A Global Overview of Decentralization with Reference to Issues in Peru

1. A Global Overview of Decentralization with Reference to Issues in Peru Tim Campbell, PhD Urban Age Institute Presentation at CIES Lima, Peru 15 December 2009

2. Content • Introduction • Background (books, Gold Report) • Guidelines and Framework of Issues • Why Decentralize? • Features of the Global Effort • Eight Policy Areas • Future– emerging strategies, next steps Tim Campbell, PhD. Urban Age Institute

3. Background sources Tim Campbell, PhD. Urban Age Institute

4. What is Gold? • UCLG and history Istanbul and Barcelona • Clamor for stocktaking and framework • Charter and Guidelines • Global observatory organized in 2004, implemented by 8 groups, coordinated by Univ. Paris II Tim Campbell, PhD. Urban Age Institute

5. European Charter • European Charter: • basic powers and responsibilities of local authorities shall be prescribed by the constitution or by statute • Local authorities shall, within the limits of the law, have full discretion to exercise their initiative • Public responsibilities shall generally be exercised, in preference, by those authorities which are closest to the citizen. • Powers given to local authorities shall normally be full and exclusive. • Where powers are delegated to them by a central or regional authority, local authorities shall, insofar as possible, be allowed discretion in adapting their exercise to local conditions. Tim Campbell, PhD. Urban Age Institute

6. UN Habitat Guidelines • principle of subsidiarity constitutes the rationale underlying to the process of decentralization. • powers should be shared or exercised concurrently among different spheres of government. These should not lead to a diminution of local autonomy or prevent the development of local authorities as full partners. • National, regional and local responsibilities should be differentiated by the constitution or by legislation • nationally determined standards of local service provision should take into account the principle of subsidiarity • Local authorities should freely exercise their powers… and powers should be full and exclusive, not be undermined, limited or impeded Tim Campbell, PhD. Urban Age Institute

7. Whence Decentralization? States reveal many reasons… • Collapse of central state • Regionalization (EU) • Democracy • Liberalization of trade favors cities • Economic development at the local level Tim Campbell, PhD. Urban Age Institute

8. Depth and Velocity of Change • Early adopters, fast moving • Broad middle, many battles • Stressed states, little progress • Wide variation by region, emphasis on different aspects Tim Campbell, PhD. Urban Age Institute

9. Depth and Velocity of Change • Early adopters, fast moving • Broad middle, many battles • Stressed states, little progress • Wide variation by region, emphasis on different aspects Peru “acceleration….” Compares to …. Indonesia’s Big Bang Venezuela’s menu of options Both reversed course Tim Campbell, PhD. Urban Age Institute

10. Eight Core Policy Areas • National strategy • Organization of the state • Responsibilities • Economic development • Finance – internal and intergovernmental • Democratic participation • Capacity building • Metropolitan areas Tim Campbell, PhD. Urban Age Institute

11. Objectives of DecentralizationFramework of issues • Political and fiscal reform • Economic development • Service Delivery • Democracy National strategies: address some, rarely all objectives Tim Campbell, PhD. Urban Age Institute

12. 1. Organization of the State Municipalities Township Special District Metropolitan District Province State, Lander <---First Tier-- ------Second Tier------ <--------Third Tier ---- Tim Campbell, PhD. Urban Age Institute

13. Organization of the State Opposing Pressures Municipalities Township Special District Metropolitan District Province State, Lander Efficiency pressure to Reduce local govt units <---First Tier-- ------Second Tier------ <--------Third Tier ---- Fiscal incentives to increase local units Tim Campbell, PhD. Urban Age Institute

14. Organization of the State Opposing Pressures Peru’s regionalization aggregate demand, capture economies of scale … And district municipalities… creates pressure for more units Municipalities Township Special District Metropolitan District Province State, Lander Efficiency pressure to Reduce local govt units <---First Tier-- ------Second Tier------ <--------Third Tier ---- Fiscal incentives to increase local units Tim Campbell, PhD. Urban Age Institute

15. Structural ProblemLocal Government Units and Urban Population Most units of government have small populations Tim Campbell, PhD. Urban Age Institute

16. Structural ProblemLocal Government Units and Urban Population Heterogeneity an issue, systemic segmentation may be useful Most units of government have small populations Tim Campbell, PhD. Urban Age Institute

17. 2. Responsibilities • Wide ranging issues • Question of autonomy in choice • Principal-agent • Fiscal choosers with public consent • Shared responsibilities • Efficiency issues: allocation or production? • Shifting advantages with technologies Tim Campbell, PhD. Urban Age Institute

