DECENTRALIZED GOVERNANCE AND ACCOUNTABILITY: ACADEMIC RESEARCH AND THE FUTURE OF DONOR PROGRAMMING Jonathan Rodden Erik Wibbels DECENTRALIZED GOVERNANCE AND ACCOUNTABILITY: ACADEMIC RESEARCH AND THE FUTURE OF DONOR PROGRAMMING Editors: Jonathan Rodden Erik Wibbels TABLE OF CONTENTS Message From USAID DRG Center Director ............................. 1 Introduction ....................................................................................5 The Effect and Efficacy of Local Elections .................................................... 6 Local Forms of Accountability ....................................................................... 8 Social Heterogeneity and Conflict ................................................................ 9 The Structure of Jurisdictions ...................................................................... 10 Public Financial Management and Economic Development .................................................................................................... 11 Conclusions: Academic and Policy Work in the Service of Learning .......................................................................................... 12 Chapter 1. The Social Underpinnings of Decentralized Governance: Networks, Technology and the Future of Social Accountability .............................................................................. 15 Basic Approaches to Accountable Governance ...................................... 18 Accountable for What?: Decentralization and the Allocation of Responsibilities ....................................................................... 21 A Decade of Social Accountability Programs ........................................... 22 Social Networks, Civil Society, and Accountability ................................ 27 Information Technology, Social Networks, and Accountability .................................................................................................. 34 Frontiers for Policy and Learning on Accountability .............................. 38 Conclusions ...................................................................................................... 41 References ........................................................................................................ 44 Chapter 2. Leadership Selection Rules and Decentralized Governance ......................................................... 49 Introduction ..................................................................................................... 49 Leader Selection Rule at the State and Province Level .......................... 51 I The alleged benefits of political decentralization (elections) .................................................................................................... 51 The alleged benefits of political centralization (appointments) ............................................................................................ 55 Empirical evidence at the provincial level ............................................. 57 Discussion .................................................................................................... 58 Leader Selection Rule at the Local Level................................................... 59 Theoretical Arguments ............................................................................. 60 Empirical Findings ....................................................................................... 62 Discussion .................................................................................................... 66 Variation within Democratic Electoral Institutions ................................. 67 Partisanship and Local Elections ............................................................. 67 “At-large” versus Single-Member District Elections .......................... 68 Conclusion ........................................................................................................ 69 References ........................................................................................................ 70 Chapter 3. Traditional Leaders, Service Delivery and Electoral Accountability ....................................................... 75 Introduction ..................................................................................................... 75 What We Know from Academic Studies ................................................. 81 Chiefs and Locally Organized Public Goods and Services ......................................................................................................... 82 Chiefs and Government Performance .................................................. 86 Effects of Traditional Chiefs on Democratic Norms and Electoral Accountability .................................................................... 93 Traditional Leaders and Development Policy .......................................... 97 Strategy #1: Exclusion and Disempowerment .................................... 97 Strategy #2: Recognition and Reform ................................................... 98 A Way to Engage Traditional Leaders? ............................................... 101 Areas for Further Research........................................................................ 102 Conclusion ...................................................................................................... 104 References ...................................................................................................... 106 II Appendix .........................................................................................................110 Chapter 4. Decentralized Rule and Revenue ..........................111 Introduction ....................................................................................................111 The Perils of Partial Decentralization: Observational Studies ..............................................................................................................114 Grants and Governance: Is There a Causal Relationship? ...................................................................................................118 Does Local Taxation Improve Governance? ..........................................124 A Research Agenda on Rule and Revenue ..............................................127 Conclusions .................................................................................................... 132 References ...................................................................................................... 133 Chapter 5. The Proliferation of Decentralized Governing Units .........................................................................139 Introduction.................................................................................................... 139 Government Unit Proliferation and the Territorial Organization of Government ..................................................................... 140 The Determinants of Jurisdictional Size .................................................. 144 Functional Determinants ........................................................................ 145 Supply-Side Determinants ...................................................................... 148 Demand-Side Determinants .................................................................. 151 Summary ..................................................................................................... 153 The Effects of Unit Proliferation................................................................ 153 Summary ..................................................................................................... 161 The Knowledge Frontier ............................................................................. 161 References ...................................................................................................... 167 Chapter 6. Decentralization and Business Performance ............................................................................... 175 Introduction ................................................................................................... 175 Empirical Difficulties in Connecting Decentralization to Business Performance ............................................................................. 178 III Conceptualizing and Measuring Decentralization............................. 178 Conceptualizing and Measuring Business Performance .............................................................................................. 180 What Do Businesses Want? ....................................................................... 182 Factor Endowments ................................................................................. 184 Long-Term Factors .................................................................................. 186 Short-Term Factors ................................................................................. 190 Theoretical Benefits of Decentralization for Business ......................... 198 Tailoring ..................................................................................................... 198 Monitoring and Accountability .............................................................. 199 Competition for Capital and Labor ..................................................... 200 Policy Lessons for Development ............................................................... 201 There Is No Clear Evidence that Decentralization Enhances Business Performance ..........................................................