Working Paper No.29
Decentralization and local government in Bolivia: an overview from the bottom up
Jean-Paul Faguet
DESTIN, LSE
May 2003
Hundreds of studies have failed to establish the
effects of decentralization on a number of important policy goals. This paper examines the remarkable case of
Bolivia to explore decentralization’s effects on government responsiveness and
poverty-orientation. I first summarize
econometric results on the effects of decentralization nationally, and then
turn to qualitative research – the focus of the paper – that digs deep into
local government processes to understand how decentralization did this. In Bolivia, decentralization made government
more responsive by re-directing public investment to areas of greatest
need. Investment shifted from economic
production and infrastructure to social services and human capital formation,
and resources were rebalanced in favour of poorer districts. I explain these results as the aggregate of
discrete local institutional and political dynamics. I develop a conceptual model which construes local government as
the nexus of two political markets and one organizational dynamic, where votes,
money, influence and information are freely exchanged. In order for local government to be
effective, these three relationships must counterbalance each other and none
dominate the other. Such a stable
tension leads to a self-limiting dynamic where pressures from various interest
groups are contained within the bounds of political competition. Breaking this tension can hobble government,
leaving it undemocratic, insensitive to economic conditions, or uninformed and unaccountable.
Other Crisis States papers by Jean-Paul Faguet:
Working Paper No.62
(April 2005)
The Effects of Decentralisation on Public Investment: Evidence and Four Lessons from Bolivia and Colombia
(Jean-Paul Faguet)
Discussion Paper No.3 (January 2004)
Democracy in the Desert: Civil Society, Nation Building and Empire
(Jean-Paul Faguet)
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