18. 2. Responsibilities • Wide ranging issues • Question of autonomy in choice • Principal-agent • Fiscal choosers with public consent • Shared responsibilities • Efficiency issues: allocation or production? • Shifting advantages with technologies Demand– voice of governed-- not seen as determining factor in autonomy, choice, Organization of state and responsibilities Tim Campbell, PhD. Urban Age Institute

19. 3. Economic DevelopmentLocal Government ActionsCooperative strategies to address endogenous factors Tim Campbell, PhD. Urban Age Institute

20. Trends in average tariff rates Percent 100 Mid1980s 80 60 40 Late1990s 20 0 India Bangladesh Brazil China Pakistan Peru Tim Campbell, PhD. Urban Age Institute

21. Local Government Roles– infrastructure coordination Tim Campbell, PhD. Urban Age Institute

22. Local Government RolesParticipation Tim Campbell, PhD. Urban Age Institute

23. Local Government Roles– business friendliness Tim Campbell, PhD. Urban Age Institute

24. 3. Economic DevelopmentLocal Government ActionsCooperative strategies to address endogenous factors Place-based economic Development difficult Hard work in business, infrastructure, participation Tim Campbell, PhD. Urban Age Institute

25. 4. Finance • Restrictions on income earning and borrowing • Dependency and steadiness of flow • Myth of autonomy • Widespread mention of excessive discretion at the center, opaqueness, unfunded mandates • Subsidiarity not observed in practice • Peru in line ?-- 4 funds, dependency rising Tim Campbell, PhD. Urban Age Institute

26. Subnational Share of Total Public Expenditure Tim Campbell, PhD. Urban Age Institute

27. 5. Local democracy– brightest spot, with clouds? • Elections in most regions, but… • Tend to be driven by national issues • Focus on executive • Concerns with flagging participation at the poles Tim Campbell, PhD. Urban Age Institute

28. 5. Local democracy– brightest spot, with clouds? • Elections in most regions, but… • Tend to be driven by national issues • Focus on executive • Concerns with flagging participation at the poles Lessons from LAC electoral regimes– Bolivia impeachment Uninominal, individual on ballot for accountability Tim Campbell, PhD. Urban Age Institute

29. 6. Participation • Many models being explored Grassroots opinion grand sabha (India), Africa Mobilizing groups participatory budgeting (Brazil) Contributions mayor’s funds Citizen initiated voluntary organizations (Japan) Electoral systems voting impeachment Tim Campbell, PhD. Urban Age Institute

30. 6. Participation • Many models being explored Grassroots opinion grand sabha (India), Africa Mobilizing groups participatory budgeting (Brazil) Contributions mayor’s funds Citizen initiated voluntary organizations (Japan) Electoral systems voting impeachment Participatory budgeting Accountability and demand Publish results, encourage Citizen involvement More civil society Tim Campbell, PhD. Urban Age Institute

31. 7. Capacity Issues • Problems • Poor execution (of budget) • High turnover • Corruption Tim Campbell, PhD. Urban Age Institute

32. Personnel and Spending per Staff Tim Campbell, PhD. Urban Age Institute

33. 7. Capacity Issues • Remedies • Professionalization or certification • Civil service or competency? • Peru • High turnover, wide variety • on steady path (long term) Tim Campbell, PhD. Urban Age Institute

34. 8. Metro Governments • Spreading, flattening • Fragmenting without coordination • Technical • Social • Economic regions • Peru, like others, cooperative pragmatic regionalism Tim Campbell, PhD. Urban Age Institute

35. Emerging strategiesCities by Size • >10 m 21 17 • 5-10 31 6 • 1-5 378 118 • .5-1 400 107 • Total 1061 Tim Campbell, PhD. Urban Age Institute

36. Emerging strategiesTrust, Learning and Capital • The underground economy • Versions of trusted ties Tim Campbell, PhD. Urban Age Institute

37. Next StepsPolicy Issues • Strategies more whole, longer term • See financial from top and bottom, better data • Stratify governments, offer incentives in graduated system, • Incentives for cooperation across units • Transparency and consistency in finance, costs of services, data on finance • Participation: why low turnouts, improved electoral regimes, analytical work on electoral rules • Capacity: strategies for whole systems, incentives for professional management • Learning: seek and exchange Tim Campbell, PhD. Urban Age Institute