Decentralization In Latin America: The Case of Brazil

Decentralization In Latin America: The Case of Brazil

Over the last three decades, democracy has swept back

across the Latin American region. Accompanying this newest

wave of democratization is a wave of decentralization.

Decentralization can be loosely defined as the movement of

power away from the central government to the periphery,

namely to the local and regional levels. In theory, this

redistribution of power allows the lower levels of

government to operate with more autonomy, bestowing them

with sufficient resources to make independent decisions. The

WTO and World Bank have hailed decentralization in the

region as a step towards creating strong and enduring

democracies (Stepan, 2000). However, even though the result

of this movement is the dispersal of power from the center,

its outcome is not necessarily a consolidation of democratic

practices. Government structures that were created by the

military regime cannot be used to support democratic

governments, and decentralizing power to a broken system

will not solve deep-rooted problems. The result of

decentralization in this context has been very dualistic.

Although regional and municipal governments have gained

fiscal resources and considerably more autonomy from central

governments, they suffer from widespread fiscal inequality,

poverty and disparities in political representation between

regions. This paper will use Brazil as a case study in order

to explain the ambiguous nature of decentralization as a

tool for democratic consolidation. I hope to show that

consolidating of democracy at the local and regional levels

cannot be achieved through decentralization if the existing

government infrastructure is not designed to handle these

changes.

Despite a common colonial heritage, Latin America is an

immensely politically diverse region. There is a tremendous

amount of variance in the governance structure of the

region’s 18 nations, and within them, 350 states and 16,000

municipalities. Latin America is also the most urbanized

region in the “developing” world; approximately 80 percent

of its inhabitants live in urban areas. The region also

claims the less favourable watermark of having the most

extreme income inequality in the world. On top of this Latin

America also has a very high poverty rate; nearly 40 percent

of the region’s population lives below the poverty line

(Nickson, 2011). Latin America’s past has been a tapestry of

different political systems since independence. When the

Portuguese and Spanish colonial administrations occupied the

region, they used strong centralized governments to keep the

population under their control. These institutions of

governance have had a strong influence on post-colonial

administrations, and played no small part in the

authoritarian climate that has dominated the region until

very recently. However, these central governments were not

without opposition. Regional elites took advantage of often-

weak central governments to wrest control of peripheral

areas. A strong period of centralization during the 20th

century reigned in much power from the periphery, but the

influence of these elites still remains considerable to this

day (Tulchin & Selee, 2004).

Latin America’s history is one of strong authoritarian

rule. But in the 20th century waves of democratic transition

began to wash across the region, though they were often

quickly proceeded by relapse into authoritarian rule. The

1980’s saw a “third wave” of democracy sweep across Latin

America. Largely accompanying this democratic reform was one

of decentralization. The reasons for and consequences of

decentralization in the region have been significantly

varied. In Mexico and Venezuela, power has largely been

moved from the central government to the historically weak

state governments. Brazil and Argentina have seen their

historically weak local governments as well as state

governments accorded a considerable amount of new power. The

region’s unitary nations have also seen a considerable

amount of decentralization. Bolivia, Chile, Columbia,

Ecuador and Nicaragua have all experienced decentralization

of service delivery and substantially increased fiscal

autonomy. On the other hand, decentralization has played a

far more limited role in Costa Rica, Honduras, Panama,

Paraguay and Uruguay (Nickson, 2011). The reasons behind the

widespread trend of decentralization are equally diverse, if

not more so. Pressure from international financial

organizations is often cited as the main determining factor

for decentralization. This pressure has certainly been a

factor, but arguably not the definitive one. International

financial institutions pushed hard for reformation in the

areas of urban planning and development during the 1970s and

80s. However, they did not concern themselves with

decentralization of fiscal or service institutions until the

90s. By that time much decentralization had already taken

place in these institutions. Another theory states that

decentralization began to take hold due to urbanization and

economic growth. This theory certainly holds a level of

truth. In the cases of Brazil and Columbia, urbanization in

the 1950s-70s caused widespread protest for better services

and for the devolution of political power and fiscal

resources. Protests like these were emulated in other parts

of the region as well. It is also postulated that many of

these protests and much social mobilization was in fact not

tied to urbanization, but to an increasing demand for

democracy. Many pro-democratic political and social actors

saw decentralization as the first step in wresting control

of the government from the military and authoritarian

regimes (Falleti, 2010). These are only a few of the many

arguments relating to why decentralization has taken place

in Latin America, and should help shed some light on the

ambiguity of the subject. None of these examples can be

taken to be the singular reason for decentralization;

instead, one should acknowledge all of them as factors in a

very complex process that spans across a similarly complex

and varied region.

