International Development ISSN 1470-2320 Prizewinning Dissertation 2018 No.18-KL Decentralisation: Road to Development or Bridge to Nowhere? Estimating the Effect of Devolution on Infrastructure Spending in Kenya Kurtis Lockhart Published: February 2019 Department of International Development London School of Economics and Political Science Houghton Street Tel: +44 (020) 7955 7425/6252 London Fax: +44 (020) 7955-6844 WC2A 2AE UK Email:
[email protected] Website: http://www.lse.ac.uk/internationalDevelopment/home.aspx Candidate Number: 91345 MSc in Development Management 2018 Dissertation submitted in partial fulfilment of the requirements of the degree Decentralisation: Road to Development or Bridge to Nowhere? Estimating the Effect of Devolution on Infrastructure Spending in Kenya Word Count: 10,081 Abstract Does the decentralisation of state institutions result in a more equitable distribution of public goods in the African context? To answer this question this study examines a natural experiment in Kenya where the new 2010 Constitution devolved political and fiscal powers to 47 newly-established county governments. A difference-in-differences strategy is employed that exploits heterogeneity in the ethnic alignment of each county to the president. This effectively varies the intensity of the ‘treatment’ of devolution across counties. Using data on road expenditure across all 47 counties from 2010 to 2017, this study finds that the devolution of state structures in Kenya resulted in a significantly more equitable distribution of road spending. These results represent an important contrast to the prevailing view in the literature that asserts that decentralisation reforms in sub-Saharan Africa have largely failed to live up to expectations.