Empowering Local Government Lessons from Europe This paper examines the literature on the evolution of local government in eight western European countries in an attempt to find clues to what makes for successful devolution of power to local governments. It appears likely that rising incomes led to a greater demand for local public goods and also helped the citizenry to articulate this demand in a politically effective way. History may have played an important role by delaying, though not halting, the devolution of power to the local level in states which inherited centralised bureaucracies. While some of the pattern of evolution seems explicable, much remains to be understood, in particular why centralised absolutist states evolved so differently in Scandinavia as compared to France, , and .

E SOMANATHAN

I diture and revenue (Figures 1 and 2).1 Why it entails building a bureaucracy. This seems Past and Present have richer countries been generally more to have been important in the history of successful at devolving power to local English local government. Secondly, it is hat lessons does Europe’s ex- authorities? This may be partly due to an harder for central authorities to undermine perience with local government increase in the demand for government local government that has deep historical Whold for the developing world services that rises more than proportion- roots. Where the public has experienced today? This study is motivated by the idea ately with income. Such an increase may local self-government, it might take a that local governments in democratic also be disproportionately in favour of political battle for higher authorities to polities are likely to be more effective in goods best provided at the local level. take this away. The value of such a system providing certain goods and services than Urbanisation is probably a cause of such is then generally known and it is difficult are national and provincial governments. a shift in demand, as Sharpe (1988) argues. to undermine it. Where there has been no Perhaps the most basic reason for this is But this is not a complete explanation such experience, the political and electoral that politicians’ accountability is enhanced of the differences in local government pressure to introduce it may be weak. when the electorate can separately reward between high and low income countries. Why do we find the geographical pattern or punish performance at local and higher Even if the demand for local government of centralised government in the centre of levels of government. Moreover, when increases, we still have to understand how Europe, with ‘looser’ government in the local public goods are provided by a the political process translates this into an northern periphery? An intriguing theory national or provincial government, this has increased supply of local government. that addresses this was proposed by Otto necessarily to be accomplished through a It is, therefore, of interest to examine to Hintze. Hintze argued that local self- bureaucracy. For the elected officials to what extent, and how, this problem was government “rests upon the fact that the supervise this bureaucracy closely, how- overcome in different European countries. general interests of the state as a whole ever, is difficult, and this is more likely Historically, there has been considerable coincide with the special interests of the to be the case when the area governed is variation in the degree of centralisation leading sectors of the population of the large. This difficulty increases when either among European countries. France, Spain, area”.2 This could not be the case in the the demand for, or the conditions of supply and Italy, influenced by the Napoleonic heartland of Europe, he argues, because of public goods and services vary from Code, have traditionally been the most states located there were subject to intense locality to locality, since a uniform system centralised. However, until the 19th cen- military competition leading to militari- of provision would not then be appro- tury, Denmark, and, to a lesser extent, sation and a concomitant bureaucratis- priate. Competition between local govern- Norway, were also highly centralised ation and centralisation. Only in England ments to attract capital could be a further polities which nevertheless converged and Scandinavia, and and Hun- stimulus towards efficiency in the provi- toward the much more decentralised poli- gary, where military competition was not sion of public services. ties of northern Europe: Britain, , so intense, could local government arise However, many countries, particularly and Sweden. Nevertheless, all European before this century. At the same time, the in the underdeveloped world, are countries, even the three most centralised presence of a petty nobility was necessary characterised by highly centralised govern- mentioned here, have embarked on de- for (rural) local government, for only such ments which manifestly fail to provide centralisation programmes which have a class would both be loyal to the state, local public services. A good part of the had a considerable impact. Thus, while and yet not be so powerful as to attempt reason for this resides in the reluctance of history has played a role in the present to set up mini-states of their own. higher-level governments to cede power structure of subnational government, so How does the introduction or expansion and the rents that go with power to local have the demands of modern politics. of local self-government come about in authorities. History plays an enduring role for at least modern democracies? Several themes There is a distinct correlation between two quite distinct reasons. Where the state emerge in the discussion of individual per capita income and the share of local has historically been decentralised, countries below. The increasing appeal of government in total government expen- centralisation may be expensive because the ideology of democracy is an important

