Tuesday, August 20, 2013

Decentralization Study Memo

Decentralization Study Memo

“Local governments” is used as a term synonymous with “subnational governments,” that is, both municipal and regional levels of government.

Decentralization efforts in select countries       
Source: Alfred Montero of Carleton College, Miami Herald, Posted on Wed, Oct. 17, 2007:
• Argentina: Governors elected since 1912 and mayors since the 1950s, except during authoritarian periods. Both elected since 1983. Local governments have strong powers.
• Bolivia: Governors first elected in 2005, mayors since 1985. Governors are fighting with President Evo Morales over spending authority.
• Brazil: Governors directly elected since 1982, mayors since 1946 except in large cities during authoritarian government 1964-85. Local governments have strong taxing and spending authority.
• Chile: Mayors elected since 1992. Regional governments are weak, while municipal governments have gained greater autonomy. But subnational share of total spending remains low.
• Colombia: State and local governments have much autonomy over social and economic policies. Mayors elected after 1989 and governors after 1990.
• Mexico: Local governments have strong powers.
• Peru: Governors first elected in 2002.
  Uruguay: Fiscal decentralization for municipalities began in 1985.
• Venezuela: Governors first elected in 1989, with growing fiscal and policy powers. Chávez has been recentralizing power since taking office in 1999.

“Decentralization in the Unitary State: Four Latin American Countries”
by  Cristina A. Rodriguez-Acosta and Allan Rosenbaum
Florida International University

This paper will look at the state of decentralization processes in two Latin American countries: Colombia and Paraguay.  Each of these two countries is a unitary state (rather than federal).  However, each of them has undertaken major initiatives aimed at encouraging the decentralization of governance and the strengthening of local government.  The results in each case seem to be quite varied.  In some places, decentralization has seemed to initially flourish and then decline.  In others, there seems to have been steady progress made.  The goal of the paper will be to examine what factors influence greater or lesser movement towards decentralization and the strengthening of local governance.

The paper will trace the history of the executive branch and its relationship with local governments. The role of the legislative branch will also be evaluated.  The paper will look at the role both branches have played in promoting decentralization, the impact they have had and what’s their role and impact in the progress and future of the decentralization process. The paper will also examine how their actions have contributed (or not) to the strengthening of local governments and governance. In addition, various factors affecting national commitment towards decentralization including the role of: the Congress, the Executive, political parties, grass-roots mobilization, civil society, etc. will be reviewed.

Decentralization Peru Highlighted
Heidi Smith
Peru is the latest in a flurry of Latin American countries to implement decentralization policies—with former President Alejandro Toledo’s 2003 decree to set up the El Consejo Nacional de la Decentralización (The National Council on Decentralization, CND) and the Ley 12312 which establish consultation process for local priorities (Insert correct name, date and action). Since the 1980, increasing numbers of countries in the region have entrusted state functions to local governments. Initially, the idea was pushed by the international financial sector. As social funds (public money/national booty/purses) to assist the developing countries decreased, due to problems like the 1980s debt crisis and increasing thrust towards the Washington Consensus, policy advisors suggested social policies, like education and health care, could be implement more efficiently—and directly to the poor –through local governments.

Decentralization is defined as “the transfer of authority, reasonability and resources through deconcentration, delegation or devolution from the center to the lower levels of administration.” The 1990s literature framed decentralization as creating good governance, active decision-making and local control while increasing citizen participation. The idea spread to Central and Eastern Europe and East Asia as authoritarian regimes collapsed and market based principles took over the state planned systems of the past.  New public management systems developed, with local bureaucracies containing new administrative and political power. The conventional tendency established that governments first created a bureaucratic structure with some discretion to make decision, implement required social polices reporting to the central government, and last to complete the process, permit the new entity the right to taxes its population for social programs. The final element, setting up decentralized financial reforms, promoting fiscal incentives and tax revenue systems to emerge from below, has provided to be the most difficult to implement.

Consequently, a recent report by the World Bank Institute provides an in-depth explication of decentralization, highlighting that too much fiscal decentralization could create a “moral hazard” for a country.  Providing Mexico’s banking crisis or Argentine’s 2001 economic collapse as examples, where national governments should be concerned of allowing subnational levels manage their own financial recourses could risk the macro-economic stability.  Today, although many countries, namely Bolivia, Colombia and federalist states like Argentina, Mexico and Brazil, have devolved its power to the local level, many policy makers are still uncertain to its effects to poverty reduction. Further without the local control of resources and financial responsibility, few localities entrusted with poverty alleviation can compete.

Fiscal federalism is a system of transfer payments or grants by which a federal government shares its revenues with lower levels of government. Federal governments use this power to enforce national rules and standards. There are two primary types of transfers, conditional and unconditional. A conditional transfer from a federal body to a province, or other territory, involves a certain set of conditions. If the lower level of government is to receive this type of transfer, it must agree to the spending instructions of the federal government. An example of this would be the Canada Health Transfer. The second type of grant, unconditional, is usually a cash or tax point transfer, with no spending instructions. An example of this would be a federal equalization transfer.

“Decentralization And Democratic Governance In Latin America” Edited by Joseph S. Tulchin and Andrew Selee. Woodrow Wilson Center Report on the Americas #12

Campbell, Tim. The Quiet Revolution: Decentralization and the Rise of Political Participation in Latin American Cities. Pittsburgh: University of Pittsburgh Press, 2003.

Crucial Needs, Weak Incentives: The Politics of Health and Education Reform in Latin America (co-editor, with Robert Kaufman, and contributor, Woodrow Wilson Center and Johns Hopkins U. Press, 2004) This book evaluates the implantation of education and health policies in nine case studies from six countries after decentralization policies occurred.


Mitchell, Christopher, “New Studies of Political Decentralization in Latin America” Latin American Research Review - Volume 41, Number 3, 2006, pp. 175-184 University of Texas Press

Falleti, Tulia Gabriela” Decentralization and Democracy in Latin America (review)”
The Americas, The Academy of American Franciscan History, - Volume 62, Number 1, July 2005, pp. 144-145

  • Fiscal Decentralization in Latin America, by Luiz Villela, Integration and Regional Programs Department of the Inter-American Development Bank
  • Popular Participation, Social Service Delivery and Poverty Reduction 1994-2000, by George Gray Molina, Universidad Católica Boliviana

  • Decentralization, Participation and Social Control of Public Resources: Participatory Budgeting in Porto Alegre, Brazil, by Zander Navarro, Federal University of Rio Grande do Sul, Porto Alegre, Brazil

  • Forging Civic Culture in Bogota City, by Cristina Rojas, Carleton University

Rondinelli, Dennis A. and G. Shabbir Cheema, “Government Decentralization in a Comparative Perspective: Theory and Practice in Developing Countries, International review of Administrative Sciences 47 (1981): 133-45.

Tulia G. Falleti, “A Sequential Theory of Decentralization: Latin American Cases in Comparative Perspective,” American Political Science Review, Vol. 99, No. 3 August 2005.

Rondinelli, Dennis A. and G. Shabbir Cheema, “From Government Decentralization to Decentralized Governance,” Brookings Institute, Washington, D.C. reviews the effectiveness of decentralization

Sustainable Financial Management of Local Capital Markets

Professor Heidi Smith from Iberoamericana University in Mexico  City was invited to discuss [Published]:2018-06-19 [Views]:32 Translated fro...