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Assisting Decentralization Policies in Latin America
Some Lessons from Bilateral and Multilateral Development
CooperationHarald FuhrChair of International PoliticsEconomics and
Social Sciences Facuzlty University of Potsdam,
[email protected]
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Assisting Decentralization Policiesin Latin America
Overview:Patterns of decentralization policiesDonor
interventions Lessons / Shortcomings Policy ManagementNew options
for donor agencies ?
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Decentralization is gaining
prominenceArgentinaBrazilChileColombiaSouth
AfricaZimbabwe051015202530354045% local
expen-dituresIndonesiaSub-national expenditures / total government
expenditures19741994
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Government objectives inLatin American decentralization
policies198019902000Action and innovations >> Distortions,
adjustmentsand consolidation >>>Political Integration and
StabilizationImproving services and ...... qualityFiscal
stabilization
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Assisting Decentralization:Lessons from Development Assistance
Source: Frank 2002
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Venezuela
Ecuador
Peru
Bolivia
Colombia
ARG
Brazil
Chile
Decentralization Objectives (1970 2002)
Hoja1
1970-19751975-19801980-19851985-19901990-19951995-20002000-2002
Political Dec.
Fiscal Dec.
Administrative Dec.
Social
Context
LEYENDA
Argentina
Bolivia
Brasil
Rio Grande do Sul (Brasil)
Chile
Colombia
Ecuador
Per
Venezuela
Motivaciones
&R&"Impact,Normal"&14Objetivos en las Rutas Crticas
de la Descentralizacin&"Arial,Normal"&10
Hoja2
Hoja3
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Assisting Decentralization:Lessons from Development Assistance
Decentralization is something intrinsically goodIts potential
advantages can only be mobilized under certain conditions:
Consensus-based strategySound assignment of expenditures and
revenues; sound system of transfers Prudent fiscal management (+
hard budgets) at all levelsInstitutional modernization and capacity
building at all levelsNew auditing and participatory arrangements
Otherwise: quite risky; potentially backfiring and destabilizing
Need for a comprehensive view of opportunities and risks
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Assisting Decentralization:Lessons from Development Assistance
Neglecting overall fiscal problems and subnational indebtednessPush
for increase of transfers ran ahead of clarifying tasks (or vice
versa)Popular demands for redistributionSoft budget constraints at
subnational levelsPropensity to increase spending Problem: access
of subnational governments to provincial banks and towards private
financeEventual bail-out by central government Need for sound
fiscal management at all levels and a deficit neutral
decentralization policy
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Assisting Decentralization:Lessons from Development Assistance
Neglecting the political dimension of decentrali-zation: actors,
interests, bargainingUnderstanding the political economy of reform:
New arrangements for decision making, access to and command over
resources Seeking and strengthening champions and winnersDealing
with/ compensating losersUnderstanding zero-sum perceptions: i.e.
political delays; bureaucratic resistance; successful failure Need
for sound project analysis at entryWorking with actors >
consensus and dialogue plus: win-win messages
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Political cycles for decentralization policies199519971999Action
and innovations >> Distortions, adjustmentsand consolidation
>>>New tranfersDelegation of servicesFiscal
problemsElectionsElectionsPotential Benefits
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Assisting Decentralization:Lessons from Development Assistance
Too strong an emphasis on municipal strengthening and development,
thus:Underutilization of development options at intermediate levels
(regions, provinces, districts) Neglect to assist reform of
intergovernmental fiscal relationsNeglect to assist
intergovernmental collaboration (division of tasks and
resources)Often: too strong a pressure towards redistribution and
resources for the municipalitiesNeed for a more comprehensive
intergovern-mental view of decentralization
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Assisting Decentralization:Lessons from Development Assistance
Similarly: too strong an emphasis on regional development
agenciesRegional planning approaches and Long history to strengthen
Regional Development CorporationsDisadvantages: Classical problem:
coordination of policies with both national and local
entitiesPlanning instead of enablingInsulated reform proposals for
and not with a target groups; weak links to state reform exercises/
inter-governmental incentives/ private sector environmentNeed for a
multi-level approach, networking and collaboration
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Assisting Decentralization:Lessons from Development Assistance
Donor efforts highly fragmented both within agencies and among
agencies . and experts.Financial often separated from technical
assistanceUrban / regional planning projects Infrastructure
projects Democratization, NGO and participatory projectsEducation,
health and poverty-oriented projects State reform programs :Fiscal
decentralization issues Financial management reformsHR management
issuesBetter synergy, collaboration, learning needed
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Gradualism in DecentralizationAgenda :State reform and new
intergovernmental rulesSubnational PSMLocal economic & PS
development Financing local dev.Strengthen citizens
participationLocal social policies, poverty reduction
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Local govern-ment
'Civil society'
State government
National government
PS
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Gradualism in DecentralizationAgenda :State reform and new
intergovernmental rulesSubnational PSMLocal economic & PS
development Financing local dev.Strengthen citizens
participationLocal social policies, poverty reductionHow can donors
assist governments managing such complexity effectively ?
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Donor Cooperation in Decentralization
State reform and new intergovernmental rulesSubnational PSM
Local economic & PS development Financing local dev.Strengthen
citizens participationLocal social policies, poverty
reductionComparative advantages of donors
IFIs/IGOsBilateralsINGOs
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Assisting Decentralization:Lessons from Development Assistance
Tecnocratic enclaving of projects is delicateAdvantages: inputs can
be focused on a specific environment and task groupDisadvantages:
often weak links to (national) state reform exercises where norms
are setInsulated reform proposals for and not with a target group
Public marketing of decentralization very weak and somewhat
antique.
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Assisting Decentralization:Lessons from Development Assistance
Consequently: neglecting the need to work with key actors ( >
process approaches) New rules need new rule-makingNetworking and
bargaining among key actors requiredNew rules need consensus among
key actorsDialogue with citizen groupsQuality of rule making seems
important for sustainability of new rules Facilitation of such
bargaining and decision making processes (as comparative advantage
of donors)New messages for a consensus-based strategy (from zero
sum to win-win)
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Institution building through political bargainingNew rules/
normsNew institutional arrangementsNew institutionsActors
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Actors and institution buildingold institutionsActors
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Actors and institution buildingNew institutionsold actorsnew
actors
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Actors, Interests, ResourcesLocal GovernmentRegional
GovernmentNational Government Actors Interests Objectives
Resources
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Actors, Interests, ResourcesLocal GovernmentRegional
GovernmentNational Government
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Actors, Interests, ResourcesLocal GovernmentRegional
GovernmentNational Government Donor - Interventions?