Economic and Political Weekly October 13, 2001 3935 one. The rhetoric accompanying appeals Figure 1: Relation between Local Share of Government Revenue to Per Capita GDP for decentralisation is one of democrati- Local share of government revenue (per cent) with regression line sation. To some degree, this is simply a 40 - recognition of the benefits of democratic MNG SWE accountability discussed above. The appeal DNK of this idea is probably due to the increa- FIN sing political sophistication of the citi- 30 - NOR zenry as incomes and educational levels ISL rise. At some juncture one or other politi- CHE cal party sees an advantage in pushing this 20 - BGR AUT USA issue, as happened with the socialists in DEU CAN France in the 1980s. A second important FRA NIC HUN LUX theme that emerges is the presence of ZAF ESP NGBR regional parties organised on more or less 10 - ISR ethnic lines. This is clearly seen in Spain BOI MEX PRT IRL BEL AUS PER CHL MYS following the end of Franco’s regime. In THA PRY BRA such a case, the regional parties have a 0 - strong interest in devolution to the level 0 5000 10000 15000 20000 at which they are powerful, and may be PPP-adjusted real per capita GDP in a strong enough position at the centre While modern local self-government has municipal councils (conseil municipal), to bring this about. thus been well established in Britain for and of councils to govern the departments over a century, this has not made it invul- (conseil généraux), but they remained un- I nerable. The conservative government of der extensive state control. The paid staff Britain Margaret Thatcher found it convenient to were state employees, and the general ad- considerably curtail local governments’ ministrative supervision (called tutelle) of At the beginning of the 19th century autonomy to tax and spend, as part of the the prefect was maintained. This system Britain had a relatively decentralised programme to roll back the state. More- continued until the 1980s, although the government.3 In the rural areas and some over, the manner in which this was done range of functions, and hence the real urban areas, the county was the unit of led to a greater burden being placed on authority of the local governments, has government. The principal local officials local authorities controlled by the Labour expanded. at the county level were the Justices of the party than those controlled by the Conser- It was the existence and pre-eminence Peace who were mostly unpaid members vatives [Wolman 1988]. Nevertheless, of the prefect, an official who has no of the landed gentry. In some of the towns, there was never any intention on the part parallel in Britain, which, more than any- there were boroughs governed by small of the conservatives to do away with local thing else, characterised the centralisation associations of merchants. Democratisation government or to take over the adminis- of the French system. However, local began in the 1830s with the extension of tration of local affairs. This is likely to interests were represented to some degree the suffrage in 1832. The middle classes have been much more difficult politically due to the existence of a system known in the towns pressed to have control over and, of course, there was no reason for the as the cumul des mandats. This meant that their local affairs removed from the hands conservatives to wish to do it. mayors and others elected to (possibly of the existing cliques which were un- multiple) local offices often were also interested in providing public services. This III elected to legislative offices at the national led to the passage by parliament of the France level. These ‘notables’ thus obtained 1835 Municipal Corporations Act which additional power in their relations with the provided for a council elected by all rate- Following the Revolution, subnational prefect. The formulation and implemen- payers (those paying property taxes). The government in France had two levels: the tation of central policies were thus sub- powers of these Municipal Corporations departments, and the communes. There jected to a certain degree of constraint by were extended through the 19th century. were 89 departments and some 36,000 local interests. Nevertheless, it is clear that In 1888, four years after the franchise was communes or municipalities. Each depart- this could not be self-government in the extended to agricultural labourers, the ment was headed by an official of the British sense. Transparency, and with it, counties were also given elected councils. central state known as the prefect who was accountability, was a victim of the system It is clear that the presence of an urban a successor of the pre-revolutionary offi- [Rogers 1998]. Since the implementation elite sufficiently interested