Chapter 5 – The State of Knowledge on Decentralization

Why does the Bolivian experience of decentralization speak so clearly? This question has two broad answers. The first is that Bolivia decentralized sincerely. Unlike many countries, where reform is promised and even legislated, but only partially if at all implemented, in Bolivia real power and resources were devolved to local governments. This process was both rapid and surprisingly transparent. The second answer, as argued in chapter 5, is the approach employed in this book, consisting of three elements: (i) a clear, restrictive definition of decentralization; (ii) combined quantitative and qualitative methods that produce empirical results characterized by high generality and deep nuance, and thus powerful insight; and (iii) asking the right kind of question.

This last point is especially important. The right kind of question is not “What does decentralization do?” as if reform were a policy lever yielding discrete, well-defined outputs. Asking such questions has drawn many studies into an analytical stance that is deeply ironic given its subject matter: a centralized focus on top-down processes such as legal and regulatory changes, or fiscal transfer rules, that are national-systemic in character. Such concerns are obviously important, but should not obscure the very different local dynamics that decentralization sets into motion. The right question begins, instead, with the presumption that decentralization in any context produces a range of responses that are heterogeneous and complex. The main question is not which response dominates – in a fluid social system all dominances can be transient and none in particular need last for long. The main question, rather, is what underlying factors cause such variation in response? And what are the political and societal determinants of certain responses of particular interest, e.g. those that make municipalities more honest and transparent, equitable, or prosperous? In simple terms, what makes good municipalities good, and what makes bad ones bad?

Taking up such questions forces us to understand not just municipalities’ static characteristics (history, geography, local structure of production), but also the micro dynamics by which social, economic and political actors relate to each other, compete for advantage, and cooperate or conflict. It is these dynamics, as we have seen in detail, that determine the effectiveness of local government, and its accountability and responsiveness to the governed. Ultimately, the success or failure of decentralization depends upon the character of such local dynamics. The overarching lesson of this book is that the outcome of decentralization is largely the aggregation of the abundance of local processes that it sets into motion. To understand decentralization, we must understand governance from the ground up. We must think less about “decentralization”, and more about grass-roots democracy.