Laura B. Rawlings, Lynne Sherburne-Benz, Julie Van Domelen
The study seeks to answer four questions that summarize the fundamental issues in the international debate about the capacity of social funds to improve beneficiaries' living conditions: o Do social funds reach poor areas and poor households? Do social funds deliver high-quality, sustainable investments? Do social funds affect living standards? How cost-efficient are social funds and the investments they finance, compared with other delivery mechanisms? The findings and lessons from this research reflect a specific moment in the evolution of six social funds and therefore may not fully predict the future impact of current investments. The evaluation assesses subprojects identified and implemented between 1993 and 1999, a period when longer-term objectives-such as increasing access to and utilization of basic services-began to supplant the funds' original emergency mandates. The time period selected allowed enough elapsed time following the implementation of the social fund subprojects to make measurement of impact and sustainability possible. The evaluation does not consider the effects of social fund projects on employment or on income generation-the original objectives of the first generation of social funds, which were introduced in Latin America. It also does not discuss the effect of social fund investments on capacity building-a more recent emphasis of social funds seeking to assist decentralization and community development.
Regional policy has – in general – the intention to supporting the efforts of regions with development problems to overcome their current problems and to stimulate an increase in regional economic growth. If the regional policy measures by a jurisdiction are successful, there will be a tendency towards more economic convergence between the various regions within that jurisdiction, with the result of a higher degree of cohesion between these regions, than in a state without regional policy. There are many studies on evaluating the impact of different instruments of regional policy on cohesion. But there are only few investigations so far into the institutional framework of these instruments. One institutional aspect has become more and more relevant in public discussions during the last few years: In federations (e. g. in the EU), there is in general not only one jurisdiction responsible for regional policy, but two, three or even more levels of government; the responsibilities (or: competences) are fragmentated between these levels. The paper presents a theoretical analysis of the impact of the allocation of competences in the field of regional policy on the outcome (interregional cohesion) and on the costs (economic efficiency) of regional policy. The analysis is based on the Theory of Fiscal Federalism, including the Economic Theory of Intergovernmental Grants. All the possible more central or more decentral arrangements of regional policy are located between two polar cases: At one pole, we have an arrangement where only the central level of government (e. g. the EU level) is responsible for regional policy; neither any subcentral unit of government (e. g. at the member state level in the EU), nor the regions which are to be supported (the less developed regions) have any influence for deciding on the implementation of regional policy instruments, and only the central government has to finance regional policy with its own resources. At the other pole, we find an arrangement where only the subcentral units of government and the less developed regions themselves are deciding on regional policy and are responsible for financing. In connection with financing, different categories of grants in aid may be applied. In addition, the arrangements may differ from each other because of different institutions for controlling the activities of the lower levels. The main hypothesis is, that a more decentralized institutional arrangement is not in general more efficient and effective than a more centralized arrangement; but – as compared to the status quo in Europe – a more decentralized arrangement for some public responsibilities would lead to better results in the field of regional policy. Central questions to be answered are: Have subcentral governments (as compared to central units of government) a tendency for neglecting their subregions with development problems' What is the impact of information costs and asymmetrical information on the choice of the level of government for certain (sub-) responsibilities' To which degree is the central influence stimulating – or: paralyzing – the initiative of the regions which are to be supported?
The paper has two parts: in the first one, economic aspect of regionalization is considered, in the second a financial one. Regionalization, like every type of decentralization, represents a serious reform of a state and brings upon several expected as well as unexpected although significant effects on political, social, and economic life. Its goal is an improvement of political, social, and economic functions of a state, not their deterioration. Unfortunately, experience of other countries does not support overwhelming optimism. Most frequently, regionalization is done due to political considerations; economic considerations are of secondary importance or even neglected. Such a dominance of political reasoning neglects fundamental principles and arguments of the economic science, standards of rational approach to decentralization, and even economic efficiency and equality between citizens. Because of that, the emphasis in this paper is on economic and financial aspects of regionalization in Serbia. In the first part the author explores economic aspects of regionalization; four state functions (regulation, stabilization, redistribution, and allocation) in decentralized setting; relations between regionalization, deregulation, and privatization; vertical distribution of functions (exclusive functions by the state, exclusive functions by regions, shared functions). After that he explores advantages of the selected model of creating regions and distribution of authorities in Serbia, particularly economic authorities of regions (1. land planning, urban land use, housing; 2. development and maintenance of infrastructure of regional importance and coordination of public utilities in municipalities; 3. agriculture; 4. tourism; 5. forestry 6. hunting and fishing; 7. vocational training and employment; 8. ecology; 9. public works). Separate section is devoted to social protection (financial transfers and institutions). In the second part of the paper (Financing the Regions) the author first examines certain issues in principle (fiscal revenues, vertical and horizontal balance, debts and moral hazard) and then considers topics of financing regions in Serbia, such as revenues subsidies, and debts.