The Nature of Decentralization in Brazil

Brazil stands out as potentially the most decentralized

state in Latin America (Willis, Garman & Haggard, 1999).

This is due in part to recent developments in its political

history, but is also heavily influenced by its past as well

as its geography. In terms of its land area Brazil is

massive by any standards. The country covers 8,511,965

square kilometers of land and takes up nearly half of South

America’s total area; Brazil places fourth in terms of the

world’s largest nations (Encyclopedia of the Nations). This

enormous land area is currently broken up into 27 states

(including the federal district) and is home to 5,559

municipalities (Afonso & Mello, 2000). The current physical

and political structure of Brazil is marked by its

experiences with authoritarian governments and recent

military rule. Due to its immense size, Brazil was very

difficult to govern entirely from the center. It is a

country with as much history of regional power enclaves as

any other on the continent. The military government would

often work in concert with these regional elites in order to

control Brazil’s peripheral areas. This meant that power was

already decentralized to some extent in Brazil during

military rule, although it was far from democratic (Willis,

Garman & Haggard, 1999).

In 1988, Brazil emerged from over 20 years of

authoritarian rule to draft a new constitution and bring

about a democratic government (Souza, 2003). It was

unanimously decided that decentralization would play a

central role in the new government and was explicitly

written into the constitution. Local governments were given

a much larger amount of autonomy from the state and national

levels. States and local governments were also accorded much

greater fiscal autonomy than ever before. Historically, the

central government would distribute funds to the lower

levels of government however it saw fit; but with the

changes outlined in the new constitution, multiple tax

sources were transferred to the lower levels of government

and new sources were created. Along with fiscal

decentralization came the decentralization of services and

the transfer of responsibilities from the federal level to

state and municipal governments. Services such as health

care and transportation were entrusted to these governments,

giving them far more freedom in how they organized their

affairs (Baiocchi, Heller & Silva, 2011).

These changes have given state and municipal governments

an unprecedented level of freedom from the federal level,

but democratic consolidation has not been the only result.

The next two sections will cover states and municipalities

and give a number of examples covering the difficulties they

have had due to democratization and decentralization.

Effects of Decentralization on State Government

During the period of military rule preceding Brazil’s

current democratic government, the power of its states was

severely compromised. Centralization of revenue was promoted

and popular elections were prohibited. During Brazil’s

democratic transition, decentralization gave much political

and fiscal power back to the states. However, Brazil still

suffers from vast disparities in income throughout the

region, and political inequality between states.