in local affairs cial known as the intendant. The com- of policy depended on the outcome of to demand local elected government (with munes were run by elected councils from closed-door negotiations or deals between a restricted franchise) was an important 1790 following the revolution. At some the prefect and the notables, the latter factor in the making of the Municipal periods during the 19th century, these were could secure outcomes which they desired Corporations Act. Of course, if the central replaced by appointed officials (mayors without having to accept political respon- government had already been in posses- and councillors) but the symbolism of sibility for them. Voters could never be sion of a bureaucracy with which it could democracy was never entirely discarded. sure to what extent actual results were administer the towns, it may have chosen During ’s rule, the appointments forced on their elected representatives or to use it instead of giving power to elected were made from lists drawn up of the secretly desired by them. local councils. But the creation of a bureau- voters. At other times, officials were In the 1980s the socialist government cracy would have been expensive. The rural elected, but they were always subject to that came to power in 1981 introduced the MPs and those from towns without a de- the supervision of the prefect. first major reforms in subnational govern- mand for better government may have been In the 1880s, following the establish- ment in a century. The supervisory powers unwilling to pay for it. And so it is not ment of the Third Republic, the French of the prefects were abolished and passed surprising that this route was not attempted. legislature guaranteed the election of the on to the presidents of the departmental

3936 Economic and Political Weekly October 13, 2001 councils in the case of departments, and Figure 2: Relation between Local Share of Government to the presidents of the municipal councils Expenditure to Per Capita GDP in the case of communes. A third, higher, Local share of government expenditure with regression line level of local government, the region, which 40 - MNG DNK had been created in 1972, was further empowered. The regional councils created in 1972 were not directly elected. Their FIN SWE members consisted largely of elected NOR members of the lower level local govern- NLD BGR IRL GDR ment as well as of the national assembly. HUN ISL In 1986, this system changed to one of 20 - CHE DEU USA direct election. New powers were devolved FRA AUT CAN to all three levels of subnational govern- LUX ment: economic development, education, ISR BEL and training to the regions, health and NIC BRA ESP ZAF AUS social services to the departments, and PER THA PRT BOL CHL MEX town planning to the communes. MYS Here we conduct a brief examination of PRY 0 - the two major episodes of decentralisation, 0 5000 10000 15000 20000 that of the 1870s and 1880s during the PPP-adjusted real per capita GDP Third Republic and the recent episode from Decentralisation was seen both as a means to push for reform, and the socialists the 1980s. Within a few years of the revo- of appeasing a restless working class and adopted this as part of their political plat- lution, a highly centralised system of as a potential threat to the state. In the end, form. There still remains the question of government had been put in place. The political interest prevailed and decentra- why they went through with meaningful decentralising legislators of the 1870s were lisation passed. In 1879, the senate passed reforms after coming to power at the natio- the left parties led by Leon Gambetta.4 into the left’s control. This resulted in nal level. Part of the answer to this ques- Schmidt (1990) argues that their moti- further reform in 1882 and 1884 in which tion lies in the fact that the Left’s march vations were largely pragmatic rather than the remaining communes were also given to power came by way of the local govern- principled. In the highly volatile political elected mayors. The one exception was ments, the communes, the departments climate, they feared losing power and Paris, which was still seen as too revolu- and regions, in which they first captured wished to decentralise so that they could tionary. majorities before winning at the national retain power in at least some spheres if they This episode illustrates the importance level in 1981. This probably strengthened lost their majority in the national legis- of two factors in promoting decentra- the hands of those in the party who wanted lature. In 1876, a moderately decentralising lisation. First, the existence of a genuine to abolish the tutelle and increase the powers law was passed which provided for elected demand for decentralisation. This was felt of local elected officials. mayors for all but the largest 3,000 com- by leftist politicians to be an issue with munes. In the latter, mayors were to con- their voters, principally the lower middle IV tinue to be appointed. classes including shopkeepers and arti- Germany At this time, the legislature consisted of sans, who had found their elected councils two chambers: the directly elected Cham- and mayors to be more responsive to their In late medieval times many German ber of Deputies, in which the left parties needs than appointed officials. Second, cities possessed autonomy and were gov- had a