Does decentralization enhance service delivery and poverty reduction? The expert contributors to this book address this fundamental question faced by policymakers and scholars in developing and advanced countries. The book illustrates that it is equally important for international agencies as well as bilateral donors to provide advice and assistance on decentralization that effectively supports poverty reduction. The volume builds on insights from the recent, political economy developments in the intergovernmental literature reviewed in the Handbook of Fiscal Federalism, and presents new empirical evidence on the effects of decentralization in different parts of the world. Policy-oriented papers evaluating the effectiveness of decentralized service delivery are presented. The role of institutions and the importance of sequencing of policies in ensuring effective outcomes are also considered. The volume presents some insightful empirical studies of the decentralization process from Latin America, Eastern Europe, and Africa. With a detailed empirical analysis of effective outcomes of public policies implemented at the sub-national level, and a focus on method, this book will be of great interest to academics specializing in public sector economics and public finance, and to national and international policymakers.

Dissatisfied with centralized approaches to delivering local public services, a large number of countries are decentralizing responsibility for these services to lower-level, locally elected governments. The results have been mixed. The paper provides a framework for evaluating the benefits and costs, in terms of service delivery, of different approaches to decentralization, based on relationships of accountability between different actors in the delivery chain. Moving from a model of central provision to that of decentralization to local governments introduces a new relationship of accountability-between national and local policymakers-while altering existing relationships, such as that between citizens and elected politicians. Only by examining how these relationships change can we understand why decentralization can, and sometimes cannot, lead to better service delivery. In particular, the various instruments of decentralization-fiscal, administrative, regulatory, market, and financial-can affect the incentives facing service providers, even though they relate only to local policymakers. Likewise, and perhaps more significantly, the incentives facing local and national politicians can have a profound effect on the provision of local services. Finally, the process of implementing decentralization can be as important as the design of the system in influencing service delivery outcomes.

Nearly all countries worldwide are now experimenting with decentralization. Their motivation are diverse. Many countries are decentralizing because they believe this can help stimulate economic growth or reduce rural poverty, goals central government interventions have failed to achieve. Some countries see it as a way to strengthen civil society and deepen democracy. Some perceive it as a way to off-load expensive responsibilities onto lower level governments. Thus, decentralization is seen as a solution to many different kinds of problems. This report examines the origins and implications decentralization from a political economy perspective, with a focus on its promise and limitations. It explores why countries have often chosen not to decentralize, even when evidence suggests that doing so would be in the interests of the government. It seeks to explain why since the early 1980s many countries have undertaken some form of decentralization. This report also evaluates the evidence to understand where decentralization has considerable promise and where it does not. It identifies conditions needed for decentralization to succeed. It identifies the ways in which decentralization can promote rural development. And it names the goals which decentralization will probably not help achieve.

This book draws on experiences in developing countries to bridge the gap between the conventional textbook treatment of fiscal decentralization and the actual practice of subnational government finance. The extensive literature about the theory and practice is surveyed and longstanding problems and new questions are addressed. It focuses on the key choices that must be made in decentralizing, on how economic and political factors shape the choices that countries make, and on how, by paying more attention to the need for a more comprehensive approach and the critical connections between different components of decentralization reform, everyone involved might get more for their money.

Decentralization - an essential pillar of institutional reform - is of critical importance in developing countries, particularly in regard to democratization, effective development, and good governance. Uganda, since 1986 and the start of decentralization measures under Yoweri Museveni and the National Resistance Movement, has represented one of the most serious commitments in Sub-Saharan Africa. With the benefit of extensive fieldwork, Fumihiko Saito demonstrates how conflict resolution, information dissemination, and encouragement of the many and varied stakeholders to form partnerships are critical to successfully bringing services "closer to the people. Decentralization and Development Partnerships: Lessons from Uganda goes beyond theory to compare academic assumptions to the reality of decentralization implementation in modern Uganda. Although the process is by no means free of difficulties, Saito concludes that a "win-win" outcome is a real possibility.