberto M., 2009. "Fiscal Decentralization and Local Finance Reforms in the Philippines," Discussion Papers DP 2009-10, Philippine Institute for Development Studies.
  3. Speer, Johanna, 2012. "Participatory Governance Reform: A Good Strategy for Increasing Government Responsiveness and Improving Public Services?," World Development, Elsevier, vol. 40(12), pages 2379-2398.

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