Abstract
A recurrent debate in political science and development economics is how to incorporate citizens into the political process, whether this has any beneficial effects on the policy-making process, and, ultimately, how it affects the quality of people’s lives. Particular emphasis is made on the inclusion of historically excluded sectors such as women or indigenous peoples in the definition, design, oversight, and execution of their budget. From micro-project development experiments in areas ravaged by civil war or invasion to national and regional development policies, the dominant narrative is to promote citizen involvement in the definition of the policy choices that affect their lives. Political localism is seen as a reliable mechanism to bring the government closer to “the people”, devolving to local governments power wielded by central governments in order to increase democratic responsiveness.
These ubiquitous claims are, however, empirical questions that have proven difficult to test. Widespread decentralization during the last three decades has been accompanied by empirical work that is as extensive as inconclusive. Fundamental questions about the effects of decentralization on core aspects of governance remain open-ended. What happens when power is devolved to citizens? Is decentralization “good” or “bad” in a specific policy domain? How does it shift government responsiveness, if at all? Does budget follow citizen needs more closely once local governments are in charge of its allocation? Indeed, there is a fundamental discrepancy between the enthusiasm of policy makers and the contradictory scholarly findings on the subject.
Decentralization and Popular Democracy: Governance From Below in Bolivia addresses this discrepancy upfront with theoretical and methodological clarifications on the nature of decentralization. The core argument of the book is that scholars and policy makers have been posing questions in a way that perhaps necessarily leads to the current conundrum. The dominant approach to evaluate a devolution of power to citizens asks whether the effects have been positive or negative in a given policy domain: Has decentralization helped the quality of policy over education, health, development, taxes, and so on? This approach attempts to find a general answer of the type, “Decentralization is better/worse for a given policy domain.” The lack of consistent empirical conclusions contrasts sharply to the amount of resources that multilateral organizations and governments around the world invest in decentralization.
A way out of this situation, suggests Faguet, is to rethink our questions and reevaluate the precise meaning of what it is to devolve power to citizens. Faguet suggests that scholars have generally overlooked the basic fact that decentralization is a fundamental change in the incentives of officials who govern locally, shifting attention from upward-running (toward higher levels of central government) to downward-running (toward local voters) motivations. His suggestion is to change our conception of decentralization from a discrete policy event to a continuous process, in which effects are not mechanically homogeneous within policy domains but are in fact contingent on structural and institutional characteristics of local governments.
Under this view, the final result in a given policy domain will not be directly a product of decentralization per se, but that of the institutional and political resources that key actors (such as firms and civil organizations) have at their disposal to shape the policy process jointly with local governments. Decentralization will produce policy results that reflect the heterogeneous characteristics of local governments along preexisting dimensions such as corruption or elite capture, which will in turn shape the way in which newly devolved powers to local governments will be responsive to voters’ preferences. Ex ante uncertainty about the effects of decentralization is not due to theoretical underspecification but rather due to empirical variation among local governments. The apparently paradoxical empirical findings of previous scholarly work would then be epiphenomenal to the intrinsic variation of local governments in their institutional capabilities and responsiveness.
Empirically, Faguet takes a subnational approach by looking at the effects of a massive decentralization shock that occurred in Bolivia in 1994, through the enactment of the Ley de Participación Popular (Law of Popular Participation [LPP]). LPP was an important effort to grant political recognition to historically marginalized groups, and to give local governments control over important policy domains. The author compares multiple policy results and spending patterns of central versus local governments during the period going from 1987 through 2009. His subnational approach has the usual benefits of controlling multiple threats to validity by design. Focusing on a single country during a long enough period of time clarifies the process of causal identification and provides a more complete account of the idiosyncrasies that influence the final result of decentralization—often absent from cross-national comparative analysis.
He also uses a vast array of evidence in a fluid alternation of qualitative and quantitative methods that are reasonable yet rigorous, mixing the best of both approaches. Building up from in-depth qualitative analysis of two municipalities with contradictory results from decentralization, Faguet presents a model of governance from below to move the discussion toward how local governments function. In the model, economic agents interact with civil society to shape the type and quality of electoral competition, which in turn affects government responsiveness. Thus, it is a model of endogenous quality of local politics.
The in-depth anthropological insights are tested statistically with an impressive original dataset of local investments for all municipalities, allowing him to parse out the dynamic effects of decentralization by economic sector. His large-N econometric analysis confirms that for Bolivia, a large number of firms and a dense civil society are related to higher responsiveness of local governments. The reverse is also true: More powers in the context of noncompetitive markets (both political and economic) and sparse networks of grass-roots organizations decrease the responsiveness of governments to their constituents.
Decentralization seems to empower local voters conditional on societal characteristics that could be orthogonal to decentralization itself. To what extent this empowerment will be captured by local elites or used to increase responsiveness toward voters seems like a question that the traditional approach cannot answer properly. This poses interesting problems regarding the optimal mechanisms to include historically marginalized groups into the policy-making process, and whether decentralization makes sense in a context of preexisting local elite capture. It may thus be that the best way to increase government responsiveness is to devolve powers to local governments only if they possess the structural characteristics that will harness the forces of decentralization. This book implicitly forces the reader to ponder such provocative issues.
Faguet provides a timely analysis of the long-term effects of decentralization with rigorous methods and innovative data. It is a good example of how robust econometrics, vibrant thick descriptions, and a deep historical understanding of our objects of study can move our discipline forward by clarifying our theoretical debates.