majority, and the Senate, which had the prospect of losing power in future erned by councils of notables.5 Many of been elected by mayors who were them- elections prompted members of the central these cities lost their autonomy following selves appointees of the previous rightist legislature to decentralise in order to be their incorporation into the German union government. The right had a majority in able to retain power at the local level if by Prussia in the 19th century. But even the senate. The law was a compromise: the their side lost. Prussia’s bureaucratic and absolutist left had campaigned for decentralisation, The fact that there was little or no further government permitted autonomy and which its electorate wanted. On the other decentralisation for a hundred years attests self-government to at least some of its hand, once in power, it did not want to to the stability of the interests that held the cities following the City Charter Law of relinquish too much by decentralisation. system in place. These were, first, the 1808. The architect of this law, the Prus- But it also realised that its hold on power interest of legislators belonging to the ruling sian chief minister Baron Stein, intended was tenuous and so decentralisation was party to retain their control through the it to increase the involvement of the an insurance policy. The mayors were prefects’ tutelle, and second, the cumul des citizens in the affairs of the state, thus crucial here, since, in addition to their mandats which allowed local notables to giving them a greater sense of loyalty. It executive powers, they had considerable exercise influence and achieve their real, was also meant to reduce the expenses of powers to manipulate elections to the as opposed to publicly stated, goals. the state in governing the cities by replac- municipal councils. The rightist majority What finally led to the reform legislated ing paid civil servants in part by unpaid in the senate was willing to have some by socialists and their allies, the commu- councillors, and to improve the efficiency decentralisation since the alternative was nists in the 1980s was probably the in- of administration. to have mayors appointed by the left. creasing political maturity of the elector- Stein intended to extend this principle These debates were conducted in a ate, itself a function of rising incomes. to the countryside and also to have a national political climate which was marred by fear This led a larger section of the electorate elected assembly, but was dismissed be- of violent upheaval. The proletarian up- to demand better local public services. fore these proposals came to anything. The rising of the Paris Commune of 1871 was Moreover the connection between this and city charter law permitted the city govern- fresh in the legislators’ minds as were fears local democracy was understood. Grass- ments to deal with any local matters not of a monarchist seizure of power. roots and community activists organised specifically regulated or prohibited by the

Economic and Political Weekly October 13, 2001 3937 state. This was more liberal than the British there was a considerable consolidation of officials, a large number of special principle which permits local authorities local jurisdictions under the Social Demo- jurisdictions to handle particular issues jurisdiction only over those activities cratic governments in the German prov- such as health were created, which further specifically laid down by parliament. The inces. The strength of the electorate’s eroded the powers of the communes. Prussian state took over control of the attachment to traditional local government By 1962, the Christian Democrats were police and judiciary in the cities with the was seen when the attempted consolidation electorally weakened and forced to admit Charter Law and retained general super- of two cities Giessen and , on the socialists into the governing coalition. visory control. In 1831, the state revised opposite sides of a river in the province It took another 10 years for the creation the law to increase state control over the of Hesse led to a massive outcry. The city of the regions to actually begin. By 1972, cities, by permitting the state to replace the council was captured in a landslide vote it appeared that the Communist party might city governments’ laws with its own. by the opposition Christian Democrats and actually come to power. Reform via devo- Following the revolutions of 1848, the the state government then backed away lution of power to regions offered a hope Prussian king agreed to the formation of from its plans. of deflecting this threat. Statutory autho- a national parliament with representation rity was granted to the regions in 1972 and divided among three classes in proportion V was followed by the grant of financial to the taxes paid by each class. This elec- Italy powers and transfer of personnel from the tion system, which favoured the wealthy, central government. Regional governments spread to the city councils. The kingdom of ’s system of have had varying success at providing their While city government thus gained local government was inherited from the constituents with public services, but at autonomy fairly early on, county govern- Napoleonic administration, with com- least in some areas, mainly in the north and ment in the rural areas remained firmly in munes and