Does decentralisation bring responsive government closer to the people? Or does it dilute the ability of poor people to organise and influence the government? How can advocates of decentralisation make sure they do not inadvertently hurt the people they are trying to help? This working paper from the Institute of Development Studies at the University of Sussex, analyses the relationship between political, fiscal and administrative decentralisation and social sector spending. Confirmatory factor analysis on decentralisation data collected from 108 countries is used to develop a measurement model.
The governments of countries that are administratively decentralised tend to spend more of their revenue on social policy, while politically decentralised states spend less on social sectors. If all other things are equal, political centralisation allows poor people to influence the values that direct government and overcome obstacles to collective action. Administrative decentralisation allows more efficient and responsive services for the poor
There are different ideas of what decentralisation means, many of which ignore its multidimensionality. In this paper, decentralisation is measured in terms of the extent to which power and authority are devolved from central to any lower level of government. There is a clear distinction between administrative, political and fiscal decentralisation – each of which has different implications for pro poor policy.
- Organisation is the main weapon of the poor – political decentralisation dilutes the ability of groups representing poor people to press for pro poor spending.
- Political decentralisation may directly favour rich people and weaken the influence of poor groups.
- Administrative decentralisation allows efficient implementation of political values by encouraging competition and innovation, and allowing better management of local information.
- There is no consistent, significant statistical association between the degree of fiscal decentralisation and pro-poor public spending.
- With decentralisation there is a real danger of a race to the bottom, where local governments compete for investment and pursue policies that favour the rich.
For policy makers wishing to pursue progressive public actions, the ideal combination is increased political centralisation and administrative decentralisation and the pro-poor efficiency effects associated with it. Policy-makers who wish to make decentralisation pro-poor should overcome the current conceptual confusion and be clear what type of decentralisation they have in mind.
- Governments should be encouraged to strengthen institutions that centralise political functions, especially those institutions that represent the poor.
- Issues of redistribution and poverty must be fought at both national and local levels. National and local elections should take place at the same time. This will encourage discussion of national issues during local elections.
- Grant administrative units greater autonomy, giving sub-national groups greater control over their resources, for example through block grants Allow more scope for experimentation at local level, and reward efficiency.
- Encourage local actors, including politicians and press, to challenge local institutions and hold them accountable.
- Research into decentralisation and its impact needs to avoid a conceptual muddle. Researchers should be careful to define which of the many dimensions of decentralisation they are investigating.
