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Decentralisation's effects on public investment: evidence and policy lessons from Bolivia and Colombia

Faguet, Jean-Paul (2008) Decentralisation's effects on public investment: evidence and policy lessons from Bolivia and Colombia. Journal of Development Studies, 44 (8). pp. 1100-1121. ISSN 0022-0388

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Abstract

This paper examines decentralisation in Bolivia and Colombia to explore its effects on the uses and spatial distribution of public investment, as well as government responsiveness to local needs. In both countries, investment shifted from infrastructure to social services and human capital formation. Resources were rebalanced in favour of poorer districts. In Bolivia, decentralisation made government more responsive by re-directing public investment to areas of greatest need. In Colombia, municipalities increased investment significantly while running costs fell. Six important lessons emerge from the comparison. For decentralisation to work well: (i) local democracy must be transparent, fair and competitive; (ii) local governments must face hard budget constraints; (iii) central government must be scaled back; (iv) significant tax-raising powers must be devolved; and (v) decentralisation is composed of distinct, separable components, the sequencing of which is important. Finally, (vi) what decentralisation achieves, and whether it is advisable, hinges on how central government behaved pre-reform.

Item Type: Article
Official URL: http://www.tandf.co.uk/journals/titles/00220388.as...
Additional Information: © 2008 Taylor & Francis
Library of Congress subject classification: J Political Science > JL Political institutions (America except United States)
F History United States, Canada, Latin America > F1201 Latin America (General)
J Political Science > JS Local government Municipal government
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
Date Deposited: 25 Feb 2010 18:11
URL: http://eprints.lse.ac.uk/27160/

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