Decentralisation's Effects on Public Investment: Evidence and Policy Lessons from Bolivia and Colombia

Journal of Development Studies (Impact Factor: 0.79). 09/2008; 44(8):1100-1121. DOI: 10.1080/00220380802242370
Source: RePEc


This paper examines decentralisation in Bolivia and Colombia to explore its effects on the uses and spatial distribution of public investment, as well as government responsiveness to local needs. In both countries, investment shifted from infrastructure to social services and human capital formation. Resources were rebalanced in favour of poorer districts. In Bolivia, decentralisation made government more responsive by re-directing public investment to areas of greatest need. In Colombia, municipalities increased investment significantly while running costs fell. Six important lessons emerge from the comparison. For decentralisation to work well: (i) local democracy must be transparent, fair and competitive; (ii) local governments must face hard budget constraints; (iii) central government must be scaled back; (iv) significant tax-raising powers must be devolved; and (v) decentralisation is composed of distinct, separable components, the sequencing of which is important. Finally, (vi) what decentralisation achieves, and whether it is advisable, hinges on how central government behaved pre-reform.

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Available from: Jean-Paul Faguet,
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    • "The results also show that after the initial revenue boost SARAs reduce variation around the long term tax collection trend. This is important because a more predictable revenue base makes it easier for local governments to plan and implement their budget policies (Faguet, 2008). "
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    ABSTRACT: Do semi-autonomous revenue agencies (SARAs) outperform conventional tax administrations? This paper argues that they do. Presenting the results of a panel analysis of local tax collection in Peru between 1998 and 2011, it shows that municipalities with SARAs collect more revenue than those with conventional tax administrations. In line with findings from previous research, the effect is particularly strong in the first two years of operation, but remains significantly positive in subsequent years, after a brief accommodation period. The results also indicate that SARAs generate more stable revenue, meaning that revenue volatility is less pronounced in municipalities with SARAs, which is good for budget policy and planning.
    Journal of Development Studies 11/2011; 50(4). DOI:10.2139/ssrn.1961616 · 0.79 Impact Factor
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    • "In terms of technical merits, decentralization could have been failed but in the view of political effectiveness it could have been a success for those who initiated it as their political base has been stabilized or expanded. Hence, it is not surprising that the empirical literature on decentralization is very ambiguous and is unable to agree on what decentralization's effects on public administration, public finances, or governance have been in practice (Faguet 2008). Decentralization is not a monolithic concept and it is not inherently positive or negative. "
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    ABSTRACT: One of the most important issues in rural development is empowerment and entitlement of farmers through participation. Decentralisation and participation are seemingly interdependent. Therefore, the paper begins with a theoretical discussion on the cause and effects of this interdependence. Decentralisation is often advertised as means to better incorporate the views and wishes of local actors. Yet, a decentralization process is no guaranty for political participation of local actors. The state induced decentralisation process in rural Thailand serves as an example to investigate forces that hamper or facilitate political participation. Change and uncertainty are inherent of political systems and the agricultural sector. Hence, this paper focuses in particular, on the last two politically turbulent decades in Thailand and its impact on political participation in rural Thailand. The Tambon Administration Organization (TAO) as one means of and likewise outcome of the decentralization process will serve as an example to discuss the effects of decentralisation on participation in the TAOs, using the concept of accountability. After increasing decentralization at the end of the 90s the last decade was coined by centralization policies. The ongoing political unrest could potentially trigger a new wave of political decentralization. However, the real reason for decentralization is not to distribute power but to maintain central effectiveness. Thus, we expect to see more decentralization without participation.
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    • "Empirical literature does not agree on the benefits of decentralization as different studies are poles apart in their conclusions. For example, while Olowu and Wunsch (1990), Putnam (1993) and World Bank (1994) argue that decentralization makes governments more responsive, Faguet (2008), Tanzi (1995), Prud'homme (1995) and Samoff (1990) think otherwise. However, the 1992 constitutional recognition for decentralization has renewed interest in political decentralization in Ghana, as locals often reject leaders appointed by the central government (Ayisi, 2008). "
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    ABSTRACT: Public administration as an art is defined in the Ghanaian context regarding decentralization and public officials' accountability. It examines decentralization, local elections and empowerment. While the paper advocates for regional and district level elections, it uses the literature to argue that local representatives are more accessible to their locals. It questions the current appointment practices by the central government, which has become more partisan than originally intended in the Local Government Act. To affirm the democratic environment of politics in Ghana, it calls for constitutional amendment regarding decentralization and local government elections.
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