Brazil’s federal nature necessitates a system of chambers

to govern it. This system is comprised of an upper chamber

and a lower chamber in which bills are tabled, passed and

reviewed. The composition is remarkably similar to the one

used in the USA, and has certainly drawn inspiration from

its structure. However, the problems with this system begin

to become apparent in practice. Brazil’s upper chamber, like

the senate in the United States, is elected territorially

(Stepan, 2000). The senate has 81 members, with 3 members

elected in every territory (Political Database of the

Americas, 2011). But the territorial distribution of seats

means that there are massive inequalities in voting weight

due to vast population disparities. This problem is common

in the United States where, for example, due to population

disparity between Wyoming and California, a vote for

councilor in Wyoming has sixty-six times the weight of one

cast in California. The imbalance is even more striking in

Brazil. A vote for councilor in the sparsely populated state

of Roraima has about 144 times the weight of a vote cast in

the densely populated state of Sao Paulo. Because there is

no balancing mechanism for proportional representation in

Brazil like in many other federations (Austria, Belgium and

India for example), Brazil has one of the most unequal upper

chambers in the world. On top of this, Brazil’s senate also

has the most power of any federation to kill bills passed by

the lower chamber. The lower chamber also suffers from

problems of representation. No matter the size of the state,

each is represented by no less than 8 deputies and no more

than 70. Although this may appear at first to be a very

large range, in practice the distribution of population

amongst the states means that representation is extremely

disproportional. The reason for this problem of

representation is largely based in the creation of Brazil’s

constitution. Although the crafting of the constitution was

a democratic affair, the structure of the constituent

assembly used seat allocation rules created by the preceding

military regime (Stepan, 2000).

In 1964 the military staged a coup and took control of

Brazil’s government; as explained prior, its grasp would not

be loosened until the 1980’s. The trouble that the regime

faced was in dealing with Brazil’s congress. The country was

far too large to govern entirely from the center, so the

military government needed a way to manage congress to its

liking (Souza, 1996). To this end, the regime consolidated

much of its power in the less developed northern states and

sought to lessen the influence of the more prosperous and

resistant southern states. In the north the military

expanded its power by creating new states, in 1978 it

created Mato Grosso do Sul and in 1982 Rondonia. These

states were not highly populated or developed and relied

largely on federal subsidies for resources. This reliance

made them predictably pro-regime. In the south on the other

hand, the government used amalgamation to lessen influence

of the opposition state of Guanabara by fusing it with the

state of Rio de Janeiro. These changes effectively limited

the representation of highly populated opposition states in

the south while increasing representation in lightly

populated northern pro-regime states. During the drafting of

the 1988 constitution these state structures remained in

place. As a consequence, the states of the north, northwest

and center-east all voted as a block, and although they only

accounted for 40 percent of the countries population, they

held 52 percent of the assembly’s votes. The result was

distinct opposition to any type of proportional

representation system, as the effect of this would be to

lessen the influence of the more sparsely populated northern

states. These states also used their voting majority to

create new states in their constituencies, thus

consolidating more power in the senate through further

lopsided representation (Stepan, 2000; Souza 1996). This

situation clearly illustrates the problems presented by

simply democratizing a system initially created to further

the agenda of an authoritarian government. It also shows the

pitfalls associated with decentralizing political power to a

state system that is not based on proportional

representation. Certain sections of the country’s population

are highly overrepresented while others have very little

representation and little to no voice in the polarized

senate. In this regard, decentralization has not helped to

consolidate democratic practice and has in fact.

Effects of Decentralization on Municipal Government

Urbanization began in Brazil in the 1930s and peaked

around the 1970’s. By 2000 urbanization had hit a high of

81% compared to 45% in 1960 (Souza, 2002; Fernandes, 2007).

During this time several constitutions came and went as the

country experienced alternating democratic and authoritarian

governments. It would not be until the 1988 constitution

that Brazil’s municipalities were given any real autonomy

from the federal government. The constitution created a

large amount of fiscal decentralization and municipal

government’s share of revenue increased considerably.

Monetary transfers from the federal government were one

portion of this new revenue, but increased taxation power

was also a leading player. Increased responsibilities also

resulted from decentralization and the municipalities gained

a much larger degree of control over healthcare and

education (Souza, 2002; Baiocchi, Heller & Silva, 2011).

Although a large amount of resources and power have been

decentralized to municipalities, inequality runs rampant.

The less affluent municipalities are far less able to take

advantage of new revenue streams. Increasing taxation on

those who cannot afford to pay is unlikely to create much

revenue. Federal transfers and redistributive transfers

between states have also proven ineffective in combatting

inequality. To illustrate this point we can look at the vast

inequality between the economically strong south and the

less affluent north as presented by Celine Souza. “In 1997

58.6% of GDP was concentrated in the South-East and 17.7% in

the South, whereas the North-East had 13.1% and the North

and the Centre-West regions had 4.4% and 6.2% respectively”

(Souza, 2002). Inequalities due to disparate economic

activity across the country and traditionally rooted poverty

have not been dealt with in any significant way by the new

democratic government or decentralization process. Although

decentralization has given municipalities increased power

over revenue generation, many cannot take advantage of this

and their problems are not addressed significantly in the

constitution.

