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Abstract: During the last three decades, decentralization reform has been a leading trend in policy-making reform. The recurrent argument is that decentralization is linked to increased economic development and improved public service provision. This dissertation attempts to evaluate the validity of this assumption. To do so, it uses a three-paper approach to evaluates the outcomes of decentralization reform from different perspectives and on different dimensions. The first paper uses a geographic regression discontinuity design to estimate that on average a higher level of decentralization at a border implies an average decrease in annual GDP growth. These findings evidence a negative relationship between decentralization and annual GDP growth which are both statistically and economically significant at the one percent level. These results invite a rethinking of decentralization's effects and its implementation process. The second paper focuses on the impact of decentralization reform on Colombia's agricultural extension services. The paper argues that decentralization reform introduced significant changes in the sector. Borrowing from Evans, Hirschman and Snyder, it proposes a framework to explain why the institutional reform led to heterogeneous effects on different products and types of farmers within the sector. Integrating these changes into traditional narratives leads to a better understanding of the last twenty-five years of decline of the Colombian agricultural sector. The third paper is an impact evaluation of a public bicycle sharing system. Public transport systems, like bicycle sharing schemes, are typically under the control of local authorities --due to decentralization designs. Hence, this impact evaluation assesses if a private actor can provide a quasi-public good in the absence of action by the local authority. This paper presents an impact evaluation with a difference-in-difference quasi-experimental design that allows identification and estimation of the treatment effect of a bicycling encouraging intervention. Furthermore, in an attempt to evaluate the effect that a bicycle sharing intervention can have on workers' productivity or well-being, this paper presents an instrumental variable design informing future research on the effect of active commuting by bicycle. Approaching decentralization from these very different perspectives allows a better understanding of the intricacies of decentralization and the way these processes contribute to economic development or better public service provision.
It is widely assumed that the relationship between governance capacity and decentralization determines the success in governance, but how does this relationship function is largely contested. Does decentralization lead to an improvement in governance capacities, or are certain capacities preconditioned in order for decentralization to lead better governance? Relying on an empirical study of Turkish provincial municipalities, the book argues success in decentralization is strongly influenced by the socioeconomic conditions in the province and to a lesser extent by the local government’s capacity. The book provides a novel approach to capacity building practices and decentralization reforms by suggesting that the relationship between decentralization and governance capacity should be addressed not only on the organizational but also on the developmental level. In this way, the book proposes asymmetrical decentralization according to socio-economic development at subnational level for better governance outcomes.
Dissatisfied with centralized approaches to delivering local public services, a large number of countries are decentralizing responsibility for these services to lower-level, locally elected governments. The results have been mixed. The paper provides a framework for evaluating the benefits and costs, in terms of service delivery, of different approaches to decentralization, based on relationships of accountability between different actors in the delivery chain. Moving from a model of central provision to that of decentralization to local governments introduces a new relationship of accountability-between national and local policymakers-while altering existing relationships, such as that between citizens and elected politicians. Only by examining how these relationships change can we understand why decentralization can, and sometimes cannot, lead to better service delivery. In particular, the various instruments of decentralization-fiscal, administrative, regulatory, market, and financial-can affect the incentives facing service providers, even though they relate only to local policymakers. Likewise, and perhaps more significantly, the incentives facing local and national politicians can have a profound effect on the provision of local services. Finally, the process of implementing decentralization can be as important as the design of the system in influencing service delivery outcomes.
'Decentralization in Client Countries' assesses the effectiveness of Bank support for decentralization between fiscal years 1990 and 2007 in 20 countries, seeking to inform the design and implementation of future support. Given the difficulties of measuring the results of decentralization, the evaluation uses intermediate outcome indicators- such as strengthened legal and regulatory frameworks for intergovernmental relations, improved administrative capacity, and increased accountability of subnational governments and functionaries to higher levels of government and to local citizens- to assess the results of Bank support in these 20 cases. To examine potential lessons at a sectoral level, the evaluation also assesses whether Bank support for decentralization improved intermediate outcomes for service delivery in the education sector in 6 of the 20 countries.
This book draws on experiences in developing countries to bridge the gap between the conventional textbook treatment of fiscal decentralization and the actual practice of subnational government finance. The extensive literature about the theory and practice is surveyed and longstanding problems and new questions are addressed. It focuses on the key choices that must be made in decentralizing, on how economic and political factors shape the choices that countries make, and on how, by paying more attention to the need for a more comprehensive approach and the critical connections between different components of decentralization reform, everyone involved might get more for their money.
The report reviews how citizens can influence education, health and social protection services through access to information and opportunities to hold providers accountable. It takes stock of international evidence and experience from projects supported by the World Bank to identify knowledge gaps, key questions and areas for further work.
This paper explores the impact of fiscal decentralization on the efficiency of public service delivery. It uses a stochastic frontier method to estimate time-varying efficiency coefficients and analyzes the impact of fiscal decentralization on those efficiency coefficients. The findings indicate that fiscal decentralization can improve the efficiency of public service delivery but only under specific conditions. First, the decentralization process requires adequate political and institutional environments. Second, a sufficient degree of expenditure decentralization seems necessary to obtain favorable outcomes. Third, decentralization of expenditure needs to be accompanied by sufficient decentralization of revenue. Absent those conditions, fiscal decentralization can worsen the efficiency of public service delivery.
This volume presents a framework designed to help international development partners consider the relevance of political economy issues for their programmatic support to decentralization and local government reform. The intention is neither to advocate decentralization in general or in any particular form, nor to presume or privilege any particular decentralization objective. Instead, the purpose is to document the potential value of better understanding how (primarily national and intergovernmental) political and institutional dynamics do or could affect the scope for realizing decentralization reforms aligned with commonly advocated service delivery, governance, and poverty reduction goals. The underlying premise is that systematic analysis of these issues can productively complement the dominantly technical diagnostic work typically carried out by development partners. Specifically, development partners can benefit from better understanding the practical significance of motives that drive politicians and bureaucrats to support or oppose reform at various stages of the decentralization process, from making an initial reform decision to detailed design and implementation. In addition, the authors address how these incentives can weaken, strengthen, or shift in response to changes in political and economic conditions that arise after reform begins. A general approach to conducting political economy of decentralization analysis is outlined, recognizing the need to tailor such analysis to the particular country context. This volume is based on literature reviews and knowledge derived from selected country experiences.
Nearly all countries worldwide are now experimenting with decentralization. Their motivation 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, decentralization 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 decentralize, 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 decentralization 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.