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Balance, accountability, and responsiveness : lessons about decentralization

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  • Shah, Anwar

Abstract

The author examines the reasons developing countries are reexamining the respective roles of the private sector, civil society, and various levels of government--and considering new fiscal arrangements between national and lower levels of government. Decentralization may be particularly well-suited to developing countries, where central governments are not aswell developed as in industrial countries--because information requirements and transaction costs are lower at lower levels of government and the government can be more responsive and accountable to the citizenry. Vital to the success of decentralized decisionmaking, says the author, are: 1) A broad public consensus that decentralization is appropriate. 2) Civil service reform designed to encourage a service orientation, to discourage command-and-control governance and rent-seeking, and to prevent the central government from having a direct say in the recruitment and promotion of subnational civil servants. 3) Proper monitoring and oversight of governance. Other lessons from experience (include): 1) When there is citizen participation and transparency in decisionmaking, limited budgeting, auditing, and accounting systems at the subnational level should not be considered a barrier to decentralization. Those technical capabilities can be borrowed from higher levels of government. 2) Indonesia and Pakistan provide good examples of"asymmetric"decentralization, in which various powers can be assigned to different levels of government, depending on capacity. 3) The delinking of taxing and spending decisions leads to lack of accountability in the public sector. 4) Revenue-sharing (tax-by-tax) distorts incentives for efficient tax collection. 5) Properly structured (simple, transparent, consistent with objectives) fiscal transfers can improve government accountability. Fiscal transfers can also be used to encourage competition for the supply of public goods. In Canada and Chile, for example, Catholic schools compete with public schools for financing.

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Bibliographic Info

Paper provided by The World Bank in its series Policy Research Working Paper Series with number 2021.

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Date of creation: 31 Dec 1998
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Handle: RePEc:wbk:wbrwps:2021

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Related research

Keywords: Banks&Banking Reform; Decentralization; Public Sector Economics&Finance; Municipal Financial Management; National Governance; Banks&Banking Reform; Governance Indicators; Municipal Financial Management; Poverty Assessment; National Governance;

References

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  1. Cukierman, Alex & Webb, Steven B & Neyapti, Bilin, 1992. "Measuring the Independence of Central Banks and Its Effect on Policy Outcomes," World Bank Economic Review, World Bank Group, vol. 6(3), pages 353-98, September.
  2. Prud'homme, Remy, 1995. "The Dangers of Decentralization," World Bank Research Observer, World Bank Group, vol. 10(2), pages 201-20, August.
  3. Anwar Shah, 1996. "A Fiscal Need Approach to Equalization," Canadian Public Policy, University of Toronto Press, vol. 22(2), pages 99-115, June.
  4. Mauro, Paolo, 1995. "Corruption and Growth," The Quarterly Journal of Economics, MIT Press, vol. 110(3), pages 681-712, August.
  5. Landon, Stuart, 1999. "Education costs and institutional structure," Economics of Education Review, Elsevier, vol. 18(3), pages 327-345, June.
  6. Tsui, Kai-yuen, 1996. "Economic reform and interprovincial inequalities in China," Journal of Development Economics, Elsevier, vol. 50(2), pages 353-368, August.
  7. Boadway, Robin & Roberts, Sandra & Shah, Anwar, 1994. "The reform of fiscal systems in developing and emerging market economies : a federalism perspective," Policy Research Working Paper Series 1259, The World Bank.
  8. Deininger, K & Squire, L, 1996. "Measuring Income Inequality : A New Data-Base," Papers 537, Harvard - Institute for International Development.
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Citations

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Cited by:
  1. Lara, Carlos Icaza & Pezzini, Mario & Villarreal, Roberto & Garcilazo, Enrique & Davies, Andrew, 2009. "Institutional Reform:Improving the Effectiveness of Policy Delivery," MPRA Paper 16567, University Library of Munich, Germany.
  2. De Borger B. & Verardi V., 2008. "Estimating the direct costs of social conflicts: road blockings in Bolivia," Working Papers 2008013, University of Antwerp, Faculty of Applied Economics.
  3. Kelly Edmiston, 2000. "Fostering Subnational Autonomy and Accountability in Decentralized Developing Countries: Lessons from the Papua New Guinea Experience," International Center for Public Policy Working Paper Series, at AYSPS, GSU paper0005, International Center for Public Policy, Andrew Young School of Policy Studies, Georgia State University.
  4. Llanto, Gilberto M., 2009. "Fiscal Decentralization and Local Finance Reforms in the Philippines," Discussion Papers DP 2009-10, Philippine Institute for Development Studies.
  5. Dinar, Ariel & Kemper, Karin & Blomquist, William & Kurukulasuriya, Pradeep, 2006. "The Process and Performance of Decentralization of River Basin Resource Management: A Global Analysis," 2006 Annual meeting, July 23-26, Long Beach, CA 21093, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
  6. Zafar H. Ismail & Sehar Rizvi, 2000. "Governance, Decentralisation, and Poverty: The Case of Pakistan," The Pakistan Development Review, Pakistan Institute of Development Economics, vol. 39(4), pages 1013-1030.
  7. Paula Salinas Pena & Albert Sole-Olle, 2009. "Evaluating the effects of decentralization on educational outcomes in Spain," Working Papers in Economics 228, Universitat de Barcelona. Espai de Recerca en Economia.
  8. Anwar Shah, 1999. "Governing for Results in a Globalised and Localised World," The Pakistan Development Review, Pakistan Institute of Development Economics, vol. 38(4), pages 385-431.

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