Decentralization and Poverty in Developing Countries: Exploring the Impact

Decentralisation and Poverty Reduction: A Conceptual Framework for the Economic Impact

“…Hence, decentralisation is related to poverty eradication if the decision-making power for poverty reduction policies is transferred to the local government level, which often is the case for social services and sometimes for infrastructure. Due to the informational advantage of local authorities over the central government with regard to local conditions and preferences, this can lead to an improved correspondence of demand and supply and thus substantial efficiency gains in the provision of public goods and services (World Bank 2001, von Braun/Grote 2002, Asante 2003, Jütting et al 2004. Note that local governments have full discretion only when decision-making power includes authority over fiscal matters, which confirms that devolution is the only form of decentralisation that is of interest in this regard.…”

“…Nevertheless, it has come to be commonly accepted that decentralisation can be an effective tool for implementing poverty reduction policies because people at the local level have the information and incentives to design and implement policies that respond to local needs and preferences (Litvack et al 1998, World Bank 2001, BMZ 2002. Furthermore, decentralisation as a means to achieve good governance in terms of greater public participation, accountability of the public sector and reduced corruption can be expected to lead to poverty reduction (World Bank 2001, Crook/Sverrisson 2001, Asante 2003, Jütting et al 2004). These arguments are very popular among policymakers, but academic evidence is rather scanty.…”

“…In contrast, evidence points to seri-1 Decentralisation by design is when governments choose to transfer responsibilities to lower government levels because they are convinced of the potential benefits of this. Decentralisation by default implies that governments are forced to decentralise due to political reality (Jütting et al 2004). 7 ous constraints in the implementation of decentralisation, which inhibit any significant increase in participation, accountability and efficiency and hence an impact on poverty.…”

“…7 ous constraints in the implementation of decentralisation, which inhibit any significant increase in participation, accountability and efficiency and hence an impact on poverty. The success of decentralisation appears to depend on a number of factors such as political commitment of the centre, human and financial capacities, clearly defined procedures, the institutional setting, competitive local elections, the level of information of all relevant actors, and policy coherency (Bossuyt/Gould 2000, Crook/Sverrisson 2001, Johnson 2003, Jütting et al 2004. Only if these are in place or are developed in the process of implementation, it can be expected that the transfer of power and responsibilities for poverty alleviation policies will yield fruits.…”

Does Aid Improve Public Service Delivery?

“…Thus strengthening the institutional capability at the local level is essential if decentralization is to be effective. In addition, improving service delivery requires strengthening the relationships of accountability among policymakers, service providers, and users (Jütting et al 2004;World Bank 2003).…”