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Linking Local Government Discretion and Accountability in Decentralisation
Serdar Yilmaz, Yakup Beris and Rodrigo Serrano-Berthet∗
Decentralisation offers significant opportunities to improve government accountability by exerting stronger pressures both from below (demand) and above (supply). The literature contains many examples, however, where the potential has not been realised, partly because decentralisation reforms have often been introduced without thinking through their accountability implications. Even when accountability is taken into account, the efforts tend to emphasise either the supply or the demand side of the equation, but not both. Drawing on the sets of literature on fiscal, administrative and political decentralisation, this article presents a methodology for studying this.
Key words: Decentralisation, local governance, accountability
The local governance challenge: linking discretion and accountability
Established theories in economics and political science have articulated the efficiency 1 and accountability gains that could accrue from decentralisation reforms. They include the internalisation of spillover effects (Oates, 1972; Mueller, 1996), the alleviation of information asymmetry and better accountability due to the proximity of principals and agents (Cremer et al., 1996; Raff and Wilson, 1997; Bucovetsky et al., 1998) and competition among local governments (Tiebout, 1956). Nevertheless, the empirical literature is full of examples of failures or mixed results in delivering these gains (Asthana, 2003; Akin et al., 2005). Part of the reason – and the starting point of this article – is that both the theory and practice of decentralisation have suffered from a partial and fragmented approach, undermining the comprehensive and strategic sequencing required for effective decentralisation reforms. We argue here that to increase the developmental impact of decentralisation – to receive the biggest development bang for the buck – it is essential to get the right local governance framework, balancing discretion and accountability.
∗ Respectively, Social Development Department, World Bank, 1818 H Street, NW, Washington, DC 20433 (email@example.com); United Nations Development Program; and World Bank. The findings and conclusions are entirely those of the authors, and do not represent the views of the World Bank, its executive directors, or the countries they represent. 1. In this article we use the term ‘decentralisation’ to refer to devolution – central government’s transfer of administrative and financial decision-making authority to local governments that have clear and legally recognised jurisdictions within which they provide public services to constituents to whom they are accountable – and not deconcentration and delegation.
© The Authors 2010. Journal compilation © 2010 Overseas Development Institute. Published by Blackwell Publishing, Oxford OX4 2DQ, UK and 350 Main Street, Malden, MA 02148, USA.
Serdar Yilmaz, Yakup Beris and Rodrigo Serrano-Berthet
Although decentralisation reforms have been at the centre of public-sector reforms around the world, they come in different types – political, administrative, fiscal – and forms – deconcentration, delegation, devolution – in each country. Furthermore, implementation of these reforms is always partial, based on the political context of a country; any illustration is therefore selective and incomplete. 2 As decentralisation reforms become more widespread across the world, they often try to increase the autonomy and discretion of local governments without thinking through the accountability incentive structures that are crucial to obtain more responsive and accountable governments. Even when accountability is taken into account, the efforts tend to emphasise only internal governmental mechanisms, neglecting external citizen vigilance and political oversight, or vice versa. In addition, the relationship between discretion and accountability in decentralisation reforms is further complicated when fiscal, administrative, and political aspects are separated – a point often missed in such reform efforts. If the practice of decentralisation has been fragmented and incomplete, it is, to a certain extent, because of the separate and parallel pathways that its political and fiscal theories have followed. Public-finance economists have emphasised the allocative efficiency gains produced by fiscal decentralisation, downplaying the importance of the political dynamics surrounding the capture of those benefits by local elites. Political scientists have highlighted the potential for democratic deepening and citizen oversight, overlooking the fiscal underpinnings required to make local governments work. This article is part of an ongoing attempt to bring these two strands closer together. The first-generation theory of fiscal federalism made the case for decentralised fiscal choice based on its superior allocative efficiency. In his work on the theory of public finance, Musgrave (1959) argued that the policies of subnational branches of governments should be permitted to differ in order to reflect the preferences of residents. Carrying Musgrave’s arguments further, Oates (1972: 87) formulated the decentralisation theorem as ‘each public service should be provided by the jurisdiction having control over a minimum geographic area that would internalise benefits and costs of such provision’. One of the shortcomings of first-generation theory was that it largely assumed that local public officials seek the common good. The more empirical literatures from political science and political economy prove this to be wrong, highlighting in particular the problem of capture by the local elite. An emerging second-generation theory of fiscal federalism is bridging the gap between the economic and political approaches to decentralisation, taking as its point of departure ‘the assumption that participants in political processes (both voters and officials) have their own objective functions that they seek to maximise in a political
2. In 1994, Dillinger reported that of the 75 developing countries with populations greater than 5 million, all but 12 claimed to have embarked on some form of transfer of power from central to local governments. Since then this transfer has been occurring even in ‘inherently centralised’ countries, such as Jordan (World Bank, 2002), Morocco (Vaillancourt, 1998), Egypt (UNDP, 2004), Yemen (UNCDF, 2007), the People’s Republic of China (Wong, 1997), Turkey (Tosun and Yilmaz, 2010), and Central and Eastern European countries (Dunn and Wetzel, 2000; Bird et al., 1995) as well as authoritarian regimes like Angola (Felicio and Yilmaz, 2009), Burkina Faso (World Bank, 2009), Ethiopia (Yilmaz and Venugopal, 2008) and Pakistan (World Bank, 2009).
© The Authors 2010. Journal compilation © 2010 Overseas Development Institute. Development Policy Review 28 (3)
Linking Local Government Discretion and Accountability in Decentralisation 261 setting that provides the constraints on their behaviour. Officials don’t simply act on behalf of the welfares of their constituents’ (Oates, 2005: 356). Decentralisation reforms often lead to tensions among various stakeholders, not surprisingly because decentralisation is about redistribution of power within and between levels of government, with different actors having conflicting interests (Hiskey, 2006). Analysing the political-economy drivers of these reforms is a crucial element of implementing a coherent, well-thought-out decentralisation strategy. Often decentralisation reforms are poorly designed and implemented, due to the lack of understanding of the power and accountability relationship among various actors. The political-economy approach highlights the influence of politics in framing and implementing the reforms, showing that ‘decentralisation is ultimately a highly political process since it seeks to redistribute resources within the territorial confines of a given nation-state’ (Agrawal et al., 1999: 2) and that the advantage of decentralisation is compromised by capture by the local elites (Seabright, 1996; Bardhan and Mookherjee, 1998). This article adds to this new more integrative body of literature by presenting a methodology to better analyse the linkages between local discretion and accountability in three dimensions: political, administrative, and fiscal. It argues that the relationship between local discretion and accountability is far more complex than accountability being an automatic outcome of increased discretion. In fact, increasing resources allocated for public services and expanding local government discretion over the use of these resources require a special attention to fixing accountability incentive structures. Otherwise, decentralisation efforts will most likely not translate into more accountable government. Furthermore, all these relationships between discretion and accountability (broken 3 down into the supply and demand side of fiscal, administrative, and political aspects) are far from being static. In all its aspects, decentralisation reshapes power relations among the local residents, local governments, producers of local government services, and higher levels of government (including central government). It sets new rules of the
3. The supply side of accountability, which is also known as public accountability, is the hallmark of and a sine qua non for good governance (Bovens, 2005). It is the obligation of public authorities (governments, elected representatives, corporate, and other governing bodies) to explain publicly, fully and fairly, how they are conducting responsibilities that affect the public in important ways. Public accountability refers to the institutionalised practice of account giving; it focuses on public-sector managers who spend public money, exercise public authority, and manage a corporate body under public law. Until recently, efforts to foster good governance focused on strengthening the supply side of accountability within state institutions. Accordingly, donor initiatives supported institution-building in developing countries to increase the supply of governance processes by reforming public institutions. Recently, the development community has concluded that domestic demand for accountability, originating within civil-society entities and the public at large, is at least as important for development as supply-side mechanisms. Also referred to as social accountability, the demand side refers to an approach to building accountability that relies on civic engagement – in which ordinary citizens and/or civil-society organisations demand accountability. Recognising the limitations of both electoral and public accountability mechanisms, demand-side/socialaccountability approaches require concerted civic education efforts during the decentralisation reform process. This new understanding encouraged an expansion in the repertoire of instruments through which citizens can hold the state to account, beyond voting. These instruments include traditional practices such as public demonstrations, protests, and investigative journalism, as well as more innovative ones such as participatory budgeting, social audits, or citizen report cards.
