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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.

Suggested Citation

  • Jean-Paul Faguet, 2005. "GOVERNANCE FROM BELOW A Theory of Local Government With Two Empirical Tests," STICERD - Political Economy and Public Policy Paper Series 12, Suntory and Toyota International Centres for Economics and Related Disciplines, LSE.
  • Handle: RePEc:cep:stipep:12
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    References listed on IDEAS

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    1. Anthony Downs, 1957. "An Economic Theory of Political Action in a Democracy," Journal of Political Economy, University of Chicago Press, vol. 65, pages 135-135.
    2. Hart, Oliver, 1995. "Firms, Contracts, and Financial Structure," OUP Catalogue, Oxford University Press, number 9780198288817.
    3. 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.
    4. 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.
    5. repec:cup:apsrev:v:87:y:1993:i:02:p:303-318_09 is not listed on IDEAS
    6. Olivier Blanchard & Andrei Shleifer, 2001. "Federalism With and Without Political Centralization: China Versus Russia," IMF Staff Papers, Palgrave Macmillan, vol. 48(4), pages 1-8.
    7. 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.
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    Cited by:

    1. 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.
    2. 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.
    3. Llanto, Gilberto M., 2009. "Fiscal Decentralization and Local Finance Reforms in the Philippines," Discussion Papers DP 2009-10, Philippine Institute for Development Studies.

    More about this item

    Keywords

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

    JEL classification:

    • D71 - Microeconomics - - Analysis of Collective Decision-Making - - - Social Choice; Clubs; Committees; Associations
    • H41 - Public Economics - - Publicly Provided Goods - - - Public Goods
    • H42 - Public Economics - - Publicly Provided Goods - - - Publicly Provided Private Goods
    • H72 - Public Economics - - State and Local Government; Intergovernmental Relations - - - State and Local Budget and Expenditures
    • O18 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Urban, Rural, Regional, and Transportation Analysis; Housing; Infrastructure

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