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

Faguet, Jean-Paul ORCID: 0000-0002-7188-0098 (2002) A model of central vs decentralized government: self-interest and mis-allocation in Bolivia. DESTIN working papers (39). London School of Economics and Political Science. Development Studies Institute, London, UK.

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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:
Additional Information: © 2003 The Author
Divisions: STICERD
International Development
Subjects: J Political Science > JC Political theory
Date Deposited: 16 Dec 2008 14:43
Last Modified: 16 May 2024 11:27

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