© The Authors 2010. Journal compilation © 2010 Overseas Development Institute. Development Policy Review 28 (3)
They also tend to favour upward accountability – towards upper levels of government. Such 4. This often creates a relationship of upward accountability or dependence on central authorities. We are aware of the risk of generalising issues that are mostly specific to the local context. We argue that factors presented in the methodology that affect discretion and accountability are valid. rural) should be resolved in the discussion over the kind of expenditure assignments to be allocated to local governments. Decentralisation thus leads to new interactions and contractual relationships between local governments. 2006). there is a need for a minimum level of rule of law that will allow local governments to challenge central government encroachment (Bahl and Martinez-Vazquez. However. which may contradict the arguments about local discretion and accountability. big. According to this literature. and between providers and producers of services and communities and non-governmental organisations. in the analysis we do not distinguish among different types of local governments. Journal compilation © 2010 Overseas Development Institute. The methodology presented here is not intended as a one-size-fits-all solution to the complex public policy issue of decentralisation. or among provinces in a federal system vs.e. the relationship between the central government or its deconcentrated units and local governments presents challenges. 2006). once a decision on according a certain level of discretion is made. small vs. © The Authors 2010. However. balancing discretion and accountability is important to increase the developmental impact of decentralisation. rural. Our methodology recommends that. Similarly. In balancing discretion and accountability. It thus redefines the interactions between local leaders and their constituencies. and provide a portion of the local government’s financial resources for service delivery. Studies about the size of local governments examine the efficiency implications of size in service delivery. local governments are accountable to higher-level hierarchies for their conduct. our aim is not to offer a universal prescription. taking into account efficiency and effectiveness factors and the demands of local populations. The size or the nature of local government (urban vs. helping new local leaders to emerge in the political competition. Development Policy Review 28 (3) . the goal here is not to dismiss the important role of central governments in accountability relationships in decentralisation. local governments need to be checked and balanced against abuse of their discretions. i. thus. regardless of the size or location of the local governments. the issues of optimal size and location of local governments are beyond the scope of this article. However. This is not to suggest that the 4 size and location of the local governments do not matter in a decentralisation context. central governments have a set of accountability instruments. between small and big private firms. They are relevant during the decision-making process on what kind of discretion over which services should be accorded to local governments. Yakup Beris and Rodrigo Serrano-Berthet political game.262 Serdar Yilmaz. In these cases. urban vs. While warning against these risks. the decisions and actions of local governments have a greater impact on local economies. In this respect. Central governments or their deconcentrated units may set the rules under which local governments operate. local governments in a unitary system. In these situations. Provided with a meaningful level of discretionary space. such formal accountability rules and norms can be too vague and incomplete to deal with every situation and circumstance. as a result of new regulatory and financial powers over procurement and service delivery. smaller governments that are closer to the people should be better able to provide the tax/service delivery package that citizens want (Fox and Gurley.
and Section 4 discusses the linkage between discretion and accountability in fiscal decentralisation. and socio-economic conditions to decide the best sequence for a country. It would be too prescriptive if it were to suggest a preference in these key and mostly political decisions. From our perspective. The methodology does not present one or the other dimension as superior or conditional for the other dimensions. 2008). and redefining formal relationships between the representative and executive bodies (Keating. 6. Accordingly. But this is limited to discretion (devolution of power) and is not linked to accountability. The decision on how and whether to reach this ultimate goal is a political one shaped by the local conditions and preferences in each country. The premise that the local political and institutional setting might substantially affect local performance and accountability is extensively theorised and documented in institutionalism-inspired studies of decentralisation (Lankina et al. the balance 5. The theoretical literature provides normative discussions on broad steps for sequencing and implementing decentralisation programmes. 1995). Following this introduction. sequencing poses a big question: Can any one of three dimensions of decentralisation (political. 2006). or fiscal) survive without the presence of the others? This is especially the case when countries introduce only fiscal decentralisation without the other dimensions (for example. However. any analysis of local governance structures needs to pay particular attention to the way local governments (both appointed and elected local officials) establish and maintain accountability relationships with their surrounding local actors. Sequencing in this particular context refers only to some preconditions for a successful decentralisation reform. 6 Although we accept the general notion of sequencing in decentralisation reforms. Beyond the elements of our methodology. reshaping local actor and voter incentives in many ways. Section 2 presents the key components of the local political setting and discusses how to make local politics more accountable. the methodology put forward here is simply a diagnostic tool for policy-makers to use when deciding on policy actions. there is a broader debate on sequencing. © The Authors 2010. 2 The local political setting and accountability Analysing the local political setting is crucial to understanding the factors that drive 7 accountability (Lankina. 7. The final section puts forward possible scenarios (trajectories) to achieve a high level of discretion and accountability in decentralisation. such as changing the size of municipalities. 2007).Linking Local Government Discretion and Accountability in Decentralisation 263 minimum guarantees will allow independent bodies (such as courts) to arbitrate between 5 the central and local governments in case of conflict or disagreement.. interests. But it presents different scenarios (trajectories) to reach the ultimate goal of a high level of discretion and accountability in all three dimensions. not a panacea. They can also change the structure of legislative bodies. Decentralisation reforms can restructure the local political setting. This article tries to partially address the sequencing issue in the last section under the discussion on trajectories but refrains from making conclusive statements as it treats these cases as ‘incomplete’ decentralisation. administrative. China and Viet Nam). we regard it as essential to conduct systematic analyses of country-specific local power structures. reformulating local electoral legislation. Section 3 introduces different dimensions of local administrative discretion and accountability. This was the case when the Supreme Court of the Philippines ruled that the central government had to pay the entitlements it was withholding from the local governments (Bahl and Martinez-Vazquez. Journal compilation © 2010 Overseas Development Institute. Development Policy Review 28 (3) . Our methodology presents a ‘menu of options’ and possible trajectories.
The following sub-sections identify the key structural elements at the local level that define the setting for political action and set out some accompanying arrangements needed to improve the downward accountability relationships of local authorities with the citizens. a key prerequisite for the separation of powers. He ascribes the production of services to local public employees. especially in the oversight of local governments.264 Serdar Yilmaz. In this sense. such as land use. legislative. Journal compilation © 2010 Overseas Development Institute.1 Factors defining the local political setting An appropriate political setting for downward accountability requires a suitable environment for local elected leaders to act independently (even if it conflicts with their own parties or with the central government) and responsively (in line with the demands of the local population). Development Policy Review 28 (3) . © The Authors 2010. local councillors are expected to undertake independent oversight over local executive bodies. and (iii) the existence and functioning of a party system and political party laws. zoning. We make a distinction between the elected and executive bodies within local governments because they have distinct roles in local decision-making. this is done through administrative courts or alternative dispute-resolution mechanisms that mediate between local governments and citizens 9 about administrative actions. is a specialised local court system able to resolve such conflicts. private contractors. Schroeder (2004) depicts local governments (elected and executive bodies) as the provision units rather than producers of services. and local courts take the role of impartially resolving conflicts arising from local government’s administrative actions. We use the term ‘local appointed official’ interchangeably with ‘local bureaucracy’ and emphasise the important role of local elected representatives in local accountability systems. in less developed countries such formalised court systems usually do not extend to jurisdictions below a certain level of government or do not always respond to certain types of small-scale conflicts. the way councils are elected. how those services are to be financed. and business regulations. at least in theory. before a formal recourse to the judicial system. the way executives are elected or appointed. meaning that they make decisions about the type. and judicial bodies. and quality of services to be made available in the locality. legislative. and judicial branches of local government and the clear separation of powers among them. However. Yakup Beris and Rodrigo Serrano-Berthet 8 between elected local authorities and local executives and administrators. 9. 2008). (ii) the election laws and the electoral system. The local leadership will be influenced by at least three sets of factors: (i) the institutional arrangements for separation of powers among the executive. and the structures for local legislative and executive bodies to relate to citizens (Lankina. 2. or higher jurisdictions under contract with the local government. In many countries. Another important component of the institutional separation of powers is the relationship between the executive and the legislative. ‘bureaucracy (and its supporting personnel) is the set of actors that either carry out the production of local services or help to oversee the private (or public) contractors that serve as production units’ (Schroeder 2004: 9). and how produced. Institutional separation of powers at the local level Strongly influencing the quality of local decision-making are the checks and balances between the executive. Frequently. quantity. The relationship between and the relative weight of the local executive and the local council establish how local decisions 8. Accordingly. With roles and functions clearly identified. traditional and informal structures may also address cases resulting from local government actions.