provinces, each province hav- in communist controlled regions, they have the hands of the nobility until 1891, when ing a state-appointed prefect with super- been quite successful [Putnam 1993]. elected county councils took over local visory powers over the local governments.6 However, the municipalities are now government. However, due to the three The provinces were the analog of the French ensnared by a web of controls placed by class system, the nobility continued to departments. This carried over to unified regional governments. Between 1970 and dominate in the countryside, where the Italy under the law of 1865 which provided 1981, the regions’ share of public expen- middle classes were weak. for elected communes. But the state re- diture increased from 3 per cent to 19 per In 1919, universal suffrage was intro- tained the power to dismiss elected offi- cent. This was partly at the expense of the duced with the Weimar republic, and this cials and replace them with appointees. central government whose share declined included the city and councils. However, The system left little authority to the local from 70 to 64 per cent, but also at the the state took over the government of many governments. Today there are some 8,000 expense of the communes, whose share cities. Local governments became entirely communes and 95 provinces. declined from 23 to 14 per cent. This was appointed during the Nazi period. In 1948, the new Italian constitution due to a considerable reduction in the Following second world war, the occu- provided for the creation of a third, higher communes’ authority to tax that was pying governments in the west, re-estab- tier of subnational government: the region. imposed coincident with the regional re- lished elected local governments, while This was a reaction against the highly forms of 1972. The motives for this may continuing to directly control the govern- centralised and bureaucratic Fascist have been partly technical, to enable ments of their zones. Democratisation was regime. The constitutional provision for rationalisation of the impossible tax code, a primary objective of the allies to ensure the creation of regional governments was and partly political, as the centre sought that there was no repeat of Nazism. It was supported by all major political parties. to strengthen its control over the com- logical to begin this at the local level while However, the right-of-centre Christian munes at a time when the regions were maintaining control at the state level. The Democratic party which ruled Italy did not being created [Sanantonio 1987]. In any self-confidence and esteem the local implement the provisions of the constitu- case, the result of the reduction in the governments gained while rebuilding the tion and the regional governments did not communes’ powers of taxation was that devastated cities guaranteed that their come into being. This was for the usual they became heavily indebted. In 1978, the autonomy would be unchallenged when reasons:•the legislators of the ruling party central government rescinded the com- the Federal Republic was established in wished to maintain their power and patron- munes powers of borrowing and assumed 1949. The federal constitution, as well as age which would have been diminished their debts. From then on, the communes those of the states, provided for autono- by the creation of the regions. They were have been heavily dependent on grants. mous local governments. also afraid that some of the regional However, many of these are block grants It appears that the bureaucratic Prussian governments would be captured by op- and so do not encroach on the communes’ state initially introduced local self-govern- position parties, in particular the Com- autonomy. ment in cities as an efficiency promoting munist party. The system of local government is now measure. This was retained and extended Opposition parties, particularly the a maze of overlapping jurisdictions with due to pressure from a growing middle Socialists and Communists, pressed for mountain communities, metropolitan ar- class that demanded participation in decentralisation and the creation of the eas, local councils in some large urban government, which the state permitted to regions. Given that they were in opposi- communes, and a variety of authorities co-opt and deflect revolution. The exist- tion, this was of course, in their interest, with jurisdiction over particular issues. ence of the system made its continuance since they could then obtain some execu- The provinces and their elected officials inevitable in the Weimar republic. It formed tive power. still exist, but are largely redundant and the logical basis on which the allies could The Christian Democratic administra- powerless. As a result, governance is still begin rebuilding democracy and their tions were corrupt and clientelist. All levels poor since local elected officials may be interest and the success of the local govern- of government were corrupt and local quite constrained in their actions and it is ments contributed to its constitutional governments had very little autonomy. difficult for the electorate to identify the protection in the Federal Republic. In addition to oversight by the central sources of good or bad performance and During the late 1960s and early 1970s government through the prefect and other reward or punish it accordingly.

