Does Decentralization Increase Responsiveness to Local Needs? Evidence from Bolivia

Does Decentralization Increase Responsiveness to Local Needs? Evidence from Bolivia

Significant changes in public investment patterns - in both the sectoral uses of funds, and their geographic distribution - emerged after Bolivia devolved substantial resources from central agencies, to municipalities in 1994. By far the most impor...

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Bibliographic Details
Main Author: Faguet, Jean-Paul
Format: Policy Research Working Paper
Language:English
en_US
Published: World Bank, Washington, DC 2014
Subjects:
ACCOUNTABILITY
ACCOUNTING
ADMINISTRATIVE CAPABILITY
ADMINISTRATIVE CAPACITY
AGRICULTURE
AUTHORITY
BUREAUCRACY
CAPITALS
CENTRAL AGENCIES
CENTRAL GOVERNMENT
CENTRAL GOVERNMENTS
CITIES
CITIZENS
CONSENSUS
CORRUPTION
COUNCILS
DECENTRALIZATION
DECENTRALIZATION REFORM
DECONCENTRATION
DEMOCRATIC REGIMES
DEMOCRATIC SYSTEMS
DEVELOPMENT STRATEGIES
DEVELOPMENT STRATEGY
DEVOLUTION
DISTRICTS
ECONOMIC GROWTH
ECONOMIC INCENTIVES
ECONOMIC PERFORMANCE
ECONOMIES OF SCALE
ECONOMISTS
ELECTED REPRESENTATIVES
EMPLOYMENT
EQUILIBRIUM
EXECUTIVE AGENCIES
EXOGENOUS VARIABLES
EXPENDITURE
EXTERNALITIES
FINANCIAL SUPPORT
FISCAL
FISCAL DECENTRALIZATION
FOREIGN INVESTMENT
GOVERNMENT RESOURCES
INCOME
INEFFICIENCY
INSTITUTIONAL CAPACITY
LEGISLATURES
LOCAL GOVERNMENT
LOCAL GOVERNMENTS
MANAGERIAL EFFICIENCY
MERIT GOOD
MINISTRY OF FINANCE
MORAL HAZARD
MUNICIPAL GOVERNMENT
MUNICIPAL GOVERNMENTS
MUNICIPALITIES
MUNICIPALITY
NATIONAL TERRITORY
POLICY INSTRUMENTS
POLITICAL POWER
POLITICIANS
PRIVATE GOODS
PRIVATIZATION
PRIVATIZATION OF STATE
PUBLIC ADMINISTRATION
PUBLIC EXPENDITURE
PUBLIC FUNDS
PUBLIC GOOD
PUBLIC GOODS
PUBLIC HEALTH
PUBLIC INVESTMENT
PUBLIC SECTOR
PUBLIC SERVICE
PUBLIC SERVICE PROVISION
PUBLIC SERVICES
REPRESENTATIVES
REVENUE SHARING
REVOLUTION
SEPARATION OF POWERS
SOCIAL PACT
SOCIAL SECTORS
SOCIAL WELFARE
TAX REVENUES
TAXATION
TRADITIONAL ECONOMIES
TRANSPORT
UNDERESTIMATES
UPPER HOUSE
URBAN DEVELOPMENT
UTILITY FUNCTIONS
VOTERS
Online Access:http://documents.worldbank.org/curated/en/2001/01/888084/decentralization-increase-responsiveness-local-needs-evidence-bolivia
http://hdl.handle.net/10986/19723
Description
Summary:Significant changes in public investment patterns - in both the sectoral uses of funds, and their geographic distribution - emerged after Bolivia devolved substantial resources from central agencies, to municipalities in 1994. By far the most important determinant of these changes are objective indicators of social need (for example, education investment rises where illiteracy is higher). Indicators of institutional capacity, and social organization are less important. Empirical tests using a unique database show that investment changed significantly in education, agriculture, urban development, water management, water and sanitation, and possibly health. These results are robust, and insensitive to specification. As the smallest, poorest municipalities invested newly devolved public funds in their highest priority projects, investment showed a strong, positive relationship with need in agriculture, and the social sectors. In sectors where decentralization did not bring about changes, the central government had invested little before a994, and the local government continued to invest little afterward. These findings are consistent with a model of public investment, in which local government's superior knowledge of local needs, dominates the central government's technical, and organizational advantage in the provision of public services.

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