1 Decentralisation and Poverty: Exploring the Impact by Lucia Wegner Development Centre, OECD, Paris OECD Workshop, September 2004, Paris

2 1) Decentralisation and Poverty: A new topic 2) Our Approach 3) Main findings 4) Key determinants of pro-poor decentralisation 5) Policy implications? Outline

3 1. Decentralisation and Poverty: A New Topic Decentralisation for quite some time an issue in the development debate, but not in connotation with poverty concerns Recently, shift in the agenda: Decentralisation a tool for poverty reduction? (MDG debate, PRSPs, …) First insight: mixed evidence; “it depends…”; but on what???

4 2. Our Approach Development of a simple framework that links decentralisation to poverty Reporting evidence from the empirical literature Systematic analysis of these findings to identify common patterns of pro-poor decentralisation processes

5 DECENTRALISATION POLITICAL CHANNELECONOMIC CHANNEL PARTICIPATION STABILITYEFFICIENCY VULNERABILITY VOICELESSNESS TARGETING LACK of ACCESS TO SERVICES POVERTY Decentralisation and Poverty

6 Impact Background Country setting Social Institutions Capacity Political Power Structure Objectives Decentralisation Poverty Process Ability and willingness Transparent & participative process Elite capture/corruption Policy Coherence Key factors of influence

7 Source: Jütting et al. (2004) 3. Main Results

8 4. Expected and Unexpected Results: Country Background Best performers have a higher GDP Yet what about Ghana and West Bengal? Best performers have generally more freedom of expression… Yet what about China? Best performers have generally higher educational levels

9 Country background (contin.) Best performers have built decentralisation reforms on existing social institutions (China) Yet some local institutions discriminate against somegroups of the population? (e.g. women in northern Indian states) Yet what if decentralisation reinforces local client- patron relationships? (Mexico)

10 Process Design (I) Ability and Willingness Political commitment: West Bengal versus Zambia Local Human Capacity: Philippines and Mexico Local Financial Capacity: Bolivia and China

11 Process Design (II) Transparency and participative process -information flow and role of civil society (Bolivia, South Africa)  -participation Policy coherence -Decentralisation as part of a larger reform to reduce poverty (India: West Bengal) - donor’s co-ordination

12 5. Policy conclusions Decentralisation could be a powerful tool in countries with: Process by design National coherent policies Capacity Challenges for donors? 1. Fine tuning policies; reinforcing the link between decentralisation and poverty and investing in participation 2. Focus on pre-conditions for decentralisation