The author explains mechanism of local economy functioning and distinguishes three sets in this mechanism: decentralized, centralized and mixed sets. Taking into account conditions of local economy functioning, in which local authorities are decisive subjects (local administration and people's councils) the author formulates an opinion that postulates on decentralization, which are stated in discussions, practically refer to substitution of centralized set with mixed set — and not decentralized one — of local economy. Centralized set can not be fully abolished even when mixed set is a predominating set of local economy functioning. Anyway it does not eliminate the possibility of competence expansion of leading local authorities. In such situation decentralized set of local economy functioning, in strict meaning of the word, can play a marginal role only. The author considers in a broad way the role played by financial factor in local economy functioning. A special attention is paid to dissimilarity of financing principles in particular sets of this economy, because efficiency of the reform considerably depends on proper knowledge about these principles.
1. Like many other countries, Portugal is facing numerous major problems related to regional unbalance and consequently to the location of economic activity. An unfortunate tendency has long been to judge an economy almost solely from the viewpoint of national production and consumption aggregats, without reference to the geographic division of economic activity.However the questions of social justice in the distributions of the fruits of economic development are as important and as different in terms of regions as in terms of social classes.Thus, at the present, increasingly attention is not being limited to the overall results of national development; the results are being accepted as satisfactory only if they concern the whole of the country, if each region is able to contribute to and participate in the national growth..On the other hand, Government activity to guide economic and social development involves not only the activity of policies and programmes but also the losely related process of formulation of goals and means and of appraisal of the results.If planning for regional development is intended to intervene realistically upon reality, it should be a continuous process in which the various units and levels of government subject the entire process to continuous review and evaluation leading to adjustment of plans, programmes and projects whenever necessary. Review and evaluation then form the transition to a new cycle of planning and decision making, moving ahead in time on the basis of a continuous stream of feedback information. At the same time, the fact is stressed that planning is actually a combination of plan formulation and plan inplementation.Institutional framework, in the modern sense of the process of achieving intended results through organizations, is a major factor at all levels - national, regional, sectoral and local. There was a time when proposals for new development pro. jects - particularly large programmes for resource development, new industries, improved education and health services - were considered only in terms of economic and technical feasibility.. After many unfortunate failures, institutional feasibility has come to be recognized as also an important dimension of planning.For evaluating the evolution of the objectives and means which have characterized Portuguese regional planning I rely in large measure on a general policy model formulated in the light of relevant theoretical and empirical considerations from economics and related social science disciplineOne of the basic attributes of this model is its distinction among three types of analytic regions: congested, potential, and backward. The advantaSe of these distinctions over the common division between "developed" and "underdeveloped" regions is that they come to grips directly with the problem of overconcentration of population and economic activity in some areas, a problem too often neglected in favour of studying the difficulties experienced by relatively underdeveloped regions.The circumstances which have given rise to the evolution of' Portuguese regional policy are compared with the assumptions of this basic model. Attention is given to the basic theoretical notions that have animated Portuguese thought concerning regional development and urban-rural integration, as well as to concrete measures which have been undertaken or which are envisaged for the future.On the basis of these considerations an effort is made to formulate a number of generalizations regarding the potential strenghts and difficulties of regional planning policy-making and a number of operationally feasible proposale are set forth for dealing with the difficulties.2. Portuguese regional planning was initiated on the basis of a deliberated attempt to deal rationally with spatial resource allocation, namely through the policy of "ordenamento do território".In the terminology of the Third Plan, the Portuguese approach maintains that the policy of "ordenamento do território" must find a practical compromise between regions depending on a policy of publicly induced growth and regions depending on a policy of induced public investment. On the one hand, it must give every opportunity, under conditions of lively competition, to strong regions whose potential benefits the whole of the country. On the other hand, it must seek to involve the weak regions in a process of