Decentralization and service delivery

1. Decentralization and service delivery

2. The problem • Disappointing health and education outcomes, especially for poor people

3. Outcomes are worse for poor peopleDeaths per 1000 births Source: Analysis of Demographic and Health Survey data

4. Outcomes are worse for poor peoplePercent aged 15 to 19 completing each grade or higher Source: Analysis of Demographic and Health Survey data

5. The problem • Disappointing health and education outcomes, especially for poor people • Increasing public spending is not enough

6. Increasing public spending is not enough * Percent deviation from rate predicted by GDP per capita Source: Spending and GDP from World Development Indicators database. School completion from Bruns, Mingat and Rakatomalala 2003

7. Increasing public spending is not enough * Percent deviation from rate predicted by GDP per capita Source: Spending and GDP from World Development Indicators database. Under-5 mortality from Unicef 2002

8. The problem • Disappointing health and education outcomes, especially for poor people • Increasing public spending is not enough • Services failing poor people at local levels

9. The real problem for policy: Services failing poor people • Resources fail to reach frontline service providers • Bulky state administrations soak up bulk of the resources • Leakage: in Uganda, only 13 percent of non-wage recurrent spending on primary education reached primary schools • Mismanagement: in Nigeria, community health workers often don’t get paid

10. The real problem for policy:Services failing poor people • Service quality is low for poor people • Bangladesh: Absenteeism rates for doctors in primary health care centers: 74 percent • Zimbabwe: 13 percent of respondents gave as a reason for not delivering babies in public facilities that “nurses hit mothers during delivery” • Guinea: 70 percent of government drugs disappeared

11. The solution: Decentralize? • Increasing accountability for local services • Decentralization to locally elected governments—analyzing potential impact within a framework of accountability

12. A framework of relationships of accountability Poor people Providers

13. A framework of relationships of accountability Policymakers Poor people Providers

14. Mexico’s PRONASOL, 1989-94 • Large social assistance program (1.2 percent of GDP) • Water, sanitation, electricity and education construction to poor communities • Limited poverty impact • Reduced poverty by 3 percent • If better targeted, could have reduced it by 64 percent

15. PRONASOL expenditures according to party in municipal government Source: Estevez, Magaloni and Diaz-Cayeros 2002

16. A framework of relationships of accountability Policymakers Poor people Providers

17. Absence rate among teachers

18. Decentralized service delivery National policymakers Local policymakers Poor people Providers

19. Fiscal issues National policymakers Local policymakers Poor people Providers

20. Fiscal Issues • Expenditure assignments • Loss of economies of scale • Concurrent responsibilities can lead to duplication, confusion, and evasion • Financing—tax assignments, intergovernmental transfers, borrowing • Soft budget constraints • Tax inefficiencies and inequities • Political distortions in resource distribution

21. Administrative responsibilities National policymakers Local policymakers Poor people Providers

22. Capacity constraints National policymakers Local policymakers Poor people Providers

23. Political issues National policymakers Local policymakers Poor people Providers

24. Political Issues • Why do services fail poor people even in democracies where politicians depend upon their support to gain and remain in office? • Political market imperfections • Information constraints • Social polarization • Credibility of political promises

25. Voters better informed about local public goods Easier to monitor local services Easier to coordinate rewards/ punishments when policy dimensionality is reduced In Uganda and the Philippines, voters rely on local social networks for information about local govts., and on national newspapers for national govts. In Nigeria, uncertainty about fiscal resources available to local govts. In India, voters hold state governments responsible for local services Do information problems improve with decentralization?

26. Decentralized units more homogeneous Some local communities even more polarized (within-village inequality in India very high) Local elites find it easier to mobilize and “capture” public resources Does social polarization reduce with decentralization?

27. Proximity and reputation breed credibility In young democracies, politicians build credibility by targeting their “clients” Combination of social polarization and young democracy make local politics particularly “clientelistic” Does political credibility increase with decentralization?

28. Political Issues • Why do services fail poor people even in democracies where politicians depend upon their support to gain and remain in office? • Political market imperfections • Information constraints • Social polarization • Credibility of political promises • Political Institutions and Electoral Rules

29. Non-pivotal/non-swing voters get neglected under centralization (Eg. Bolivia) Lower barriers to entry increases political competition National political parties determine objectives and incentives of local governments Proportional representation and district magnitude more significant determinants of service delivery incentives Political Institutions and Electoral Rules

30. Transition dilemmas National policymakers Local policymakers Poor people Providers

31. EDUCO Program in El Salvador • Parents’ associations (ACEs) • Hire and fire teachers • Visit schools on regular basis • Contract with Ministry of Education to deliver primary education

32. EDUCO promoted parental involvement… …which boosts student performance Source: Adapted from Jimenez and Sawada 1999

33. Conclusion • Services fail when accountability breaks down • Decentralization can overcome or exacerbate accountability failures • Institutional design should address political market imperfections: -- provide more relevant information -- de-emphasize social polarization -- build credibility for public services