Decentralization,

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Decentralization, service delivery and politics
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The problem

• Disappointing health and education outcomes,
  especially for poor people

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(No Transcript)
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Malawi, Access to school according to income
level, 2006
Source CSR Malawi, World Bank (forthcoming)
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Mali, Access to school according to income level,
2007
Source Calculations from household survey data
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Outcomes are worse for poor peopleDeaths per
1000 births
Source Analysis of Demographic and Health Survey
data
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The problem

• Disappointing health and education outcomes,
  especially for poor people
• Increasing public spending is not enough

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Increasing public spending is not enough
Percent deviation from rate predicted by GDP
per capita Source Spending and GDP from World
Development Indicators database. School
completion from Bruns, Mingat and Rakatomalala
2003
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Increasing public spending is not enough
Percent deviation from rate predicted by GDP
per capita Source Spending and GDP from World
Development Indicators database. Under-5
mortality from Unicef 2002
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The real problem Services are failing poor people

• Disappointing health and education outcomes,
  especially for poor people
• Increasing public spending is not enough
• Services failing poor people at local levels

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How are services failing poor people?

• Public spending benefits the rich more than the
  poor

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Distribution of Health Care Subsidies All India,
1995-6
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Public-private cost sharing by level of education
(average of 18 African countries)
Source Francis NDEM, Les dépenses déducation
des ménages, UNESCO Pôle de Dakar, 2008
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Share of public resources used for the 10 most
educated, Africa Region
Source Education performance rating how do
African countries score?, World Bank (forthcoming)
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How are services failing poor people?

• Public spending benefits the rich more than the
  poor
• Money fails to reach frontline service providers
• In Uganda, only 13 percent of non-wage recurrent
  spending on primary education reached primary
  schools
• In Chad, only 1 percent of non-wage recurrent
  spending reached primary health clinics

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How are services failing poor people?

• Public spending benefits the rich more than the
  poor
• Money fails to reach frontline service providers
• Service quality is low for poor people

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All India Teacher Absence Map (Public Schools)
Source Kremer, Muralidharan, Chaudhury, Hammer,
and Rogers. 2004. Teacher Absence in India.
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India 2003 Doctor absence from PHCs by state
and reason
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Absence rate among teachers
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Uganda What enumerators found
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A framework of relationships of accountability
Poor people
Providers
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A framework of relationships of accountability
Policymakers
Poor people
Providers
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Mexicos PRONASOL, 1989-94

• Large social assistance program (1.2 percent of
  GDP)
• Water, sanitation, electricity and education
  construction to poor communities
• Limited poverty impact
• Reduced poverty by 3 percent
• If better targeted, could have reduced it by 64
  percent

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PRONASOL expenditures according to party in
municipal government
Source Estevez, Magaloni and Diaz-Cayeros 2002
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A framework of relationships of accountability
Policymakers
Poor people
Providers
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The solution Decentralize?

• Local governments reflect local preferences
• Citizens better able to monitor local governments
  and hold them accountable

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Decentralized service delivery
National policymakers
Local policymakers
Poor people
Providers
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Fiscal issues
National policymakers
Local policymakers
Poor people
Providers
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Fiscal Issues

• Expenditure assignments
• Loss of economies of scale
• Tax competition, race to the bottom
• Concurrent responsibilities can lead to
  duplication, confusion, and evasion
• Financingtax assignments, intergovernmental
  transfers, borrowing
• Political distortions in resource distribution
• Soft budget constraints

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Administrative responsibilities
National policymakers
Local policymakers
Poor people
Providers
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Administrative responsibilities
National policymakers
Local policymakers
Poor people
Providers
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Political issues
National policymakers
Local policymakers
Poor people
Providers
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Political Issues

• Why do services fail poor people even in
  democracies?
• Political market imperfections
• Information constraints
• Social polarization
• Credibility of political promises

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Do information problems improve with
decentralization?

• Voters better informed about local public goods
• Easier to monitor local services
• Easier to coordinate punishments when policy
  dimensionality is reduced

• In Uganda and the Philippines, voters rely on
  local social networks for information about local
  govts., and on national newspapers for national
  govts.
• In Nigeria, uncertainty about fiscal resources
  available to local govts.
• In India, voters hold state governments
  responsible for local services

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Does social polarization decline with
decentralization?

• Decentralized units more homogeneous

• Some local communities even more polarized
  (within-village inequality in India very high)
• Local elites find it easier to mobilize and
  capture public resources

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Does political credibility increase with
decentralization?

• Proximity and reputation breed credibility

• In young democracies, politicians build
  credibility by targeting their clients
• Combination of social polarization and young
  democracy make local politics particularly
  clientelistic

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Transition dilemmas
National policymakers
Local policymakers
Poor people
Providers
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EDUCO Program in El Salvador

• Parents associations (ACEs)
• Hire and fire teachers
• Visit schools on regular basis
• Contract with Ministry of Education to deliver
  primary education

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EDUCO promoted parental involvement
which boosts student performance
Source Adapted from Jimenez and Sawada 1999
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Conclusion

• Services fail when accountability breaks down
• Decentralization can overcome or exacerbate
  accountability failures
• Institutional design should address all the links
  in the service delivery chain