January 29, 2009

What is decentralization? Modes of decentralization Administrative Fiscal Political Forms of decentralization Deconcentration Devolution Delegation Two views of decentralization Technocratic Communitarian

Hypotheses about conditions for decentralization Bardhan People can ‘vote with their feet’ Money reaches lower levels No need for targeting No capacity issues No elite capture When is decentralization appropriate? When preferences differ among citizens When there are ‘spillovers’ among jurisdictions When coordination costs among agents (citizens) are high When there is a supporting finance mechanism?

Other preconditions for effective decentralization Heller High degree of state capacity Well-developed civil society Political party with social movement characteristics that BENEFITS from decentralization Mechanisms to resist local elite capture

What matters for decentralization (Bardhan) Heterogeneity of agents Spillovers between jurisdictions Coordination costs among agents Can they hold local officials accountable? Financing mechanism Potential for capture by local elites

Insights from Uganda Case Increasing local taxes has had pernicious effects on the poor No effective mechanism to incorporate local planning into district plans Competition between elected officials and civil servants New forms of patronage can be created by decentralization

Olken – Study of Corruption in KDP Randomly assign villages to be subject to audit Randomly assign two levels of participation Invitations to attend village meetings widely distributed Invitations + anonymous comment forms distributed Measure Corruption Usual method: perceptions, or ask about bribe paying

Participation Being in a participation group does not significantly affect overall corruption With or without comment forms But invitations reduced missing money on wages more than on materials Villages with invitations did more openly discuss corruption at meetings Villages with comments were more likely to take action Missing money was lower were comments were distributed through schools (rather than having politicians involved)

Corruption measure Take ‘core’ samples from roads and public works Interview villagers about effective wage rates Estimate losses due to corruptoin Findings: Being in audit group reduces corruption by 8% But number of awards to family members increases

Analytic Frameworks for Assignment Pritchett and Woolcock Discretionary v. transaction intensive nature of services Eight alternatives for provision Grindle Klitgaard World Bank Hypotheses about decentralization

Grindle – Assessing Governance Interventions How much conflict is likely? How much time is required to institutionalize? How organizationally complex? Logistically complex? Expensive? How much behavioral change is required And, for what benefit?

Evaluating Potential Governance Interventions (Grindle) Is intervention appropriate for state capacity? What degree of conflict is likely Time required for institutionalization Organizational complexity Budgetary requirements Amount of behavioral change required

Pritchett & Woolcock Effective provision depends on structure of incentives Resources Information Decision-making Delivery mechanism Accountability

Klitgaard C = M + D – A Strategies: Obtain information Set rewards and penalties Change accountability relationships Induce competition Limit discretion Divide up large tasks