The Political Economy of Local Democracy: Decentralization and Performance
Degree awarded: Ph.D. School of International Service. American University
Governments in weak states routinely fail to deliver services they promised to provide their citizens. In theory, decentralization is supposed to promote accountability at the local level and hence, improve municipal performance by encouraging public participation, building government capacity, and increasing political competition. Decentralization should improve performance because it gives civil society, voters, and fee payers an opportunity to hold local officials accountable by incentivizing them with political and revenue pressures. However, even in cases where decentralization has occurred, local municipalities vary in the extent to which they are effective suppliers of services.The literature on decentralization and performance suggests that participation, resources and voting are three accountability mechanisms that affect municipal performance (Crook and Manor 1998; Agrawal and Ribot 1999; Cheema and Rondinelli 2007). Mozambique, a post-conflict, low-income new democracy that implemented a major decentralization effort in 1998, provided a natural laboratory in which to investigate how these factors cause variation in municipal performance. I found that public participation was low and donor-dependent, municipalities still relied on central government transfers and donor funding, and a single party dominated state resources, which limited political competition and accountability.Whereas theory predicted that these conditions would not foster accountability and incubate municipal performance, I found that donors, unearned income, mayoral leadership and political competition improved municipal performance in three cases. First, donors provided resources that capacitated public participation and funded services. Second, decentralization provided authorities withincentives for municipalities to double revenue collections in the face of high aid and central government transfers. Third, mayoral leadership was critical in using resources and authorities to improve performance. Lastly, decentralization provided the political opening in a de facto one-party state for an opposition mayor who performed well to win re-election and launch a new national party. These findings extend beyond international relations to the fields of development studies, public administration and political science. Even in the context of weak institutions and serious constraints, local governments are able to build revenue capacity, improve service delivery, and sustainable political independence in dominant-party states through decentralization reforms.
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