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Decentralization and service delivery The problem • Disappointing health and education outcomes, especially for poor people Outcomes are worse for poor people Deaths per 1000 births Source: Analysis of Demographic and Health Survey data Outcomes are worse for poor people Percent aged 15 to 19 completing each grade or higher Source: Analysis of Demographic and Health Survey data The problem • Disappointing health and education outcomes, especially for poor people • Increasing public spending is not enough Increasing public spending is not enough * Percent deviation from rate predicted by GDP per capita Source: Spending and GDP from World Development Indicators database. School completion from Bruns, Mingat and Rakatomalala 2003 Increasing public spending is not enough * Percent deviation from rate predicted by GDP per capita Source: Spending and GDP from World Development Indicators database. Under-5 mortality from Unicef 2002 The problem • Disappointing health and education outcomes, especially for poor people • Increasing public spending is not enough • Services failing poor people at local levels The real problem for policy: Services failing poor people • Resources fail to reach frontline service providers – Bulky state administrations soak up bulk of the resources – Leakage: in Uganda, only 13 percent of nonwage recurrent spending on primary education reached primary schools – Mismanagement: in Nigeria, community health workers often don’t get paid The real problem for policy: Services failing poor people • Service quality is low for poor people – Bangladesh: Absenteeism rates for doctors in primary health care centers: 74 percent – Zimbabwe: 13 percent of respondents gave as a reason for not delivering babies in public facilities that “nurses hit mothers during delivery” – Guinea: 70 percent of government drugs disappeared The solution: Decentralize? • Increasing accountability for local services • Decentralization to locally elected governments—analyzing potential impact within a framework of accountability A framework of relationships of accountability Poor people Providers A framework of relationships of accountability Policymakers Poor people Providers Mexico’s PRONASOL, 1989-94 • Large social assistance program (1.2 percent of GDP) • Water, sanitation, electricity and education construction to poor communities • Limited poverty impact – Reduced poverty by 3 percent – If better targeted, could have reduced it by 64 percent PRONASOL expenditures according to party in municipal government Source: Estevez, Magaloni and Diaz-Cayeros 2002 A framework of relationships of accountability Policymakers Poor people Providers Absence rate among teachers Country Ecuador India Indonesia Papua New Guinea Peru Zambia Uganda Rate (percent) 16 25 18 15 13 17 26 Decentralized service delivery National policymakers Local policymakers Poor people Providers Fiscal issues National policymakers Local policymakers Poor people Providers Fiscal Issues • Expenditure assignments – Loss of economies of scale – Concurrent responsibilities can lead to duplication, confusion, and evasion • Financing—tax assignments, intergovernmental transfers, borrowing – Soft budget constraints – Tax inefficiencies and inequities – Political distortions in resource distribution Administrative responsibilities National policymakers Local policymakers Poor people Providers Capacity constraints National policymakers Local policymakers Poor people Providers Political issues National policymakers Local policymakers Poor people Providers Political Issues • Why do services fail poor people even in democracies where politicians depend upon their support to gain and remain in office? • Political market imperfections – Information constraints – Social polarization – Credibility of political promises Do information problems improve with decentralization? • Voters better informed about local public goods • Easier to monitor local services • Easier to coordinate rewards/ punishments when policy dimensionality is reduced • In Uganda and the Philippines, voters rely on local social networks for information about local govts., and on national newspapers for national govts. • In Nigeria, uncertainty about fiscal resources available to local govts. • In India, voters hold state governments responsible for local services Does social polarization reduce with decentralization? • Decentralized units more homogeneous • Some local communities even more polarized (within-village inequality in India very high) • Local elites find it easier to mobilize and “capture” public resources Does political credibility increase with decentralization? • Proximity and reputation breed credibility • In young democracies, politicians build credibility by targeting their “clients” • Combination of social polarization and young democracy make local politics particularly “clientelistic” Political Issues • Why do services fail poor people even in democracies where politicians depend upon their support to gain and remain in office? • Political market imperfections – Information constraints – Social polarization – Credibility of political promises • Political Institutions and Electoral Rules Political Institutions and Electoral Rules • Non-pivotal/nonswing voters get neglected under centralization (Eg. Bolivia) • Lower barriers to entry increases political competition • National political parties determine objectives and incentives of local governments • Proportional representation and district magnitude more significant determinants of service delivery incentives Transition dilemmas National policymakers Local policymakers Poor people Providers EDUCO Program in El Salvador • Parents’ associations (ACEs) – Hire and fire teachers – Visit schools on regular basis – Contract with Ministry of Education to deliver primary education EDUCO promoted parental involvement… Source: Adapted from Jimenez and Sawada 1999 …which boosts student performance Conclusion • Services fail when accountability breaks down • Decentralization can overcome or exacerbate accountability failures • Institutional design should address political market imperfections: -- provide more relevant information -- de-emphasize social polarization -- build credibility for public services