DECENTRALIZATION AND POVERTY REDUCTION Dr David Ayres Consultant 5 November

A Key Question  Does D&D Contribute to Poverty Reduction? 2

Problems of Definition?  What type of decentralization are we referring to?  Delegation, deconcentration, devolution?  Political, administrative, fiscal?  Devolution is the most extensive... combines political, administrative, fiscal. 3

More Problems of Definition?  What is poverty?  Is it an absolute or a relative status?  Does it include, for example, a designated percentage of a given country’s population by income, regardless of the wealth of the country?  Does it relate to an inability to afford life’s necessities or to the deprivation of essential capabilities? If so, what are these necessities or capabilities? Are they the same for one country as they are for another? 4

More Problems of Definition?  Most attempts to define poverty are quite broad  World Bank: poverty “is pronounced deprivation in well-being”  includes the traditional view of poverty, measured by either income or consumption  Includes other measures - voicelessness, powerlessness, vulnerability and exposure to risk  OECD: poverty “the inability of people to meet economic, social and other standards of well-being” 5

Clarifying the Key Question...  How does devolution contribute to people’s capacity to meet economic, social and other standards of well-being?  How does it contribute to the reduction of deprivation? 6

More Problems  Decentralization does not work in isolation, and poverty cannot be reduced with a single policy idea.  How do we measure the impact of decentralization on poverty reduction?  Compare decentralized and non-decentralized areas?  Long term study?  The idea is not universally accepted  Veveld: “Decentralization not emerging as a pro-poor policy”

The Ideal Situation 8

“D&D” and Poverty Reduction 9  Decentralization does not automatically lead to the reduction of poverty.  Studies from some countries indicate decentralization sometimes has an effect on poverty reduction; in other countries it has no effect  Why?  Successful decentralization requires local governments to have enough power (and resources) to have an impact  Successful decentralization depends on participation, and the poor don’t participate

Some Thoughts  What is needed for poverty reduction through D&D in Cambodia:  Increased opportunities for participation  Stronger local civil society  More service delivery through local government  Revenue raising powers for local government

D&D, GG and Poverty Reduction 11

QUESTIONS 12