The Political Economy of Decentralization and Good Governance in Latin America

Abstract

Decentralization has been seen as one of the key elements in achieving better governance in Latin American countries. To some extent, decentralization has often been a reaction to the failure of dirigiste, centralized military administrations (Burki and Perry, 2000; López Murphy, 1995). But, it has also been a result of an extrapolation of governance structures and models that have been based on the experiences of developed countries, particularly those in North America. The expectation has been that local service delivery is better able to adapt to local needs and achieve effective poverty reduction (Faguet, 2004). Bilateral and multilateral donors have reinforced this perception. Indeed, in the case of Bolivia, the Heavily Indebted Poor Countries (HIPC) debt relief has been directly targeted to municipalities. Yet the experience has been at best tentative and disappointing, and questions arise as to how to better achieve the promise of better service delivery (Inchauste, 2009; Ahmad and García-Escribano, 2008).

This chapter is based on the authors’ presentation at the forum “Decentralization for Economic Development,” organized by the IDB in July 2008.