results in proclivities for greater public expenditures and policy changes (Wolman et al. This arrangement is detrimental to local accountability if local councils are marginalised and their role reduced to rubber-stamping the preferences of the local executive (Lankina. giving the council more weight than the executive. particularly when a new mayor defeats an incumbent. 1996). City managers are not subject to frequent turnover and thus are more likely to ensure policy continuity and to have credible commitments to other actors in local development (Clingermayer and Feiock. The risk of this type of local government is that ‘debating chambers’ are not able to implement sound policy decisions (Lankina. deciding public policy and with a strong symbolic role in representing the city 10 (Sisk. Or the mayor may lack veto power. including nomination procedures. 1995). which would have been the case with elected political executives (Montjoy and Watson. For example.Linking Local Government Discretion and Accountability in Decentralisation 265 are made. It has been suggested that city managers are more likely to pursue policy innovations than elected mayors because they are ostensibly guided more by actual effectiveness and efficiency. This system is also referred to as ‘parliamentary system’. rather than short-term electoral considerations and pressure-group demands. 1997). 2008). the mayor may have charter-based veto authority over council decisions.. Commissioner. Various arrangements exist for governing the mayor-council relationship. Under a commission form of municipal government. Existence and quality of local electoral systems Electoral systems change the incentives of elected local leaders and voters. The concept of ‘electoral systems’ is defined narrowly to refer only to the rules that determine ‘the means by which votes are translated into seats in the process of electing politicians into office’ (Farrell. Journal compilation © 2010 Overseas Development Institute. 1995). Such an arrangement can preclude 11 politically motivated patronage (Montjoy and Watson. 2001). all with equal powers though one may have the title of mayor. elected commissioners also manage separate departments. 2001). Council-manager. and how campaigns are conducted (ibid. 12.). Different institutional mechanisms for assigning the weight to the respective bodies are possible: Strong mayor system. 2008). The third type. Mayor-council set-ups might have an adverse effect on policy outcomes because political and administrative roles are not sharply distinguished under this arrangement. use of the strong mayor system has led to mayoral domination of local councils (Crook and Manor. for example. a popularly elected mayor wields strong executive. Wunsch. ‘Electoral laws’ is a broader concept that includes the laws regulating all facets of the election process. undermine alternative 10. 1998. and procedures may exist for the council to override this veto. is the council-manager arrangement. often charismatic. The council appoints and contracts with a politically neutral administrator to run and manage the city. The system has been criticised for violating the principle of division of powers (Montjoy and Watson. Development Policy Review 28 (3) . the characteristics of the franchise. The second type of institutional arrangement is the election of a mayor by the council. An electoral system may favour big parties. They are both legislators and department chairs. also called a ‘strong mayor system’. 11. © The Authors 2010. authority. during and 12 between elections. usually from council members. Strong council. Under the mayor-council set-up. frequent under many strong council systems. Empirical studies have shown how electoral turnover. 2001: 15). 1995). In Côte d’Ivoire and Uganda.
it can be structured in such a way as to systematically exclude certain groups. 2008). 2006). © The Authors 2010. first-past-the-post elections in single-member districts. of course. Or it may encourage political parties to simply ‘win’ the votes of particular groups over others. whether elections are manipulated (Sisk.). or encourage strict hierarchies within parties. In PR systems. Competition among local politicians increases the chances for vulnerable groups to be included in decision-making (Lankina. 2008). and therefore the performance of decentralisation reforms (Hiskey. Yakup Beris and Rodrigo Serrano-Berthet 13 voices and dissent. whether officials being elected are perceived to wield sufficient power. 13. Development Policy Review 28 (3) . the structure of local electoral systems has an impact on the quality of local representation and its responsiveness. A party or group that has only a slight minority could easily lose elections in each electoral district. So PR works to ensure that a party’s degree of representation appropriately reflects its electoral support (ibid. This arrangement becomes a particular concern where minority interests are equally distributed across the polity. ranging from pure PR systems. However. 2008). voters in a given electoral district vote for a specific candidate. 2008). 1998. whether local elections are held concomitantly with national elections. 2001. The alternative to PR systems is majority or plurality voting within single-member districts. 1993. With only one representative per electoral district. Faguet. 2000. and the share of votes received by a party is translated by a fixed formula into the number of seats to be held by that party. In sum. voters generally vote for a political party rather than a specific candidate. competitive and regular elections compel local politicians to exercise power in a way that allows decentralised institutions to provide efficient and fair outcomes (Echeverri-Gent. 2001). But if an electoral system does not secure real competition among local politicians. The chief drawback is that there is no guarantee that minority interests receive any representation (ibid. A host of factors may shape the effectiveness of elections as an instrument of local citizens’ voice. In the emerging systems of democratic decentralisation in the developing world. systems mixing PR with elections from single-member districts. In this context. Key among them: whether elections are based on individuals or party-nominated candidates. Journal compilation © 2010 Overseas Development Institute. Electoral districts contain multiple representatives. there is more variation.266 Serdar Yilmaz. Blair.). More important. voters have greater clarity of representation – they have no doubt who is directly charged with accounting for their interests. also known as first-past-the-post. There are very few systematic studies evaluating the relationship between varying institutional electoral arrangements and accountability in local governments (Packel. Scholars of decentralisation assert that fair. Crook and Manor. and. 2005). to arrangements where the winning party takes all the council seats allocated through the election (Packel. few scholars provide systematic insight into whether certain electoral arrangements produce better outcomes than others (Packel. decentralisation reforms might end up strengthening the hands of local political strongmen. the choice between proportional representation and election through single-member districts and plurality votes. is a key institutional variation. Rules for candidacy may force party members to have closer ties with ‘the centre’ rather than their local constituency. Here. leaving it with no representation whatsoever (Farrell. Gallagher and Mitchell.