Another issue for the democratic governance and even

implementation of decentralization is the role played by

Brazil’s regional elites. Since the founding of Brazil in

1889, regional elites have created strongholds in the

countries various states and municipalities. These elites

bargained with the outgoing military dictatorship in order

to gain influence in the drafting of the 1988 constitution.

They used this influence in order to protect their interests

and ensure that the constitution would be favourable to

them. Although they played a large role in the

decentralization process by pushing for a weakened central

government, this had the joint effect of inhibiting the

government from implementing reforms evenly across the

country (Baiocchi, Heller & Silva, 2011). This is one of the

many reasons why some regions of the country suffer from

massive inequality.

A further issue can be raised with the decentralization

of political power and implementation of democratic

government on the municipal level. The military regime that

preceded the current democratic government had little

concern about the active involvement of citizenry or the

creation of inclusive governing structures for

municipalities. The only concern was efficiently delivering

services and creating infrastructure. To this end, the

structures of Brazil’s municipal governments were initially

crafted as efficient administrative bureaucracies that could

carry out the regime’s decisions (Rodriguez-Acosta &

Rosenbaum, 2005).

Brazil’s 1988 constitution applied democracy to the local

level and shifted numerous responsibilities to municipal

governments. Unfortunately, due to the fact that city

governments had been formed to function under an

authoritarian regime, they had difficulty transitioning to

democracy. One of the biggest challenges faced during the

transition was a lack of guidance. The central government’s

hand was largely removed from municipal matters through the

decentralization process. This meant that newly elected and

untested politicians would receive little direction from the

federal government. The effect was a lack of far reaching

objectives and an inability of local governments to

implement decisions that were made. (Rodriguez-Acosta &

Rosenbaum, 2005; Nickson, 2011).

The problems associated with decentralizing

responsibilities to municipalities and simply placing

democratic power into a system designed for authoritarian

governance is made very clear with the case of Sao Paulo.

Sao Paulo is a metropolitan region made up of 39 separate

municipal units. The rationale behind amalgamating so many

municipalities together was to achieve maximum efficiency

for the delivery of essential services by the military

regime. When these municipalities became democratic they

gained greater autonomy through decentralization, but

consequently lost much of their former cohesion. Each

municipality now functions separately from the others and

implements policies with vastly differing levels of success.

Without funding cohesion and proper redistributive

mechanisms, the less well off municipalities are often left

unable to provide basic services for their citizenry

(Rodriguez-Acosta & Rosenbaum, 2005; Souza, 1996). The

difficulties in service provision are considerable:

“70% of the population lives in inadequate housing, 3

million people live in what is considered ‘favelas’ or

slums. Most public services are inadequately provided, thus

affecting more seriously the poor: public transportation

lacks infrastructure; sanitation only covers the demand of

about 50% of the population; education and health services

are very poor. In contrast, the more affluent east and

central regions of metropolitan Sao Paulo have all their

basic services provided for (Rodriguez-Acosta & Rosenbaum,

2005, pg.301).

The problem is compounded because no municipality wants

to take on the added responsibility, politically or

fiscally, of creating a cohesive metropolitan plan. For this

reason and because of the lack of central government

guidance, it seems unlikely that these problems of

inequality will change in the near future.

The difficulties faced by the Sao Paulo metropolitan area

are clearly a result of democratizing a system that was not

designed for such a mode of governance, and decentralizing

power into the broken system.

Conclusion

This paper has aimed to show the problems associated with

decentralizing political responsibilities and fiscal

resources to regional and municipal governments in Brazil.

Preexisting political structures that have grown their roots

in authoritarian governments are a huge barrier to effective

democratization through decentralization. I have presented

problems that have perplexed Brazil’s process of

decentralization and democratic consolidation in order to

illustrate the difficulties facing Latin America as a whole.

The entire region has been marked by military and

authoritarian governments and will face similar problems as

Brazil if democracy and decentralization initiatives are

undergone without first fixing the incompatible

authoritarian infrastructure.

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