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Decentralizing development: Allocating public goods via competition

  • Chavis, Larry
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    Decentralizing the allocation of public goods by giving funds directly to communities takes advantage of local information concerning needs, but leaves funds open to misuse or capture by local elites. A large scale development project in Indonesia attempts to overcome this downside of decentralized allocation by having communities compete locally for block grants. Competition weeds out less efficient projects. Increasing the number of villages bidding by 10% leads to a 1.8% decline in road construction costs. Increased community participation in project planning also leads to better outcomes.

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    Article provided by Elsevier in its journal Journal of Development Economics.

    Volume (Year): 93 (2010)
    Issue (Month): 2 (November)
    Pages: 264-274

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    Handle: RePEc:eee:deveco:v:93:y:2010:i:2:p:264-274
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    1. Benjamin Olken, 2005. "Monitoring corruption: Evidence from a field experiment in indonesia," Natural Field Experiments 00317, The Field Experiments Website.
    2. 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.
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    5. Andrei Shleifer, 1985. "A Theory of Yardstick Competition," RAND Journal of Economics, The RAND Corporation, vol. 16(3), pages 319-327, Autumn.
    6. Fitria Fitrani & Bert Hofman & Kai Kaiser, 2005. "Unity in diversity? The creation of new local governments in a decentralising Indonesia," Bulletin of Indonesian Economic Studies, Taylor & Francis Journals, vol. 41(1), pages 57-79.
    7. Olken, Benjamin A., 2006. "Corruption and the costs of redistribution: Micro evidence from Indonesia," Journal of Public Economics, Elsevier, vol. 90(4-5), pages 853-870, May.
    8. Galasso, Emanuela & Ravallion, Martin, 2005. "Decentralized targeting of an antipoverty program," Journal of Public Economics, Elsevier, vol. 89(4), pages 705-727, April.
    9. Pranab Bardhan & Dilip Mookherjee, 2006. "Decentralisation and Accountability in Infrastructure Delivery in Developing Countries," Economic Journal, Royal Economic Society, vol. 116(508), pages 101-127, 01.
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