and engage in government decision-making. on which there can be no division along party lines (Olowu. In addition. Development Policy Review 28 (3) . 1999. Role of national parties in nominating local candidates. rules governing the financing of parties and the participation of disadvantaged groups such as women or certain minorities.. According to this understanding. the role of national parties in nominating local candidates.Linking Local Government Discretion and Accountability in Decentralisation 267 2008). and the availability of parties based on ethnicity or religion. prominent examples of party-based systems are Côte d’Ivoire. 2003). Political parties lie at the heart of this representation. the role of national party leaders in selecting candidates and preparing party lists for local elections. They provide the ‘linkage’ between the ruler and the ruled. In Africa. parties have been outlawed in local elections. Nigeria. the inclusion of parties at the local level risks allowing policy-making to become contaminated by patronage and clientelism instead of focusing on long-term benefits (Packel. Kenya. the policy-maker and the citizen (Lawson. the existence of partisan or non-partisan systems. In Ghana. Nature of party system and structures The rules and structures of local political representation create (positive or negative) incentives for local elected leaders to be downwardly accountable to all citizens. The membership and loyalty structure of the parties. The literature argues that elected officials may be focused on securing re-election or delivering benefits to their narrow client base. 2008). adjudicate disputes between conflicting interests. based on an argument that merit. It is therefore very important to develop this research agenda further to better understand how the quality of local electoral systems reflects the local electorate’s preferences. 2005). not party affiliation. including Bolivia and Mexico. for example. officials may be more concerned with taking measures to ensure their promotion and advancement within the internal party structure. namely. These factors can have direct or indirect effects on the ability of local political leaders to exercise their powers and may © The Authors 2010. 1980). 2008). rather than delivering policies that benefit the entire community in the long run (Lankina. it is essential to understand the features affecting the party system and structures. is the basis of representation (Crook. They articulate and aggregate interests. Allowing parties to participate in local government. Francis and James. Senegal and South Africa (Packel. rather than in promoting policies that benefit the community (Ahmad et al. 2008). a smaller literature focuses on partisan systems compared with non-partisan ones (Packel. and the hierarchy structure within parties can also shape the behaviours of political parties. Advocates of non-partisanship in local elections maintain that local government pertains to ‘bread and butter’ issues. the nature of local campaigning and the performance of elected leaders. Given the critical importance for local governance. acknowledges the link between local and national government. by contrast. 2008). Partisan or non-partisan. This is true for both advanced industrial democracies and developing countries. 2003). 2009). Although a growing literature is looking at the relationship between electoral competition and local government performance. provide channels for the recruitment of leadership. Examples of systems allowing partisanship in local elections are nearly all from the recently decentralising Latin American countries. India’s panchayats also operate on a non-partisan basis by law (Venugopal and Yilmaz. Journal compilation © 2010 Overseas Development Institute.
No matter what combination is chosen. Development Policy Review 28 (3) . influence peddling. There is no one-size-fits-all setting that these elements would produce. Financing of parties. however. This is still an area with a scant literature. © The Authors 2010. gender. Honduras and Nicaragua. accurate information about party funding sources and political spending practices is not available to the public. In a study comparing six Latin American countries that have taken formal measures to decentralise forest management. A recent study by the National Democratic Institute of 22 countries highlights many areas of concern. In many developing countries. depending on the country context and preferences of the local leaders. 2. These arrangements are also likely to diminish the capacity of local actors to demand accountability from local elected officials. In many countries. Political accountability can also be improved by having elected local officials oversee local executives. 2008). 2000). downward accountability of locally elected leaders is damaged. Without clear rules stipulating the inclusion of certain disadvantaged or minority segments of society. A review of relevant case studies shows that national parties play a role in nominations (Packel. because their choices for selecting representatives are likely to be limited (Packel. and leveraging state resources for party purposes may compromise the faith of ordinary citizens in the political processes. Brazil. through elections (Aucoin and Heintzman. many different combinations could be determined. local candidates are selected by national parties.. Corrupt practices related to covert party funding streams. the goal is to provide a setting conducive to downward accountability. Larson (2003) notes with concern that in Bolivia. or religion – reflects a party agenda (and inevitably. which may affect party loyalties. 2005). or by involving citizens directly in decision-making beyond elections. ethnicity. where only nationally registered parties can field candidates for local elections. parties do not command stable loyalties. Where local elections occur on a partisan basis. 2001). Yakup Beris and Rodrigo Serrano-Berthet create an environment where national priorities and national party leaders dominate local priorities and agendas. 2008). such as the role of wealthy business interests in funding campaigns to gain access to lucrative state contracts (Bryan and Baer. nomination rules that favour national parties can serve as impediments to downward accountability. Local party financing is also critical in analysing local governance structures. Participation of disadvantaged groups. This is the case in Senegal. with elections focusing on elites or personalities (Azfar et al.268 Serdar Yilmaz. a party system may easily engender a system of dominance by majority and more powerful social groups. All the elements discussed in this section define the local political setting in which local elected officials interact with the other actors within the government and with the citizens.2 Making local politics downwardly accountable Political accountability is a process whereby citizens hold elected officials to account for their behaviour and performance – say. In the absence of sanctions against such exclusion. The following section discusses the key aspects that need to be taken into account. Costa Rica. leading to skewed policy-making and greater rent-seeking. Journal compilation © 2010 Overseas Development Institute. a local council and government agenda) favouring the majority and the more powerful. Exclusion from the party system – based on race.
1976. amend. Bachrach and Baratz. 1962). even under ‘perfect’ conditions. These mechanisms are important in countries where ‘money. Stone. a voice in local elections fails to ensure that elected officials 14 will exercise power on behalf of all segments of the community. like Canada. and politics are based on kin. reserve seats for women and other vulnerable groups. or patronage (Olowu et al. They legitimise local authority and provide elected representatives with a mandate for action. 2004: 71). elections remain the principal method whereby all eligible local residents can have a voice in the outcome and can hold decision-makers accountable (Schroeder. personality. 1989. and corruption’ dominate elections. Public accountability approaches Introducing safeguards into the electoral system. Development Policy Review 28 (3) . But little attention has been devoted to how specific electoral mechanisms fare in delivering accountability. referenda. it is assumed that party-free elections ensure that elected officials speak on behalf of the community and do not espouse narrow party agendas (Sisk. 2001). violence.. And other studies reveal a middle-class. Despite many weaknesses. turnouts in local elections have gradually declined over the past few decades in many countries. 1989). 2000). Representatives who were recently private citizens would thus be more 14. law. male bias in the composition of elected bodies (Balme. © The Authors 2010. or executive order. or repeal an act.Linking Local Government Discretion and Accountability in Decentralisation 269 Strengthening the political dimension of local accountability requires some safeguards on the supply side regarding local electoral systems and local council oversight (public accountability). 2008). 1960. Mabileau. as parties are often perceived to have lost touch with the electorate. including procedures for petitions to adopt. These studies suggest structural biases against marginalised and non-elite groups built into elections even in Western democracies. Term limits could foster accountability by preventing local politicians from becoming entrenched in their positions and locked into relationships of patronage. or recalls of elected public officials. allow for recalls of elected officials and limit the length of the term they may remain in office. 1989. Hunter (1953) shows how power in US cities is concentrated in. In some countries.. and exercised on behalf of. the general literature on elections does show that differing electoral arrangements shape how citizens exercise influence on policy-makers (Powell. white-collar. Some countries allow independent candidates to run in local elections. Journal compilation © 2010 Overseas Development Institute. An established body of literature on Western local governance suggests that. On the demand side. a narrow group of elite interests. parties are now banned from participating in local elections. to demand public hearings on policy decisions and action and to appeal to ombudsman offices in local governments (social accountability). political accountability measures allow for citizen-initiated legislation (petitions). or even whether voters use elections to hold officials accountable for certain policy decisions (Rodden. The impact of such measures is complex. 2004: 9). Studies on the involvement of underprivileged segments in decision-making processes demonstrate that they rubber-stamp decisions already reached by other interests (Schattschneider. Elections focused on parties have likewise alienated voters. although two opposing relationships are possible (Packel. re-election procedures could determine political accountability. For example. Newton. 2004). 1989. As a result of a decline in faith in representative democracy. Nevertheless. Mabileau et al.
