The Incoherence of Institutional Reform: Decentralization as a Structural Solution to Immediate Political Needs

Abstract

Institutional reforms are structural changes in the rules and norms of authority, with effects that are long-term and unpredictable on government, politics, and society. But leaders may undertake them to solve unrelated, discrete, short-term political problems. Understanding the latter is key to understanding the characteristics of many real reforms, and hence their fate. We introduce the concept of instrumental incoherence and use it to construct a theory of decentralization where reform is motivated by orthogonal objectives. We show that reformers’ incentives map onto the specifics of reform design via their side effects, not their main effects, which in turn lead to the medium- and long-term consequences eventually realized. We characterize downwardly accountable decentralization, which ties the hands of the center to empower local voters, vs. upwardly accountable decentralization, which ties the hands of local government to empower the center. We use these ideas to explain highly divergent outcomes in two extreme cases, Bolivia and Pakistan, using detailed, original evidence. Our analysis likely extends to a broader class of reforms where the incentives of agents pursuing a change, and the effects of that change, are highly asymmetric in time and dimension.

Decentralization and Pro-poor Participation in Ghana: Unmasking the Barriers to Inclusive Grassroots Development

“…By decentralizing power and resources to subnational units of government, citizens are offered the opportunity to interact face-to-face with important policymakers to shape local decisions that directly affect them (Arkorful et al 2021;Faguet and Shami 2022). Pateman (1970) and Elliott et al (2018) assert that citizens are more concerned about decisions closer to them than remote decisions at the national level.…”

“…The World Bank has argued forcefully in its 2001 and 2004 world development reports that decentralization gives voice to and creates a conducive climate for the participation of local people. Manor (2011) and Faguet and Shami (2022) endorsed the view that decentralization enhances citizen participation. However, the majority of the studies have been unable to produce unambiguous and conclusive evidence of improved participation in the practice of decentralization in developing countries.…”

“…Decentralization has been broadly embraced by donors and governments of the developing world since the 1980s as a reform that could propel grassroots development. Citizens' participation in governance and development processes is said to improve under decentralized governance (World Bank 2001;Faguet 2004;Faguet and Shami 2022;Blair 2000;Debrah 2014;Bardhan 2002;Ribot 1999;Jütting et al 2004;Manor 1999). This makes the provision of development services more responsive and reflective of citizens' needs within a decentralized governance system (Campell 2003;Crook and Manor 1998;Dufhues et al 2015;Fatke 2016; Baral and Heinen 2007).…”

The perversion of public land distribution by landed elites: Power, inequality and development in Colombia

“…Our analysis is predicated on the notion that land distribution is not a simple policy instrument the main effects of which are first-order. Like other complex institutional reforms (Faguet and Shami 2019), land distribution is a complex instrument that sets in motion important institutional changes across various dimensions of economics, politics and society. It can be expected to have significant effects not just on agricultural productivity and output, but also factors further afield such as the distribution of status and power in society, the types and quantities of public services provided locally, and political competition, amongst others (Bardhan, Luca, Mookherjee and Pino, 2014;Janvry, Gonzales-Navarro and Sadoulet, 2014;Keswell and Carter, 2014).…”

Political Cleavages in Motion:bolivia in 2021

“…Institutional reforms triggered 'revolution from below' (Faguet and Shami 2021). Bolivia's 1994 decentralization had the unintended effect of unmasking the underlying ethnic and regional conflicts that define Bolivian society (Zuazo et al 2012).…”