State reforms and the decentralization of the agricultural and rural public sector: Lessons from the Latin American experience

This paper is about strengthening the institutions that ensure good governance. Strengthening the institutional capacities of local governments is important for: 1) economic reasons (e.g. productive and allocative efficiency), 2) equity reasons (territorial and social equity); and 3) political reasons (e.g. elected officers' accountability to citizens, citizens' participation in decision-making, and democratization of decision-making).

This paper compares the experience of two decades of state reforms in seven Latin American countries (Chile, Colombia, Bolivia, Brazil, Mexico, Peru and Venezuela), in order to analyze the factors that might explain what succeeded and what went wrong; and to draw some lessons for the future.

In all these countries - starting with Chile in 1973 - various types of state reforms have been implemented, sometimes as a component of macroeconomic stabilization programmes, but also independent from them.

State reforms are historical processes, which involve political, legal, administrative and territorial changes. As a result of all these processes, by the end of the 20th century, the highly centralized forms of the nation-state have yielded some of its functions to: a) supranational governance bodies (e.g. MERCOSUR, NAFTA); b) to subnational agencies; c) nongovernmental organizations; d) grassroots organizations, and e) private enterprises.

The transfer of some decision-making powers and responsibilities from central government agencies to subnational (e.g. regional and/or lower) governments has been an important component of some of these reforms in the cases of Bolivia, Colombia, Brazil and Venezuela. This "territorial decentralization" of power in some cases has been preceded by political reforms: such as the popular election of local mayors and/or regional governors. In a few cases, the transfer of decision-making has gone from a central government agency to a 'civil society' or 'grassroots organization'. In a large number of cases transfers have favoured private enterprises, either via the selling out of state enterprises and assets to private firms or via contracting out for services without any shift in public property assets. In most cases, however, these reforms have been accompanied by the dismantling or downsizing of some central government agencies, particularly from the agricultural public sector.

Yet, although there has been not serious attempts at evaluating the differentiated impacts that the reforms have had on the extreme poor, the poor and the middle classes, the Latin American experience also shows that few reforms have reached all their alleged goals (e.g. increased market competitiveness, poverty reduction, environmental sustainability, sound governability), and some have even resulted in serious short circuits and backlashes.

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