however. The relationship between elected local councillors and executives also pertains to budget planning. If a provision for recall exists.. In 1997. as mayors wound up being selected by council members rather than by the electorate. A number of factors interfere with the oversight responsibility of local councillors. there is the status of local councillors (Lankina. but some of the most progressive legislation for recall exists in Madhya Pradesh. Even with imperfect information. in many settings councillors are low paid and part-time. Researchers argue that these limits impede performance (Cleary. eliminating the possibility of re-election may at the very least reduce opportunities for accountability (Packel. Grindle. its design matters if it is to be an instrument of accountability. not a response to corruption (Hiskey and Seligson. Mexico is one country that imposes term limits of three years on local elected officials and bars them from holding the same position again for one term. voters use elections to reward or punish politicians.270 Serdar Yilmaz. Yakup Beris and Rodrigo Serrano-Berthet attuned to the concerns and interests of the community than career politicians (Packel. 2008). execution. this high use demonstrated that the recall hindered accountability. 2005). India’s panchayati raj law varies across different States. the widespread use of the law allowing the town council to recall mayors in cases of misconduct.). indicating that the voto constructivo was being used as a political manoeuvre. Although executive positions are generally considered to be full-time. 2008). Local councils are the core units of representative governments. 2007. 1997). council members may not be able to master the responsibilities of their position before their terms expire. But if term limits are too restrictive. 2003). Journal compilation © 2010 Overseas Development Institute. one year after the first mayors entered office following implementation of decentralising reforms. Development Policy Review 28 (3) . 2007). known as the voto constructivo de censura (constructive censorship vote). 2006). Second. 2003) and where the gram sabha (village assembly – open to all adult residents) has the right to dismiss the panchayat chairperson in the event of wrongdoing (Johnson et al. recall provisions exist in Ethiopia and Nigeria (Olowu. Local councillors are supposed to oversee the executive branch during the entire process of public financial management and provide local executives with constant feedback. and politicians may engage in more rent-seeking (Maravall. relying as it does on the assumption that local elected representatives have more incentive to respond to the needs and preferences of local populations and are more downwardly accountable than local bureaucrats. Improving local council oversight therefore constitutes an important part of public accountability approaches. the decision is confined more to evaluations of past actions. First. elections lose their power of control. given perfect information. Recall gives councils or popular bodies the ability to dismiss elected leaders for wrongdoing. Indeed. with detailed regulations for gram panchayat action (Mathew and Mathew. But without the possibility of re-election. there is the lack of safeguards against dual © The Authors 2010. and with less citizen support for the political system than in municipalities where the recall was not exercised (ibid. 2008). Recall alone may not engender downward accountability if the only actors capable of exercising this power are beholden to national political parties (Packel. Improving local council oversight. 30% of them were replaced. 2003). 2008). illustrates this risk. their council duties motivated by civic spirit and volunteerism (Pelissero and Krebs. In Bolivia. and monitoring and evaluation. Unlike elections. The theory of retrospective control of politicians asserts that. In Africa.
In some developing countries. 2008). such as the young or the elderly. social. higher-up bureaucracies and elected local officials. and accountable’ (Fung and Wright.. In some instances. some of these deliberative forums could be complicated and time-consuming. clientelism. while in Kenya as well as Ghana. sit in local councils. neighbourhood assemblies. elite capture and elite biases are still widespread. namely. Other countries demonstrate similar conflicts of interest. 2004). a third of local councillors are formally appointed by state bodies. thus drawing even the normally passive and 17 uninterested citizens into public life (Lankina. These efforts represent a new approach to democratic governance that some scholars have called ‘Empowered Participatory Governance’ (Fung.. deliberative. participatory. In some settings citizens are excused from work and asked to meet to make recommendations about local issues. members of parliament can be ex officio members of local councils (Olowu et al. 2008). In some parts of Russia. The size of the locality and its cohesiveness are important factors determining the effectiveness of such forums (Sisk. © The Authors 2010. councillor positions also overlap with key patrimonial. local councils are packed with senior professional employees of medical and educational institutions (Lankina. 2001). appointed by higher-level bureaucracies on a contract basis. 15. 2001: 8). Development Policy Review 28 (3) . 2001). 16. 2003). Social accountability approaches Social accountability mechanisms can give poor and marginalised people a more direct voice in the policies that local governments formulate and implement than through elections and local councils. 2004). that consensus-based decision-making may be more legitimate than that of elected officials which cannot be realistically scrutinised on a daily basis (Sisk. and accountable to. Studies of African countries where elections are in place show that local citizens fail to sanction poorly performing officials effectively (Azfar et al. Patronage. forums for various social groups. citizen juries. multi-choice referenda accompanied by active public debate and discussion. In Ghana. They tend to satisfy the political preferences of regional authorities because their jobs are subject to short-term contracts. Social accountability mechanisms are often part of broader efforts to deepen democracy and ensure a robust public sphere for citizens to give feedback and control government 16 action. and activism by non-governmental organisations and other community groups. In India. councillors often occupy dual roles as full-time executive functionaries dependent on. The practical form of such participatory arrangements includes public meetings. 2001). some states have power to remove elected representatives or even dissolve panchayats (Mathew and Mathew. 17. Journal compilation © 2010 Overseas Development Institute. or other structures in the locality. impeding accountability. It looks at how alternative political and administrative designs can ‘surpass conventional democratic institutional forms on the quite practical aims of enhancing the responsiveness and effectiveness of the state while making it more fair. which could be revoked. Even heads of private enterprises are subject to control and manipulation by higher authorities because their tax privileges and licences could be withdrawn at random (Lankina. 2004). such as school principals. In many countries.Linking Local Government Discretion and Accountability in Decentralisation 271 structures of accountability (Lankina. 2004). public employees. but observers point to their merits. Such councillors are less likely to aggregate 15 and articulate the preferences of the citizens who elected them. Logistically.
2005. Development Policy Review 28 (3) . they need to be properly designed to complement the role of the local council. executed and managed. Public hearings and consultations. the community-driven approach has recently been expanded into a broader local governance approach that captures the quality of these local interactions (Helling et al. 3 Local administrative discretion and accountability To have flexibility in delivering services and the opportunity to respond to local needs. 18. 2004). 2006).. one-quarter of the members to come from non-governmental and community-based organisations (Estrella and Iszatt. 19. change and enforce regulatory decisions/laws. municipal. public petitions. In the Philippines. and civil-society organisations.272 Serdar Yilmaz. to govern a procurement system (based on national standards). the private sector. We identify three broad areas of authority as being crucial for local governments to be administratively autonomous: power to make. community-driven development programmes have promoted a culture of citizen 19 oversight. Journal compilation © 2010 Overseas Development Institute. Generic legislation. McLean et al. the right to demand a public hearing. and deconcentrated offices. and village governments to establish local development councils to set the direction for economic and social development and review local government budgets. A community-driven development approach tries to improve the well-being of poor people by increasing their control over the way investment resources are planned. for example. A community-based programme that empowers citizens to be informed and have a say over local public expenditure creates the expectation that all programmes should follow the same standards. (ii) by setting up specific bodies and processes for citizen oversight. Some initiatives introduce legal mechanisms empowering citizens to redress grievances or request explanations of municipal legislation. Specific bodies and processes. and to make civil service/employment decisions. These can comprise all citizens in the municipality (gram sabha in India). Creating a political culture. Although these forums provide a venue for greater co-ordination and control. and (iii) by creating a political culture for citizen oversight. the Local Government Code mandates all provincial. In some countries local development programmes transfer discretionary resources to local governments on condition that they create multi-stakeholder forums. local councillors. sectoral service delivery units. or an elected position (citizen ombudsman in Japan). several citizen representatives (Vigilance Committee in Bolivia). Yakup Beris and Rodrigo Serrano-Berthet These powers to hold political leaders accountable may be expanded: (i) by generic legislation empowering citizens to demand explanations and justifications from local governments. By introducing mechanisms for poor and marginalised people to participate in decision-making and for local transparency and accountability. Because communities do not act in isolation but in a local space where they interact with local governments. © The Authors 2010. local governments need administrative autonomy. and the right to initiate a recall or referendum are examples. with representation from civil 18 society..
