Does Decentralization Increase Responsiveness to Local Needs? Evidence from Bolivia
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World Bank, Washington, DC
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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.
Palabras clave
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