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Multi-Page.Pdf Public Disclosure Authorized Public Disclosure Authorized 0r) y _ 0) *~~~ vmmq~~~~~~~~~~~~~~~~ Public Disclosure Authorized Public Disclosure Authorized DIRECTIONS IN DEVELOPMENT The Political Economy of Democratic Decentralization James Manor The World Bank Washington, D.C. © 1999 The International Bank for Reconstruction and Development/ THE WORLD BANK 1818 H Street, N.W. Washington, D.C. 20433 All rights reserved Manufactured in the United States of America First Printing March 1999 The findings, interpretations, and conclusions expressed in this study are entirely those of the author and should not be attributed in any manner to the World Bank, to its affiliated organizations, or to members of its Board of Executive Directors or the countries they represent. Cover photo by Jeffrey Wong, 1998: Wind and water cut at the sand- stone strata, smoothing some edges and creating new ones, Paria- Vermillion Cliffs Wilderness, Arizona. Library of Congress Cataloging-in-Publication Data Manor, James The political economy of democratic decentralization / James Manor p. cm. -(Directions in Development) Includes bibliographical references (p. ) and index. ISBN 0-8213-4470-6 1. Decentralization in government. 2. Economic development. 3. Democratization. I. Title II. Series: Directions in development (Washington, D.C.) JS113.M355 1999 352.2'83-dc2l 99-11245 CIP Contents Abstract vii Foreword ix Acknowledgements xi Introduction 1 PART I Defining Terms 4 Types 4 Forms of Democratic Decentralization 8 Levels 10 PART II The Problem of Hubris: Regimes' Centralizing Tendencies and Earlier Experiments with Decentralization 13 The Age of Hubris 13 The Unraveling 23 PART III Explaining the Latest Wave of Decentralizations 26 Diverse Causes 27 Mixed Motives 36 Linking the Origins, Institutionalization, and Implications of Decentralization 40 PART IV Politics, State-Society Relations, and Decentralization 53 Conditions for Success, Crucial and Merely Helpful 55 Unfounded Assertions about "Preconditions" for Successful Decentralization 57 Importance of Historical Legacies 58 Virtues of Simplicity 59 Jealousy of Power Holders at Higher Levels 60 Other Reasons for Intrusions from Higher Levels 61 Mistakes at Higher Levels 62 iii iv THE POLITICAL ECONOMY OF DEMOCRATIC DECENTRALIZATION Giving Central Governments More Creative Roles in Making Decentralization Work Well 63 The Danger of Inflating Popular Expectations 65 Attracting Responsible Leaders and Combating Clientelism 65 Fine Line between Clientelism and More Creative, Institutionalized Patronage Systems 66 Creating Formal Structures with Politics and Accountability as the Main Concerns 67 Deconcentration and Devolution-Problem of Sequencing 67 Decentralization and Fiscal Discipline 68 Local Resource Mobilization and the Reluctance of Politicians at Lower Levels to Impose Fresh Taxes 69 Do Not Expect Rural Taxpayers to Vote with Their Feet 70 Grants from Above Do Not Necessarily Imply Control 71 Decentralized Authorities' Bias towards Small-Scale Infrastructure Projects 71 Decentralized Authorities' Foreshortened Time Perspective 72 Need for Patience with Elected Representatives and Voters in Newly Democratized Systems 72 Decentralizing in Uncongenial Social Contexts 73 Decentralization as an Agent of Social Change 73 Transparency: Not an Unmixed Blessing 74 Political Parties and Decentralized Bodies 75 Popular Pressure for Decentralization 76 Devices to Compel Elected Representatives to Engage with People at the Grass Roots 77 Utility of Participatory Rural Appraisal Techniques 78 PART V Assessing Decentralization to the Regional as well as the Local Level 81 The Greater Complexity and Cost of Decentralization to Both Regional and Local Levels 81 Bridging the Distance between Central and Local Levels 81 Which Responsibilities Should be Decentralized to Which Levels? 82 Protecting Decentralization from the Jealousy of Higher Level Leaders 82 Enhancing the Influence of Decentralized Bodies in National Politics 83 Ensuring Poor, Remote Regions of Fairer Representation in National Politics 83 Facilitating Local Authorities' Access to Administrative Resources at the Regional Level 83 CONTENTS v Enhancing Coordination of Development Administrators from Different Line Ministries 83 Facilitating Complex Development Projects 84 Facilitating Scaling Up from the Local Level 84 Facilitating the Upward Flow if Information from the Local Level and the Responsiveness of Central Government 84 Combating Absenteeism and Irresponsible Behaviour by Government Employees 84 Enhancing the Accountability and Responsiveness of Regional-Level Bureaucrats 84 Facilitating Poverty Alleviation and Fairness for Minorities 85 Facilitating Fairness to Women 85 Easing the Problem of the Foreshortened Time