Political Decentralization

Abstract

I provide a critical overview of the literature on political decentralization. After reviewing first-and second-generation theories of federalism, I describe recent empirical studies focusing mainly on determinants of capture and local government accountability emphasized by second-generation theories. The article concludes by describing emerging new issues that deserve more attention in future research: a wider range of political distortions beyond capture and corruption; effects of decentralization on intercommunity allocations, learning, and experimentation, and on democracy itself; a comparison of decentralization with other organizational alternatives; and issues pertaining to design and implementation raised by first-generation federalism theories, such as interjurisdictional spillovers, vertical fiscal relations, the range of devolution, and the political economy of implementation.

Shared Mandates, Moral Hazard, and Political (Mis)alignment in a Decentralized Economy

“…This is not a new result but our case study adds to the collective evidence on this issue. Our contribution is to show that this general result also holds for shared mandates, thereby contributing to filling in what Mookherjee (2014) identified as a gap in the literature.…”

“…We contribute to an understudied area of research in political economy. In his recent survey, Mookherjee (2014) shows that there is little explicit analysis of shared mandates and that there is even less research on the importance of political alignment for policy outcomes.…”

Decentralization and Development in Contemporary Uganda

“…Indeed, much of the literature on decentralization has similarly noted the difficulty in assessing the outcomes of decentralization (Mookherjee 2015;Treisman 2007), not just because of the gradual process by which decentralization is usually introduced but also because its implementation cannot be separated from the political incentives which drive decentralization policies. However, one way to assess the impact of decentralization on service delivery in Uganda is to examine the effect of district creation, whereby new districts have been created out of older districts on a semi-regular basis every few years since the early 1990s.…”

“…Yet the potential benefits of decentralization can be outweighed by a number of factors, in particular by the problem of poor administrative capacity and a greater potential for elite capture (Bardhan 2002;Robinson 2007). The contradictory and confusing nature of the relationship between decentralization and development has thus led some like Mookherjee (2015) and Treisman (2007) to argue that generalizing about the relationship between decentralization and government effectiveness is effectively impossible as it is dependent on a number of context-specific factors.…”

Local Democracy and Economic Growth

“…Counter-arguments highlight that local actors may not have the power, in practice, to truly shape local policy, that local-level decision making (as national-level) may be associated with agency problems, and that decentralized policy-making often entails coordination problems at the national level that may mitigate development (see Bardhan 2002;Faguet and Pöschl 2015;Mookherjee 2015). Recent reviews of the empirical literature report mixed results (Gemmell, Kneller, and Sanz 2013;Hankla 2009;Hankla and Downs 2010;Martinez-Vazquez and McNab 2003).…”