3938 Economic and Political Weekly October 13, 2001 VI influence. But it did not have the seats in of the municipalities, first from about 2,500 Spain the legislature to enact a law without a to 1,000 in 1952, and then down to 280 compromise with other parties. in 1974 during a second phase of consoli- Spain,7 like northern Italy, inherited the Following the advent of elected councils dation [Montin 1992]. This was prompted Napoleonic system of municipalities and in the late 1970’s, the municipalities in- by the need to have a competent profes- provinces (corresponding to communes creased expenditures to make up the short- sional administrative corps in the munici- and departments). The municipalities had fall in services that had accumulated under palities so that redistributive expenditures elected councils chaired by a state appoin- the dictatorship. However, the munici- could be efficiently and reliably executed. tee, the mayor. The state appointees at the palities had become almost entirely depen- The result of these changes was to change provincial and regional levels used their dent on central grants to finance expen- the amateur participatory nature of local powers to manipulate lower level govern- ditures. They resorted to borrowing in the government in many areas to a more bureau- ments which had little autonomy in 1980s since municipal finance had not cratic one. The debates surrounding sub- practice. A relatively decentralised regime been reformed. The central government sequent reforms have largely been about was established during the Second assumed their debts, but tightened up in how to restore citizen participation and Republic before fascism resulted in a the 1990s due to the recession. So munici- how to further improve the efficiency of reversion to the old system. pal spending has contracted. In the mean- service provision. There has never been any There was a massive process of migra- time, however, the Local Public Finance challenge to the very important role that tion to urban areas in Spain following the Act of 1988 has improved municipal fi- local government plays in the state. end of second world war. As a result there nance, with taxation centred on property Denmark’s local government was thor- was a huge expansion in demand for taxes [Suarez-Pandiello 1996]. Financial oughly centralised since the 17th century municipal services. Despite this, during reform has not been adequate, however, under an absolutist monarchy [Page 1991]. the fascist regime, spending by subnational and some regions still control much Centrally appointed officials governed levels of government grew more slowly that is under municipal control in other towns and counties. Elected councils were than in Spain’s neighbours [Carillo 1997]. parts of Europe. introduced in the 1840s. Until 1919, mayors By the 1970s the centralised administra- were appointed by the king. As in other tion of the dictatorship had failed to pro- VII Scandinavian countries, the welfare state’s vide many of the new urban areas with Scandinavia social programmes were implemented by even basic municipal services, such as local authorities, but these were much more paved streets, sewerage, and an adequate Sweden had provincial governors prior directly controlled by the central state. water supply, let alone schools, hospitals, to the 18th century and largely self- During the 1950s it became apparent parks and environmental protection governing parishes [Page 1991]. The royal that the self-governing towns had the [Clegg 1987]. As a result, highly organised reform of 1862 established a uniform resources to manage the increasing de- protest movements centred on urban issues system of local government for rural com- mand for services, while the small rural sprang up during the 1970s, which con- munes and cities. These were to be gov- parishes did not. The towns pressed for tributed to the pressure that was building erned by general assemblies of the whole decentralisation. A reform enacted by for democracy and decentralisation. population or by representative systems. parliament in the early 1970s merged the Following the death of Franco and the An elected county level of government smaller parishes and created the current establishment of democracy in 1978, the was also added. Sweden’s 1975 constitu- two-tier system of Kommune and AMT new constitution guaranteed the autonomy tion explicitly provides for local self- (county administration). This left local of the municipalities and provinces and government. The degree of legal recogni- authorities subject to far fewer forms of also of the newly created 17 regions. As tion enjoyed by local government in control [Etherington and Paddon 1991]. in Italy, however, the regions have respon- Sweden is quite unusual [Gustafsson 1981]. Nevertheless, there remains considerable sibilities for many functions that in Britain The constitution grants broad authority to bureaucratic regulation which local offi- or Germany would be performed by local the municipalities to perform any local cials find highly frustrating. In the mid- governments. In Catalonia, the regional functions. If it is thought that a council has 1980’s, a non-socialist government sought government, controlled by Catalan nation- exceeded its authority, this may be chal- to reduce public expenditure in response alists, has attempted to