Posted December 1997
| Food and Agriculture Organization of the United Nations | United Nations Capital Development Fund | International Fund for Agricultural Development | German Agency for Technical Cooperation | Swiss Agency for Development and Cooperation | World Bank |
Rome
16-18 December 1997
Technical Consultation on Decentralization
WHAT PROMISE does decentralization hold for rural development? The answer, of course, depends on what we mean by "rural development." We need to break that concept down.
Does decentralization facilitate growth in the agrarian economy? On present evidence, we should expect it to have only a relatively modest role in either impeding or promoting growth. To say this is to reject the assertion in the World Development Report 1997 that "(t)he world is replete with examples...of decentralized institutional arrangements that have contributed to growth" (World Bank, 1997, p. 123).
Some observers have noted that fiscal decentralization to the provinces and special economic zones of China after 1978 (which was not accompanied by democratization at that level) preceded the spectacular take-off of growth there. This is clearly accurate. But they then go one step further, and identify fiscal decentralization as a crucial cause of the surge in growth. If that is true, it follows logically that fiscal decentralization elsewhere can be expected to produce similarly astonishing results.
There are two major problems with this argument. First, there is the question of the main cause of growth in China. The evidence strongly suggests that the lifting of suffocating state controls on entrepreneurs and, to a lesser degree, a wave of investment from outside China were the principal causes of growth. Fiscal decentralization helped, but it was far from the main engine driving the process. Indeed, policy decisions in Beijing to devolve fiscal powers to lower levels were not even the main engine driving fiscal decentralization. The main causes, here again, were the easing of state controls on private enterprise and foreign investment (that went mainly into a few provinces) which - by fuelling growth at provincial and lower levels - placed massive new economic resources in the hands of political figures and others at those levels (see for example, Dearlove, 1995).
Second, we have not seen similar results from fiscal decentralization in other systems. It is often helps to promote some growth and other welcome trends (Shah, 1997). But it has not produced such spectacular outcomes elsewhere because the other two, main causes of China's growth surge have been absent elsewhere.
Does decentralization help rural poor or vulnerable groups such as women or minorities? Again, the evidence is ambiguous. If we are talking about the poverty which afflicts remote, underdeveloped and underrepresented subregions, then it tends to help. The creation of elected authorities within such arenas often provides vulnerable groups with a stronger voice and a fairer share of the resources distributed by the state.
The trouble is that decentralization has so far had little impact on inequalities within sub-regions or localities. This tends to be a more serious concern than inequalities between them. It can even make things worse, since hierarchical relations and elite biases against the poor tend in many countries to grow stronger as we move from higher levels down towards the grass roots. There is reason to expect that, over time, poorer groups may become better able to exert political leverage within democratic authorities at lower levels. But this may not occur to any adequate extent, and if it does, it will happen only very slowly.
When ethnic or other disadvantaged minorities are concentrated in particular sub-regions or localities, the creation of elected authorities in those arenas can assist them. But such groups often live amongst majority groups. When that is true, decentralization can make things worse - in the sort run at least, and possibly longer - because prejudices against minorities again are often stronger near the local level than higher up.
Giving minorities or women special representation on elected bodies is worth attempting - provided they are elected and not nominated. But our evidence suggests that even these may do little to assist them. (This evidence, however, emerges from systems which have existed for only a few years. Over time, such arrangements may enable these groups to assert themselves more effectively.)
Do the changes in policy preferences which tend to come with decentralization improve rural development outcomes? Recall that elected decentralized authorities almost everywhere have a strong preference for small-scale construction projects. What does that imply for rural development? Opinions will vary on this. The present writer is neither an anarchist nor a good Gandhian, but he has spent enough time talking with villagers and elected members of decentralized bodies to be persuaded that this preference is, on balance, a creative tendency. Too many little things which rural dwellers see as crucial have been overlooked for too long by high-level policymakers who emphasise large-scale programs. Corrective action to attend to rural roads, wells, modest sanitation schemes, school buildings and the like is far from irrational.
Some high-level policymakers fear that decentralization will strip them of power and the capacity to achieve badly needed big things. They need not worry. It is unlikely that the initiatives of decentralized authorities will ever be more than just a corrective to large, macrolevel undertakings which will surely survive decentralization. If the evidence tells us anything, it is that higher ups are not going to allow decentralized bodies to dominate the development agenda.
Decentralization can also benefit central authorities - and, more crucially here, rural development - in a host of ways, despite the limitations noted above. When fiscal, administrative and, above all, democratic elements are combined, it can enhance the responsiveness, accountability and noncoercive capacities of government. It can mightily increase the flow of information between government and rural dwellers (in both directions, especially upward), and catalyze greater participation and associational activity at lower levels. It can improve the coordination of agents from different line ministries, counteract urban bias, and make government more flexible in its responses to local conditions.
It can bolster the legitimacy of the state and break down popular suspicions of government. It can foster more appropriate types of development, more creative partnerships between state and society, and (by giving people at lower levels a greater sense of ownership of development policies) enhance the sustainability of those policies.
In time, these things may facilitate growth - at the margins - or they may not. They may provide the poor, women and minorities with a fairer share of opportunities and resources, or they may not. But even if they fail to achieve these things, they are valuable in enough other ways to justify support for decentralization.
By identifying those things which decentralization usually does not do well, this study has sought to accomplish two things. First, it seeks to warn high-level policymakers about the need to protect certain types of initiatives - like programs to reduce poverty - from possible damage, at least in the near term.
Second, it seeks to lower the unrealistically high expectations of decentralization which have developed in certain quarters, lest they lead to unjustified disenchantment that could scuttle promising experiments. There are already signs of this from, predictably China specialists who share the inordinate sensitivities of Chinese leaders about threats of localism to national unity and economic development (Manor, 1986; Zhang, 1995; Oi, 1992).
We should expect more disillusioned and disillusioning criticism of decentralization from other quarters. It is inevitable. But when it arises, we need to stick firmly to the understanding - which this paper has sought to establish - that while decentralization which combines fiscal, administrative and democratic elements is no panacea, it has many virtues and is worth pursuing.
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