Decentralization and Local Government in Bolivia: An Overview from the Bottom Up

Crisis States Programme Working Paper No. 29

54 Pages Posted: 25 Jun 2003

See all articles by Jean-Paul Faguet

Jean-Paul Faguet

London School of Economics & Political Science (LSE) - Centre for Economic Performance (CEP)

Date Written: April 23, 2003

Abstract

Hundreds of studies have failed to establish the effects of decentralization on a number of important policy goals. This paper examines the remarkable case of Bolivia to explore decentralization's effects on government responsiveness and poverty-orientation. I first summarize econometric results on the effects of decentralization nationally, and then turn to qualitative research - the focus of the paper - that digs deep into local government processes to understand how decentralization did this. In Bolivia, decentralization made government more responsive by re-directing public investment to areas of greatest need. Investment shifted from economic production and infrastructure to social services and human capital formation, and resources were rebalanced in favor of poorer districts. I explain these results as the aggregate of discrete local institutional and political dynamics. I develop a conceptual model which construes local government as the nexus of two political markets and one organizational dynamic, where votes, money, influence and information are freely exchanged. In order for local government to be effective, these three relationships must counterbalance each other and none dominate the other. Such a stable tension leads to a self-limiting dynamic where pressures from various interest groups are contained within the bounds of political competition. Breaking this tension can hobble government, leaving it undemocratic, insensitive to economic conditions, or uninformed and unaccountable.

Keywords: Decentralization, local government, local institutions, participation, Bolivia

JEL Classification: D72, D73, H41, H42, H72, O18

Suggested Citation

Faguet, Jean-Paul, Decentralization and Local Government in Bolivia: An Overview from the Bottom Up (April 23, 2003). Crisis States Programme Working Paper No. 29, Available at SSRN: https://ssrn.com/abstract=397721 or http://dx.doi.org/10.2139/ssrn.397721

Jean-Paul Faguet (Contact Author)

London School of Economics & Political Science (LSE) - Centre for Economic Performance (CEP) ( email )

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+44 207 955 6844 (Fax)

HOME PAGE: http://www.lse.ac.uk/Depts/destin/faguetjp.html

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