reduce the powers lenged in court by a resident of the munici- to the recession. And since local govern- of the municipalities, which tend to be pality. But the court’s decision does not ment expenditure constituted 60 per cent socialist. It attempted to abolish altogether force other municipalities to change their of state expenditure, it was a major target the provincial councils, but in this it failed, practices in accord with the decision. of this drive. But widespread support among the abolition being overturned by the Following second world war and even the citizenry for the services of the welfare constitutional court. before, the government followed the path state meant that a Thatcherist assault on In 1985, the national parliament passed of expanding social services via local local authorities’ ability to spend was not the Local Government Law, setting out the government rather than through a central politically feasible. So the government went functions to be performed by the munici- bureaucratic apparatus. This has led to in for the free local government initiative, palities. This list was quite comprehen- obligatory functions being placed upon allowing local governments to propose sive, but it was not exclusive, leaving the local governments. But the finance for projects requiring legislative changes. The actual distribution of functions to be these functions is provided by the central state was to more or less automatically performed to be worked out between the state, so the autonomy of the municipali- approve projects subject to the require- various levels of government. This reflected ties is not really reduced thereby. Munici- ment that the citizens’ health and rights the nature of the political compromise that palities get much of their revenue from were not endangered. This last was neces- was necessary to pass the law. The gover- proportional (not progressive) income sary so as not to attract trade union hos- ning socialist PSOE was inclined to pro- taxes, and they are free to set their own tility. It is not clear that the initiative did tect the municipalities’ powers from rates, within limits. succeed in cutting expenditure. encroachment by the regions, while at the Coincident with the expansion of the The modern form of local government same time attempting to retain central welfare state, there came a consolidation in Norway was laid in 1837 with the passage

Economic and Political Weekly October 13, 2001 3939 of the Local Government Act by the par- place. On the other hand, there is no doubt Fevolden, Trond, and Rune Sorensen (1987): liament [Fevolden and Sorensen 1987]. that there has been a demonstration effect ‘Norway’ in Edward C Page and Michael This was a move by farmers seeking to cut in western Europe, with the citizenry and J Goldsmith (ed), Central and Local Govern- ment Relations: A Comparative Analysis of taxes and public expenditure. Spending by politicians of the more centralised West European Unitary States, Sage local government rose to 5 per cent of GDP polities learning from their decentralised Publications, London. in the early years of this century. During the neighbours. Today’s developing countries Gunlicks, Arthur B (1981): ‘The Reorganisation economic crisis of the 1920s several local have more history to learn from. EPW of Local Governments in the Federal Republic governments went bankrupt. The central of Germany’ in Gunlicks, Arthur B (ed), Local state then imposed far-reaching controls. Notes Government Reform and Reorganisation: An After the second world war there was a International Perspective, Port Washington, Kennikat Press, NY. [This research was financially supported by the major expansion in local government as – (1986): Local Government in the German Halle Institute for International Affairs at Emory the Labour Party used local government Federal System, Duke University Press, University. I am grateful to Pradeep Chhibber for for providing the services of the welfare Durham. useful comments on an earlier draft of this paper.] state, just like the other Scandinavian Gustafsson, Gunnel (1981): ‘Local Government Reform in Sweden’ in Gunlicks, Arthur B countries. Local government is subject to 1 The percentage of total government revenue (ed), Local Government Reform and Re- fairly detailed regulation in the provision that is raised by local government was regressed organisation: An International Perspective, of services such as education and health, on real per capita income (adjusted for but otherwise quite autonomous. purchasing power) for 33 countries. Figure 1 Port Washington, Kennikat Press, NY. shows the scatterplot with the countries labelled International Monetary Fund (1992): Government Finance Statistics, Washington, DC. Conclusion by their World Bank country codes. The fitted regression line is also shown. The coefficient Ma Valles, Josep and Montserrat Cuchillo Foix on per capita income is statistically significant (1988): ‘Decentralisation in Spain: a Review’, There are quite considerable differences at the 6 per cent level. The same procedure European Journal of Political Research, 16: in the autonomy and performance of local was carried out for expenditures with the 395-407. governments in European countries. Never- coefficient significant at the 2 per cent level. Montin, Stig (1992): ‘Recent Trends in the theless, what is striking