d. such as bid splitting. improves the efficiency of service delivery and insulates operations from political interventions. leasing. 2007). land-use planning and management. say. how. 23. the existence of a specialised administrative court system for local affairs would be instrumental in establishing checks and balances between local executive and legislative bodies. It also brings in skills and knowledge. one such tool being the administrative penalty. which in turn requires flexibility in procurement laws and regulations and high-quality employees well trained in public procurement. 21. and voluntary and community organisation suppliers. and restrictive bid specifications. and the legal system is important for local administrative autonomy. ethics. A local government procurement policy is closely associated with the quality of service administration and the way contracts are awarded to partnerships in service delivery. and environmental protection. Administrative penalties do not replace criminal prosecution. and issue contracts for goods and services. an economic activity or land use. endowing local governments with such power could prove more practical and cost-effective than 20 prosecution through litigation. subject to national and state laws. research on environmental regulatory networks for shrimp farming in Thailand shows that local governments are the most effective regulators (Vandergeest. social protection. n. education. Although the power to sanction requires a qualified workforce to monitor non-compliance. Enforcing local administrative rulings is effective and legitimate only when there is recourse to challenging local government decisions. For example. Private-sector participation in service delivery through service and management contracts. A procurement strategy should stipulate mechanisms for assuring compliance with the competitive bidding and against abuses. They also need the power to sanction and punish non-compliance. including for firms of various sizes. 22. Their powers usually extend to local economic development.1 Factors affecting local administrative discretion Ability to regulate As part of administrative autonomy. and contract management (Brennan and Miller. local governments need a minimum set of powers and capacities to initiate. These enhance their discretionary authority to make decisions and take ‘actions concerning who can benefit from given resources or opportunities. but administrative changes may only approximate deconcentration’. concessions and joint ventures alleviates pressures on budgets. Discretion to procure and administer services Expanded mandates and responsibilities for new services require local governments to 21 be given discretion over procurement processes for goods and services. social enterprises.). some aspects of public health. change of orders. Discretion over civil service and employment policies In many countries ‘political and fiscal devolution may have proceeded apace. Such discretion implies that. usually a monetary fine or the revocation of licences or rights related to. zoning.Linking Local Government Discretion and Accountability in Decentralisation 273 3. minority groups businesses. As discussed in Section 2. 1999: 480). the result being 20. Development Policy Review 28 (3) . © The Authors 2010. identify 23 associated processes. and public safety – and in certain cases. amend and enforce regulatory legislation on issues within their jurisdiction. local governments can develop procurement strategies. Journal compilation © 2010 Overseas Development Institute. and to what extent’ (Agrawal and Ribot. under strictly stipulated national standards 22 and regulations.
2005: 129). and performance management (Evans. Journal compilation © 2010 Overseas Development Institute. The degree of autonomy differs across countries. the States have frequently been unable to transfer administrative and technical and technical controls over locally administered programmes. 24 control of career management. for instance.). 2005: 10). Development Policy Review 28 (3) . although subnational employees make up 90% of total government employment.. However. nazim. and … conflicts of interest’ (Ahmad et al. This is often the case in countries where central government officials were simply transferred to local governments after decentralisation reforms were instituted. 2004: 24). with the elected district executive. Table 1 provides a general picture of the situation in East Asia. but salaries and staffing are that of the District. autonomy in recruitment.. however. Similarly in Uganda. Some form of accountability to higher levels of authority may be unavoidable for local authorities performing state-delegated or -funded tasks. teachers remained provincial government employees. on the other hand. Yakup Beris and Rodrigo Serrano-Berthet ‘weakened accountability for service delivery. undermining local incentives for efficiency and responsiveness (Azfar et al. The result is that staff burdens are transferred to local governments.. the ‘double subordination’ of local government staff to the local executive and the relevant central agency weakens the downward accountability of local civil servants (ibid. the central government retains a significant degree of control over numbers and wage levels. structure and career and performance management of the subnational civil service (Green. In Pakistan. In China. key decisions and drug provision remain the prerogative of the centre. 2005). many countries suffer from ‘misaligned’ structures of accountability in decentralisation (Lankina. prestige and labour mobility often impede relocation or dislocation of civil servants across tiers of government. thereby enjoying some insulation against local control. Issues related to status. Such resistance can lead to field officers maintaining strong links with their original line ministries. 2005). without the discretionary powers over the civil service. stand-alone process’ (Green. despite devolution in health care. Bureaucracies tend to resist decentralisation reforms because of career perspectives and institutional and political allegiances. © The Authors 2010. important that there be no confusion about responsibilities or distorted incentive structures whereby the local authorities are deprived of leverage over service providers within their jurisdictions. 2001). 24. In India. Both in China and the Philippines. therefore ‘civil service management – or more broadly human resource management – should be seen as an essential component in the design of decentralisation rather than a separate. for example. control of budget and establishment. Each of these factors increases a local government’s administrative autonomy and influences its accountability relationship with local bureaucracies. despite devolution of responsibility for education to school districts. though most State legislation has clarified the functions to be devolved. 2008).274 Serdar Yilmaz. Local government competency and discretion over civil service and employment policies ideally cover autonomy and transparency in pay policy (overall wage rates as well as allowances). having little authority over them (Ahmad et al. Granting administrative autonomy to local governments in civil service management results in reallocating powers and jobs. It is. Civil servants form a crucial link in moving government closer to people. geographically and institutionally.
accessible to officials and others. 3. Oversight of the use of civil service control includes measures to improve budget transparency on staff payments. Source: Green (2005). Journal compilation © 2010 Overseas Development Institute. Ө = partial.Linking Local Government Discretion and Accountability in Decentralisation 275 Table 1: Staffing authority among subnational governments in East Asia Philippines Cambodia Indonesia Enabling mechanisms Thailand Vietnam Ө ○ Ө Ө ● ● ○ ○ Ө ○ ● ○ ○ Ө ○ Ө Budget control Determine wage Dismiss surplus staff Establishment control Control overall staffing numbers in individual offices and facilities Recruitment Formal employer Have authority to hire Have independent merit-based recruitment mechanism Career management Promotion available Internal transfers possible Horizontal mobility Performance management Direct and supervise Conduct evaluations Offer financial rewards Discipline and fire Pay policy Set overall wage rates Set local incentives/ top-ups ○ ○ ○ ○ China ○ Ө Ө Ө ○ Ө ○ Ө Ө ● Ө ● ○ ○ ○ ○ ● Ө ○ ● ● Ө ○ Ө Ө ● ● ○ Ө ○ ○ ○ ○ ○ ● ○ ○ ○ ○ Ө ● ● ○ ● ● ○ ○ ○ ● Ө ● ○ Ө Ө Ө Ө ○ Ө ● ● ○ ● ● Ө Ө ○ ● ○ ○ ○ ● ○ ○ ○ ○ ○ Note: ● = yes. Development Policy Review 28 (3) . Ratings refer to the subnational level and de facto practices as well as de jure authority. Data are for most recent available year.2 Making local administration downwardly accountable Accountability for the exercise of administrative powers requires avenues for complaints and redress. and on practices for budget and © The Authors 2010. ○ = no. on policies and practices for new appointments. ranging from 2000 to 2003.
