Decentralizing Governance

The trend toward greater decentralization of governance activities, now accepted as commonplace in the West, has become a worldwide movement. This international development—largely a product of globalization and democratization—is clearly one of the key factors reshaping economic, political, and social conditions throughout the world. Rather than the top-down, centralized decisionmaking that characterized communist economies and Third World dictatorships in the twentieth century, today's world demands flexibility, adaptability, and the autonomy to bring those qualities to bear. In this thought-provoking book, the first in a new series on Innovations in Governance, experts in government and public management trace the evolution and performance of decentralization concepts, from the transfer of authority within government to the sharing of power, authority, and responsibilities among broader governance institutions. This movement is not limited to national government—it also affects subnational governments, NGOs, private corporations, and even civil associations. The contributors assess the emerging concepts of decentralization (e.g., devolution, empowerment, capacity building, and democratic governance). They detail the factors driving the movement, including political changes such as the fall of the Iron Curtain and the ascendance of democracy; economic factors such as globalization and outsourcing; and technological advances (e.g. increased information technology and electronic commerce). Their analysis covers many different contexts and regions. For example, William Ascher of Claremont McKenna College chronicles how decentralization concepts are playing out in natural resources policy, while Kadmeil Wekwete (United Nations) outlines the specific challenges to decentralizing governance in sub-Saharan Africa. In each case, contributors explore the objectives of a decentralizing strategy as well as the benefits and difficulties that will likely result.

Over the past three decades the developing world has seen increasing devolution of political and economic power to local governments. Decentralization is considered an important element of participatory democracy and, along with privatization and deregulation, represents a substantial reduction in the authority of national governments over economic policy. The contributors to Decentralization and Local Governance in Developing Countries examine this institutional transformation from comparative and interdisciplinary perspectives, offering detailed case studies of decentralization in eight countries: Bolivia, Brazil, China, India, Indonesia, Pakistan, South Africa, and Uganda. Some of these countries witnessed an unprecedented "big bang" shift toward comprehensive political and economic decentralization: Bolivia in 1995 and Indonesia after the fall of Suharto in 1998. Brazil and India decentralized in an uneven and more gradual manner. In some other countries (such as Pakistan), devolution represented an instrument for consolidation of power of a nondemocratic national government. In China, local governments were granted much economic but little political power. South Africa made the transition from the undemocratic decentralization of apartheid to decentralization under a democratic constitution. The studies provide a comparative perspective on the political and economic context within which decentralization took place, and how this shaped its design and possible impact. Contributors Omar Azfar, Gianpaolo Baiocchi, Pranab Bardhan, Shubham Chaudhuri, Ali Cheema, Jean-Paul Faguet, Bert Hofman, Kai Kaiser, Philip E. Keefer, Asim Ijaz Khwaja, Justin Yifu Lin, Mingxing Liu, Jeffrey Livingston, Patrick Meagher, Dilip Mookherjee, Ambar Narayan, Adnan Qadir, Ran Tao, Tara Vishwanath, Martin Wittenberg

In this thought-provoking book, the first in a new series on Innovations in Governance, experts in government and public management trace the evolution and performance of decentralization concepts, from the transfer of authority within government to the sharing of power, authority, and responsibilities among broader governance institutions. This movement is not limited to national government--it also affects subnational governments, NGOs, private corporations, and even civil associations.

Through a collection of unique case studies and theoretical analyses, this work examines the genesis and impact of decentralization reforms in developing and transition countries. In particular, the volume shows how decentralization affects governance and efficiency in the provision of public goods and under what conditions decentralization seems to deliver its theoretical benefits. Analyses in the book address current concerns about the interaction of decentralization with social and political structure, resource mobilization, public goods provision and corruption. This work will be invaluable to scholars of politics, development studies and regional studies.

Many developing countries have a history of highly centralized governments. Since the late 1980s, a large number of these governments have introduced decentralization to increase democracy and improve services, especially in small communities far from capital cities. In Going Local, an unprecedented study of the effects of decentralization on thirty Mexican municipalities, Merilee Grindle describes how local governments respond when they are assigned new responsibilities and resources under decentralization policies. She explains why decentralization leads to better local governments in some cases--and why it fails to in others. Combining quantitative and qualitative methods, Grindle examines data based on a random sample of Mexican municipalities--and ventures into town halls to follow public officials as they seek to manage a variety of tasks amid conflicting pressures and new expectations. Decentralization, she discovers, is a double-edged sword. While it allows public leaders to make significant reforms quickly, institutional weaknesses undermine the durability of change, and legacies of the past continue to affect how public problems are addressed. Citizens participate, but they are more successful at extracting resources from government than in holding local officials and agencies accountable for their actions. The benefits of decentralization regularly predicted by economists, political scientists, and management specialists are not inevitable, she argues. Rather, they are strongly influenced by the quality of local leadership and politics.

