Empirical Studies of an Approach to Decentralization

Abstract

An 1998 article on decentralization focused on the element of choice as the major issue of decentralization—granting authority and responsibility for choice to administrative and elected officials at peripheral levels of organizations and governments—and introduced the concept of “decision space” to describe the range of choice allowed to local authorities for different functions (financing, service delivery, human resources, governance). This approach was based largely on principal agent theory focusing on how central authorities can circumscribe local choice by establishing rules over choice and by providing incentives for making choices that would achieve central objectives. This chapter reviews this approach and discusses its evolution in empirical studies, first focusing on defining the formal decision space (in Ghana, Uganda, Zambia, and the Philippines) and then expanding to surveys that assess the actual or informal decision space that officials reported they were able to exercise (Nicaragua and Morocco). In a more recent phase of research, the author has now expanded the scope of study to examine two additional concepts—institutional capacity to make good decisions, and accountability to elected local officials—and the interaction among decision-space, capacity, and accountability. Preliminary findings on studies using this approach in Pakistan and India are presented. In conclusion, the importance of refined definitions of decentralization to assessing what form will be most effective in achieving policy makers’ objectives is reviewed.