other judges and non-political representatives appointed after consultation with opposition parties. and administrative courts. In some African countries. environmental review boards. 26. Issues arising due to lack of sound control and audit systems range from collusive practices in procurement in Indonesia (World Bank.. obtain information. Development Policy Review 28 (3) . or commissions for sustainable development) that analyse whether local 26 administrative decisions are in line with national sectoral strategies. Such a court system issues binding decisions and may resolve cases that the local governments and associated independent bodies fail to address. and theme-specific bodies (such as the anti-corruption commissions. Public accountability approaches Public accountability in the administrative sphere refers to local civil servants being accountable to their top administrative officers and to outside officials or entities such as public audit officers. and have become a widespread accountability measure. Three major mechanisms that public sector approaches rely on to improve this accountability are structures within bureaucratic hierarchies. providing sound redress for local grievances (Olowu et al. Only impeachment could remove members of these bodies. which minimises the chance of executive interference with their work (Mathew and Mathew. ombudsmen. 25 ombudsmen who hear citizens’ complaints about regulations. 2000). 2004). © The Authors 2010.276 Serdar Yilmaz. These measures call for appropriate channels for administrative audits that can be initiated by bureaucrats or elected leaders and by civil-society groups. 2004b). there are appellate tribunals as a source of appeal against panchayat decisions. which may be customary. a particular administrative agency. Legislatures set up these agencies to make inquiries. The office of the Ombudsman in the Indian State of Kerala is a 7-member body consisting of a High Court judge as the chairperson. 2003) to a lack of compliance with procurement laws in the Philippines (World Bank. specially designed independent bodies. les tribunaux administratifs are the court of first instance with ‘full jurisdiction’ over disputes related to local government actions. run by volunteers. and can ensure compliance with national laws and regulations. and issue (limited) regulations or judgments (Zarei. and are important as a first step to uncover information about misadministration by local governments. decisions and actions. 25. Examples include independent/external auditors who scrutinise the use of public funds. Journal compilation © 2010 Overseas Development Institute. Similar measures are needed to ensure transparency and openness of the procurement process to avoid misconduct and corruption. Specially designed independent bodies authorised to conduct administrative audits on local governments have emerged in response to increased complexities requiring specific expertise. 2003). In France. regulators. In addition. or a board or committee. Yakup Beris and Rodrigo Serrano-Berthet establishment control. Administrative courts with local expertise address local conflicts arising from local governments’ regulatory and administrative decisions. for example. there are local judicial or conflict-resolving agencies. Accountability structures in the bureaucratic hierarchy enable higher authorities to instigate investigations or audits of the use of administrative discretion by lower bureaucrats. like Ghana and Uganda.
Monitoring local service provision. 2000). Citizens have organised public consultations in which different parties get a chance to comment on draft tender documents. Citizenbased efforts concentrate on producing the information that is most relevant for local citizens’ welfare – monitoring the quality of services and the way contracts and tenders are given at the local level.). In the State of Rajasthan. India (Paul. Participatory assessments and feedback surveys are often accompanied by agreements on the standards of services expected. such © The Authors 2010. the value of the contract was reduced from about $45 million to $32 million. In Argentina.Linking Local Government Discretion and Accountability in Decentralisation 277 Social accountability approaches Public accountability approaches are necessary to provide channels for uncovering basic information on regulatory decisions and civil service practices and services. Recent approaches emphasise the need for citizens to initiate administrative audits to reveal more information on employment and pay policies as well as relationships between local governments and service providers. In the Philippines. and independent outsiders conduct an in-depth analysis before the start of bidding. They can also oversee construction while it is taking place. as with the Social Investment Fund in Nicaragua (Grun. which had been widely criticised for alleged corruption. Citizens have also been involved in overseeing the opening and analysis of bidding offers. Monitoring procurement and implementation. and are trained to see that funds are spent as allocated and that the construction follows the standards agreed to in the contract. making information available to the public is thus the starting point for many social accountability initiatives. 2003). But public approaches alone fall short of ensuring proper use of administrative discretion. the Municipality of Morón. A typical source of corruption and collusion involves drafting tender documents in ways that unfairly benefit one contractor over others. assisted by the local chapter of Transparency International. At an extraordinary session of the city council. the Local Government Code defines ways in which accredited non-governmental and community-based organisations can have a seat on the prequalification. Citizen-based initiatives complement government accountability mechanisms that manage these risks – supervising contracting and bidding. social audit committees. and auditing budget execution. The contracting and implementation of public works and services suffer from a high risk of corruption and mismanagement. scrutinise local decision-making and publicise findings on how public money is allocated and spent (Mathew and Mathew. Journal compilation © 2010 Overseas Development Institute. The cards are participatory surveys that solicit user feedback on the performance of public services. Information provision as a basis for citizen monitoring. The level and quality of service provision are probably what citizens care about most. bid. and award committee for local contracts. In India. monitoring construction. public hearings with wide publicity and social mobilisation forced public officials to return public money they had misallocated (ibid. Development Policy Review 28 (3) . comprising individuals with impeccable reputations. 2002). They are used in situations where there are no demand-side data. Lack of information on financial allocations often leads to the abuse of funds. attended by 500 people. One of the main innovations that drew attention to the potential of the social accountability approach was the citizen report cards in Bangalore. introduced two mechanisms to monitor the contracting of the waste collection service.
. not the broader citizenry (Ahmad et al. Ghana. Examples include the local school councils in Chicago in the United States (Fung. which might boost a given locality’s overall economic development.. Citizen-based actions may in fact fail to provide effective oversight. Other strategies have relied on the creation of new multi-stakeholder institutions to promote citizen oversight over a specific local government service. Development Policy Review 28 (3) . which results in ‘market imperfections’ in the sense that they cannot properly hold local policy-makers accountable (Lankina. Local citizens often lack the knowledge to assess adequately the quality of complex services. The empirical record of these mechanisms is mixed.278 Serdar Yilmaz. The report-card process relies on extensive media coverage and civil-society advocacy to achieve greater accountability in other Indian States. the levels of participation within the community are likely to be lower among those less economically advantaged and the benefits of the new participatory arrangements biased toward those who are better-off (Lankina. aimed at reinforcing health providers’ accountability to citizen-clients by enhancing communities’ ability to monitor providers. 2004). 2007). Journal compilation © 2010 Overseas Development Institute. What voters can assess is often wasteful. enabling citizens to interact more effectively with the local authority. 2008). and there is no systematic evaluation of their effectiveness (Olowu et al. 2008). user groups that ensure that services are delivered as intended. Yakup Beris and Rodrigo Serrano-Berthet as user perceptions of the quality and satisfaction with public services. In Uganda. 2004) and citizen community boards and school management committees in Pakistan (ADB/DFID/World Bank. Citizen monitoring of administrative decisions should be seen as a complement and not a substitute for public accountability mechanisms. Senegal and Uganda. many of which lack incentives to be responsive. Even if participatory mechanisms are in place. An example is the Citizens’ Charter of the Municipality of Mumbai. 2001). projects. a recent report-card project. 2004). A study in Uganda found that education and income were determinants of membership in such key local government committees as health and school management (Azfar et al. This was the case in the Czech Republic. © The Authors 2010.. where one badly performing municipality decided on a very costly but also highly visible bridge across the river running through the city (Lankina et al. Malaysia. but highly visible. 2005). Another example of social scrutiny of local governments is social funds 27 committees. increased the quality and quantity of primary health-care provision (Bjorkman and Svensson.. which covers detailed public services for each municipal department. India. A complement is the citizen charter. Similar caution is needed to judge the quality of participation in community activities to monitor local government service delivery. whose implementation also rewards narrow clients. a pact between the community and service providers that spells out expectations and roles. 2007). 27. and they gather demand-side data about state-owned monopolies.