During the past two decades, a silent revolution in public sector governance has swept across the globe aiming to move decision making for local public services closer to the people. The countries embracing and adapting to this silent revolution have had diverse motives and followed even more diverse approaches. This paper attempts to present a stylized view of the motivations and approaches used to strengthen local governance. The quest for the right balance, i.e. appropriate division of powers among different levels of government, is not always the primary reason for decentralizing. There is evidence that the decentralization decision may have more to do with short-term political considerations than the long-run benefits of decentralization. To take stock of progress worldwide, we take a comparative look at developments in political, fiscal and administrative decentralization for a selected group of countries. Most of the decentralization literature deals with normative issues regarding the assignment of responsibilities among different levels of government and the design of fiscal transfers. The process of decentralization has not received the attention it deserves as the best laid plans can fail due to implementation difficulties. We revisit major controversies regarding preferred approaches to obtaining a successful outcome. Key approaches examined are big push versus small steps; bottom up vs. top down; and uniform vs. asymmetric decentralization. Finally, Indonesia's 1999 big bang decentralization program is evaluated. The program should be commended for its achievements over a short period of time, however incentives are lacking for local governments to be accountable and responsive to their residents.

Indonesia over the past two decades has embarked on a process of decentralization as part of a broader process of democratization, which followed earlier periods of centralized governance and authoritarian rule across the archipelago. The purpose of this book is to begin to explore the connections between governance and sustainable society in a wide variety of policy fields in Indonesia, and how reforming governance structures may contribute to societal benefits and the creation of a long-term sustainable society. This book bridges important theoretical debates related to governance and sustainable society and provides empirical research from Indonesia in important policy areas related to this debate. By placing research in different policy areas in a single volume, the link to the broader concepts of governance, decentralization, and societal outcomes is strengthened. The book builds on the recent interest that has focused on Indonesia and the continued development of democracy in the country. The chapters in the book show a rich variety of decentralized governance arrangements and capacity building at the local level in particular. Central standards (for example for social sustainability, anti-corruption arrangements, or for dealing with direct foreign investment), combined with local innovation (for example for municipal coordination of primary health care or metropolitan transport), are key to Indonesia as a country in a continuing process of transformation. We identify three key trends in the on-going process of decentralization and governance in Indonesia. First, we find that formal governance, the relation between the national and local government, is characterized by a system of ‘variable geometry multi-level governance’ depending on the policy area. The challenge ahead is strengthening accountability mechanisms to assure national standards while preserving and encouraging local innovation. Secondly, informal governance mechanisms are evolving to move from ‘hierarchical to network’ forms of governance. Here the challenge is to insure democratic input by citizens and civil society organizations. Finally, we identify a trend toward ‘shared value creation and sustainable cooperation.’ Indonesia is beginning to move from a rather singular policy focus on economic growth to a more complex and developing notion of policymaking for inclusive growth and the creation of a sustainable society for present and future generations. Here the challenge is sound implementation and to increase the effectiveness of governance mechanisms. There is also a noted diffusion of goals, to focus beyond the Jakarta metropolitan area to smaller regional cities, as urbanization continues and rural areas are changing. This book will be of interest for use in advanced undergraduate and graduate courses related to Southeast Asia in the fields of international relations, political science, public administration, economics, law, sociology, educa tion, public health, and the spatial sciences. It will also be of interest to policymakers and government officials at the national and local level in Southeast Asia and middle-income developing countries, officials and policymakers in institutions of regional governance such as the Association of Southeast Asian Nations (ASEAN), and of global governance such as the United Nations and World Bank. It will also be of interest to civil society organizations and other actors focused on policy development and economic development, health, education, the environment, sustainable transport, etc. The book will also be of interest to business people interested in economic and governance issues, such as the management and governance of in-bound foreign investment, inclusive growth, and corporate governance. Finally, the book should be of interest to citizens in advanced, middle-income, and developing countries motivated to learn more about the links between governance and the creation of a sustainable society for current and future generations.