is that even the In fact, these data understate the correlation Relationship Between Politics and Admini- between income and the fiscal importance of stration in Local Government: The Case of most centralised polities of western Eu- Sweden’, Local Government Studies, 18 (1): rope have effected major decentralisation local government. Data on the fiscal variables are missing at the local level mostly for poor 31-43. during the postwar period. The principle, countries, and this most probably is because Page, Edward C (1990): ‘The Political Origins of if not the practice, of autonomous local local government is fiscally unimportant in Self-Government and Bureaucracy: Otto government is everywhere accepted. Even those countries. Hintze’s Conceptual Map of Europe’, Political the most centralised countries that inher- The per capita income figures are real GDP Studies, 38: 39-55. ited the Napoleonic Code have radically per capita in 1990 adjusted for purchasing – (1991): Localism and Centralism in Europe: decentralised government. However, in power parity using the chain index and The Political and Legal Bases of Local Self- Government, Oxford University Press, Oxford. Spain and Italy, the picture is somewhat measured in 1985 US dollars [from Summers and Heston 1991]. The fiscal variables are Putnam, Robert (1993): Making Democracy Work: complicated by the introduction of the computed from the International Monetary Civic Traditions in Modern Italy, Princeton regional level of government. The powers Fund’s Government Finance Statistics for 1992. University Press, Princeton. and roles of the regions and the munici- 2 Quoted in Page (1990). Rogers, Vaughan (1998): ‘Devolution and palities are yet to be clearly defined, and 3 This section is based on Smellie (1957) and Economic Development in France’, Policy the lack of transparency, particularly in Page (1991). and Politics, 26(4): 417-437. Italy, has contributed to poor performance. 4 This account is based largely on Schmidt Sanantonio, Enzo (1987): ‘Italy’ in Edward C How and why did the decentralisation (1990). Page and Michael J Goldsmith (ed), Central 5 This account is based primarily on Gunlicks and Local Government Relations: A Com- take place? It seems difficult to escape the (1986). parative Analysis of West European Unitary conclusion that economic development and 6 This section is based mainly on Spence (1993), States, Sage Publications, London. the consequent demand for local public Evans (1982), and Sanantonio (1987). Schmidt, Vivien A (1990): Democratising France: goods resulted in pressure on politicians 7 This section is based on Clegg (1987), Carillo The Political and Administrative History of in electoral systems to decentralise. This (1997), Ma Valles and Cuchillo Foix (1988), Decentralisation, Cambridge University Press, appears to have been the case with both and Suarez-Pandiello (1996). Cambridge. Sharpe, L J (1988): ‘The Growth and Decentrali- the French reforms, the British reform of sation of the Modern Democratic State’, the 1830’s, as well as the Spanish and References European Journal of Political Research, 16: Italian reforms. Nevertheless, history has Carillo, Ernesto (1997): ‘Local Government 365-380. been important in that these reforms have Strategies for Decentralisation in the ‘State of Smellie, K B (1957): A History of Local occurred at very different times and in the Autonomies’’, Publius: The Journal of Government, Allen and Unwin, London. different ways depending on the path of Federalism, 27(4): 39-63. Spence, R E (1993): ‘Institutional Reform in Italy: political change in the various countries. Clegg, Thomas (1987): ‘Spain’ in Edward C Page The Case of Local Government’, Local It is not clear why the more absolutist and Michael J Goldsmith (ed), Central and Government Studies, 19(2): 226-241. Local Government Relations: A Comparative Suarez-Pandiello, J (1996): ‘Financing Local Scandinavian states decentralised in the Analysis of West European Unitary States, Governments in Spain: New Solutions to Old 19th century. In the three southern Euro- Sage Publications, London. Problems’, Environment and Planning C: pean countries, vested interests of central Etherington, David and Michael Paddon (1991): Government and Policy, 14:411-430. state politicians prevented decentralisation ‘The Free Local Government Initiative in Summers, Robert and Alan Heston (1991): ‘The for a long time. The importance of eco- Denmark – Modernisation, Innovation or Penn World Table (Mark 5): An Expanded Set nomic development and the political con- Control’, Local Government Studies, 17(4): of International Comparisons: 1950-1988’, sciousness it brings leads to a somewhat 6-13. Quarterly Journal of Economics, 106: 327-368. Evans, Robert H (1981): ‘Local Government Wolman, Harold (1988): ‘Understanding Recent pessimistic outlook for today’s develop- Reform in Italy, 1945-1979’ in Gunlicks, Trends in Central-Local Relations: Centralis- ing world. Political development in the Arthur B (ed) Local Government Reform and ation in Great Britain and Decentralisation in sphere of local government may not suc- Reorganisation: An International Perspective, the United States’, European Journal of ceed until economic growth has first taken Port Washington, Kennikat Press, NY. Political Research, 16: 425-435.

3940 Economic and Political Weekly October 13, 2001