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A model of central vs decentralized government: self-interest and mis-allocation in Bolivia

Faguet, Jean-Paul (2002) A model of central vs decentralized government: self-interest and mis-allocation in Bolivia. DESTIN working papers, 39. Development Studies Institute, London School of Economics and Political Science, London, UK.

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Abstract

The recent, much remarked upon decentralization in Bolivia produced four important changes in the nation’s public finances: (1) a sharp fall in the geographic concentration of investment; (2) a sea-change in the uses of investment away from infrastructure towards the social sectors; (3) a significant increase in government responsiveness to local needs; and (4) increased investment in poorer municipalities. Existing theoretical treatments of decentralization cannot account for these phenomena. This paper develops a model of government which relies on political bargaining between municipal representatives and central government agents over the allocation of public resources. By invoking central government self-interest, I can explain the Bolivian experience. Lastly I introduce the concept of residual power, which underpins the model, as key to understanding decentralization. Analyzing the location of residual power in a political system can help cut through the thicket of contradictory claims that fill the decentralization literature.

Item Type: Monograph (Working Paper)
Official URL: http://www.lse.ac.uk/collections/DESTIN
Additional Information: © 2003 The Author
Library of Congress subject classification: J Political Science > JC Political theory
Sets: Research centres and groups > Suntory and Toyota International Centres for Economics and Related Disciplines (STICERD)
Departments > International Development
Rights: http://www.lse.ac.uk/library/usingTheLibrary/academicSupport/OA/depositYourResearch.aspx
Identification Number: 39
Date Deposited: 16 Dec 2008 14:43
URL: http://eprints.lse.ac.uk/13421/

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