development at first induced, then autonomous, in a manner which will enable them to participate in the current of modernization and expansion which characterizes our time.I try to show that the difficulties of Portuguese's backward regions are in large measure a result of a relative lack of benefits deriving from social investment. This is not to deny that economic investment in backward regions will produce advantages, but the effectiveness of such projects also depends on the degree to which the regions' human resources have been developed by social investment.Therefore, I stress that while there is official recognition of the needs to provide facilities for training surplus agricultural labor for employment in industry, there has not been adequate emphasis on the general problem of developing the human resources of these areas, despite the multitude of evidence concerning pronounced needs in this regard..On the other hand, a great deal has been said and written about moving industry and other economic activities to people, but policy-makers generally are more reluctant to urge the movement of people to job sources. Until now official Portuguese policy has been unable to oppose and to diminish the growth of a surprising number of rural individually-owned farms in the face of rapid technological change. This attitude, combined with inadequate social investment, has served to perpetuate the social and economic structures characteristic of backward agricultural regions of the center and the north including a surplus agricultural labor force.One of the principal arguments in favour of moving industry to backward regions, even at considerable expense in theform of subsidies or similar means, has been that the social costs involved in this type of action are less than the social costswhich would entail the uprooting of persons seeking employment in other regions as well as the increased congestion which would result in industrial agglomerations, However, the latter difficulty is now a necessary one, since migration can be channeled to intermediate or potential, rather than congested regions.On the other hand, the issue of uprooting residents of backward areas is a genuine problem since there is abundant evidence that the number of persons preferring to live in these regions is high in both absolute and relative terms.. Moreover, migration is not feasible for many persons because deficiencies in social investment in backward regions have limited the development of human resources and thus the possibility for their employment in other regions. Nevertheless, these arguments should not be used to discourage migration, since at the margin there are always persons ready and willing to migrate from backward regions.In general, it may be said that Portuguese regional policy has been facilitated by its distinction among three types of region, and that its over-all division of effort among the regions so as to induce growth in backward regions while limiting the growth of the Lisbon region and allowing for the expansion of potential regions has been substantially correct. Investment policywithin regions, however, must place relatively greater stress on social investment for backward regions. As to population policy, the new emphasis on encouraging interregional labor migration is a positive step away from the more conservative attitudes which prevailed heretofore.3. In any event, it is obvious that the value of the Portuguese regional development policy is related to the actual context in which it is to be applied. In this respect, the creation of regional organisms to participate in the formulation of regional priorities and in the regionalization of the government budget are of particular value in the elaboration of political ends and means.Unfortunately, earlier efforts in this direction were characterized by important defects. The prograps for regional action which were drawn up as planning guidelines for the various planning regions generally have been plans in name only. They have been for the most part inventories of regional conditions at a giventime. In addition, they have been deficient intipulating orders of priority and modes of finance for suggested future projects.Nevertheless, these programs have served to confront the Regional Planning Commissions with the need for horizontal consultation and coordination in regional terms as a complement to vertical planning by sectors; they have marked an initial, if not always successful, attempt to encourage cooperation among ministries and departments on common problems..Thus, in order to satisfy the objectives of regional development foregoing discussed, the need for reform of the structures - or at least changes in the institutional apparatus - become increasingly necessary. To avoid "sprinkling" of public funds it is not enough just to introduce new methods into the organizational bodies concerned; it becomes clear that something has to be done about the decision-making structures themselves. Two complementary requirements become apparent among others:- firstly, greater decentralization of decisions within the institutional apparatus and greater participation of people.- secondly, horizontal co-ordination in order to break up the vertical compartmentalizations and to create in that way the conditions for a better synthesis capable of inspiring better decisions.Just now, a new development Plan for Portugal is in preparation covering the period 1974-1979, Considering the methods of planning which have been employed in the country, one could