Perspective of Local- Level Politicians 85 Facilitating Collaboration between Nongovernmental Organizations and Decentralized Authorities 85 Integrating the Efforts of Local-Level Voluntary Associations 85 Overcoming Authoritarian Enclaves 86 Facilitating the Integration of Local-Level Politicians into National Politics 86 Facilitating the Integration of Competing Political Parties into Decentralized Institutions 86 Combating Urban Bias 86 PART VI How Promising is Decentralization for Rural Development 88 Where Decentralization Has Considerable Promise 88 Where Decentralization Has at Least Modest Promise 94 Where Decentralization Has Little Promise 107 Summary 118 References 121 Index 130 For Roderick MacFarquhar Abstract N early all countries worldwide are now experimenting with decen- tralization. Their motivations are diverse. Many countries are decentralizing because they believe this can help stimulate economic growth or reduce rural poverty, goals central government interventions have failed to achieve. Some countries see it as a way to strengthen civil society and deepen democracy. Some perceive it as a way to off-load expensive responsibilities onto lower level governments. Thus, decen- tralization is seen as a solution to many different kinds of problems. This report examines the origins and implications decentralization from a political economy perspective, with a focus on its promise and limitations. It explores why countries have often chosen not to decen- tralize, even when evidence suggests that doing so would be in the interests of the government. It seeks to explain why since the early 1980s many countries have undertaken some form of decentralization. This report also evaluates the evidence to understand where decen- tralization has considerable promise and where it does not. It identifies conditions needed for decentralization to succeed. It identifies the ways in which decentralization can promote rural development. And it names the goals which decentralization will probably not help achieve. vii Foreword oday over 80 percent of developing and transition countries of TEastern and Central Europe and the former Soviet Union, with widely different political orientations and economic bases, are exper- imenting with decentralization. This follows more than sixty years when the trend was to centralize power and resources. Central con- trol had enabled governments to pull their economies out of the Great Depression and later to wage the Second World War. The strategy led to massive economic gains among industrial nations in the 1950s and 1960s, and to rapid economic growth and increasing world influ- ence among Communist countries. Understandably, centralization became the model for development of the emerging nations in Africa, Latin America and Asia, reinforced by donor agencies including the World Bank. However, the top-down approach has often failed to promote devel- opment and reduce poverty. Disappointment has been particularly high with rural development programs, many of which were initiated, designed and executed by central government representatives with lit- tle or no input from communities. To address these and other prob- lems, starting in the mid-1980s, governments worldwide began decentralizing some responsibilities, decisionmaking authority and resources to intermediate and local governments and often to commu- nities and the private sector. This paper is a major contribution to our understanding of the decen- tralization movement and its implications for economic growth, poverty alleviation and the development of civil society and democra- tic institutions. It will be of interest to policymakers, development practitioners and scholars. The research was carried out as part of the World Bank's Decentralization, Fiscal Systems and Rural Development Research Program, supported by the Swiss Agency for Development Cooperation, the Royal Ministry of Foreign Affairs of the Government of Norway and the World Bank. The research program is a part of a major new initiative of the World Bank to revitalize rural develop- viii FOREWORD ix ment, essential to reduce poverty and increase food security without destroying the environment. This broad program is outlined in the strategy paper, Rural Development: From Vision to Action (World Bank, 1997b). Ian Johnson, Vice President Environmentally and Socially Sustainable Development Network Acknowledgments his study owes an immense debt to Hans Binswanger's searching Tquestions and his encouragement to extend the enquiry well beyond its initial, limited concerns. Perceptive assistance from the World Bank team-Andrew Parker, Suzanne Piriou-Sall, Anwar Shah, Johan van Zyl, Wendy Ayres and others-was exceedingly valuable. Insights from many people have been critically
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