Local Institutional Development: An Analytical Sourcebook with cases

Chapter one: Analyzing Options for Local Institutional Development

1.1.Introduction

The majority of investments in institutional development made thus far, however, have
been focus at the national level.

USAID presently states as a matter of policy “investment in national public institutional

must be balanced both by the establishment of decentralized institutional at regional
and local levels and by encouragement to the private sector. Balanced assistance of this
sort is essential if excessive central control is not to inhibit private and local initiative”
(USAID, 1983:4)

Nationals are needed for the development and dissemination of improved technologies
and for the mobilization and management of resources.

For comparative and cumulative work to be done on the subject, there need to be some
consistent categories for analysis that are theoretically informed and empirically
relevant.

1.2.Activity areas for local institutional Development

Five main activity areas for rural development stand out as major focuses of local,
national, and international concern:
a. Natural resource management
b. Rural infrastructure
c. Human resource development
d. Agricultural development
e. Nonagricultural enterprise

The first three activity areas listed encompass the economic factors of production
referred to respectively as land. Capital and labor, though the development processes
the sustain, create, or enhance these “inputs” are more complex than such a
classification implies.

1.3. Alternative local institutional channels

The major categories of local institutions can be classified as follows:
a. Local administration
Local agencies and staff of central government ministries
b. Local government
 Having authority to deal with development and regulatory task and accountable to
local residents.
c. Membership organization
Help associations whose member any seek to handle
d. Cooperatives
Kinds of local organizations that pool members economic resource for their benefit
e. service organizations
local organization formed primary to help persons other than member thought
members may benefit from them
f. private businesses
either independent operations or branches of extra-local enterprises engaged in
manufacturing. Services or trade.
Local administration and local government are set apart from other local institutions
in that they have the force of law and the resource of the state behind them.

1.4. Existing institutions

When planners or mangers remark that “local institutions” are very weak, they are
usually referring to the so-called “modern institutions” that have been assigned specific
development task by the government.
Traditional chiefs or village headmen, something acting in conjunction with local councils
of elders, may function as indigenous LG institution.
Traditional chiefs or village headman sometimes acting in conjunction with local council
of elders, may function as indigenous LG institutions.
Government and donor effort to develop local institutional capabilities should be
cognizant of such existing institutions and should work cooperatively with them where
possible recognizing that these roles and organizations ere familiars and accepted
because they have been meeting some local needs.
Some combination of building on what exists and carefully fostering sometimes new is
likely to be the preferable course of action.

1.5. What is an Institution?

The term institution and organization are commonly used interchangeable and this
contribution to ambiguity and confusion. Three categories are commonly recognized:
a. Organizations that are not institutions
b. institutions that are not Organizations
c. Organizations that are institutions (or vice versa, institution are organizations).
The three categories can be illustrated with examples from the legal realm. To elaborate
ho these concepts overlap and diverge
 In general, institutions, whether or organizations or not, are complexes of norms and
behaviors that persist overtime by serving collectively valued purposes. Institutions are
regarded negatively, as lethargic, aloof, ossified. An Institution cannot operate
indefinitely without providing benefits-economic, social, political, ethical-that justify its
continued existence.

1.6. What is local?

Delimiting what is local turns out to be almost as complicated as determining what is an
institution. Local has different meaning depending on whether it is regarded from the
perspective of an outsider agency or from the vantage point of rural people themselves.
Levels of decision making and activity
i. International level
ii. National level
iii. Regional level
iv. District level
v. Sub- district level
vi. Locality level
vii. Community level
viii. Group level
ix. Household level
x. Individual level
The local level is most often equated with the community level.
A locality-a groping communities that have trading and other cooperative links with one
another, where people have some experience of working together.

1.7. Collective action and public goods

“Collective action” in which the interest, resources, ideas, and ideals of many persons are
brought together.
Together, collective action and public choice concern have contributed to what called
“public choice” theory.
Similar the benefit from institution tend to be “public goods”, thing of value to person
besides those immediately engaged in the activity, having what economics call positive
“externalities”.
The analysis has distinguished three kinds of collective action problems having quite
different implications for local institutional development:
1. whether or not collective action is needed to create the common good,
2. whether or not the group can exclude from benefits those who did not help to create
the common good.
1.8. Assessing comparative advantage for local institution
The economic principle for institutional development:
a. When are local institutions, generally speaking, likely to be more effective or
efficient on promoting and sustaining certain kinds of rural development activities
b. If some local advantage is identified, what kind of local institution would probably
be most suitable.
Sometimes the questions should be posed so as to differentiate among kinds of
rural development activities to be promoted:
c. Is one type of local institution is identified.

Comparative advantage is not static and can change over time. As a population becomes
more educated.

Factor like literacy that bear on capacity and appropriateness of different institutional
arrangements are fairly common across rural development activities, though some
factors are more evident or dramatic in a certain area.

1.9.Promoting local institutional development

The kinds and combinations of local institutions to be supported will vary from sector
and from place to place. but there are some generalizations about LID that appear valid
cross sector ally and cross-nationally.
The analysis is supplemented throughout with empirical case references amplified in the
annexes. These demonstrate the concreteness and relevance of the concepts and
categories introduced.