the administrative system 28. There is a robust literature on the theoretical and implementation aspects of fiscal decentralisation – the intergovernmental framework (IGF). from legislation to planning to implementation’ (Mountfield and Wong. and public security. A genuine spirit of decentralisation requires assigning a meaningful level of expenditure responsibilities to local governments with service autonomy so that they can respond to local needs.1 Determinants of local fiscal discretion Expenditure assignment Devolving expenditure responsibilities to local governments is an important step in 30 increasing the participation of citizens in local decision-making. the interaction between IGF and the political and administrative dimensions as well as fiscal discretion and accountability are inadequately studied.. 29. central government departments and public-sector companies continue to deliver most services with high local characteristics. © The Authors 2010. This situation often exists for education. 2000). for example. ‘since authorities are broader than functions there is confusion about who is responsible for what. If the contest over service-delivery responsibilities is not resolved. A clear assignment of service responsibilities requires a well-defined institutional framework that describes the roles and responsibilities of different levels of government. Development Policy Review 28 (3) . this section does not provide an extensive review of IGF issues. although the decentralisation law of 1999 gave all authorities to local governments. health. Clear assignment of roles and responsibilities is decisive in shaping accountability relationships. as was the case in East European countries as they embarked on decentralisation in the early 1990s (Bird et al. 30. for example. More importantly. In China and Vietnam. 4.Linking Local Government Discretion and Accountability in Decentralisation 279 4 Fiscal discretion and accountability28 Local government performance is intrinsically linked to the scope and nature of intergovernmental fiscal arrangements. and social services in many developing countries. In countries where decentralisation does not end up transferring such responsibilities to local governments. health. Thus. On the other hand. Intergovernmental fiscal rules determine the expenditure responsibilities and revenue resources of local governments as well as the design of the transfers system and local governments’ access to capital markets (Bird. but focuses on the linkage between IGF and discretion and accountability. 1995). Lack of this is a common problem in East Asia. 2005: 95). 29 decentralisation is doomed. Clear assignment of expenditure responsibilities becomes even more important in sectors where line ministries and other government agencies may also deliver services at the local level – often in the same geographic area. If local governments are denied the fiscal instruments and funding to make real use of their political and administrative autonomy. such as primary education. In Indonesia. Fiscal decentralisation requires public services with high local-public-good characteristics to be assigned to local governments and the rearrangement of roles and responsibilities among different levels of government. monitoring and sanctioning). In this devolving of responsibilities there should be no room for ambiguity. A related issue is unfunded mandates imposed from above. Journal compilation © 2010 Overseas Development Institute. they need the discretion to make their own allocation decisions (with the necessary reporting. These reduce local budgetary autonomy. it can easily constrain local autonomy and reduce the local government’s credibility and responsiveness.
The implication is that local governments must be given the authority to exercise ‘own-source’ taxation to self-finance local services at the margin. but only with the approval of the Ministry of Local Government. 1999a). appeals. 2005). Bird and Vaillancourt. Restrictions on revenue generation are similar in the Philippines. subnational governments should at least have rate-setting authority over locally assigned revenues (Bahl. In other cases. 1998). the purpose of the transfer system – an unconditional general purpose grant versus a conditional specific transfer. for example. 1999b: 79). 2005: 242).280 Serdar Yilmaz. A high degree of dependence on transfer revenues and a poorly designed system shift the focus of local government accountability away from citizens to central 31. © The Authors 2010. and administrative responsibilities (USAID. local governments ‘have taken “back door” approaches. the central government interferes with local revenue autonomy. and this creates ambiguity about the distribution of functions in a multi-tiered setting (Mountfield and Wong. Development Policy Review 28 (3) . In many countries. the way the pool is allocated among local governments. local governments do not seek revenue-raising discretion to avoid accountability.. 2001). especially if costs can be shifted to central budgets (Campos and Hellman. however. Significant revenue autonomy and some tax-effort incentives are critical to encourage downward accountability and increase the efficiency of local government 31 operations. local governments may impose additional taxes. In some cases. 1999). tax holidays. the Local Government Code constrains local revenue collection through rules on rates. on the premise that local governments are more accountable when relying on their own tax bases (Faguet. and the design and management of the system. they do not collect taxes assigned to them. Although there is no set of prescribed rules in revenue assignment. 2008). contracts with enterprises. Yakup Beris and Rodrigo Serrano-Berthet operates as nested hierarchies. for example. A completely local tax is one that is assessed and collected by local governments – at rates decided by and with proceeds accruing to local governments (Bird. 1983). The accountability implication of each constraint is that they might create incentives to make inefficient investment decisions. Journal compilation © 2010 Overseas Development Institute. In Uganda. and “trades” for investment in public services’ (Bahl. 2003): the rules determining the total amount of transfer – the distributable pool. putting direct or indirect restrictions on local government’s discretionary space. Revenue assignment Oates’s decentralisation theorem (1972) states that local governments should provide services to identifiable recipients up to the point where the value placed on the last (marginal) amount of services for which recipients are willing to pay is equal to the benefits they receive. Financing the fiscal gap The design of intergovernmental transfer systems has implications for accountability because it affects the fiscal dependence on central government and local revenue-raising ability. tax administration. and would be less accountable when the pleasure of expenditure benefits is separated from the pain of taxation (Bahl and Schroeder. Four elements determine this dependence (Yilmaz and Bindebir. there are no standards established for approval or rejection (Azfar et al. assessments. In China. 2000.
Financing infrastructure: local government borrowing Local borrowing is the fourth pillar of the intergovernmental fiscal system.Linking Local Government Discretion and Accountability in Decentralisation 281 governments. In countries where the intergovernmental system falls short of responding to local investment needs and local governments have limited ability to raise additional revenue through their own sources. Further. 33. Journal compilation © 2010 Overseas Development Institute. Depending on their purpose. they create an imbalance between downward and upward accountability incentives at the local level. for example. ‘facilitates local evasion of responsibility under the guise of fiscal powerlessness’ (Khemani. in Argentina. local governments’ over-dependence on intergovernmental transfer revenues. 33 some of them with efficient markets. and administrative constraints (Ter-Minassian and Craig. 34. local governments are dependent on the transferring authority. a substantial degree of line ministry control over local expenditure 32 decisions is maintained. significant restrictions to their discretion can be expected and use of these funds may reflect the priorities of central government rather than local citizens. © The Authors 2010. while in Uganda. In fact. There are four approaches to limit local borrowing: market discipline. in a number of developing countries.2 Making local finances downwardly accountable Fiscal decentralisation depends on the ability of local governments to manage revenues and expenditures effectively and requires strong institutions for financial accountability. 4. heavy reliance on borrowing has put macroeconomic stabilisation at risk. 2006: 22). co-operative arrangements between local and central governments. Many central governments therefore limit. perversely structured intergovernmental systems destabilised the economy. 1997). if local governments do not have any own-source revenues and all the central government transfers are conditional. rule-based controls. strong restrictions on borrowing may actually limit local discretion in addressing investment needs. 32. negatively affecting local government discretion and the incentive to respond to citizen demands. for example. In countries where central government cannot credibly commit to a hard budget constraint. moral hazard – the presumption by capital markets that central government will bail out local governments in case of bankruptcy – is a major concern for central governments. or even prohibit the issuance of debt by local governments. where transfers. To the extent that transfers are conditional. In Brazil and Argentina. 2004). as earmarked conditional grants. Suffice it to say that central governments’ 34 approach to local borrowing has important accountability implications. In other words. 2008). Access to capital markets gives local governments an opportunity to finance local investment needs. imprudent subnational fiscal practices and a softening of local governments’ budget constraint led to major macroeconomic crises (Dillinger and Webb. In Nigeria. there are irresistible incentives for local governments to exploit borrowing and extend their budgets beyond their means (Faguet. Development Policy Review 28 (3) . local government borrowing is constrained. finance more than 80% of local government expenditures. However. conditional transfers can have specific spending objectives and give local governments limited autonomy to meet local preferences. for example. In the late 1990s. control. coupled with uncertainty about the amount and timing. In inefficient markets.
2000). providing public access to borrowing information. recording. budgeting and performance systems (Sahgal and Chakrapani. control. abuse. Public accountability approaches Public-sector measures to improve accountability focus on effective. because local governments are vulnerable to waste. policy-based budgeting. 36 transparent and rules-based public financial management. misuse. resulting in fraud and corruption. corruption and inefficiencies (Baltaci and Yilmaz.. widespread corruption. Without sound management systems. 2005). and external scrutiny and audit. The term ‘public financial management’ refers to all parts of the budgeting process and both ‘upstream’ (preparation and programming) and ‘downstream’ (execution. setting standards for control of intergovernmental transfer revenues. Development Policy Review 28 (3) . Table 2: Local governments and internal controls in selected countries Country Argentina Internal control system at the local level Lack of legal instruments & no political willingness to improve internal controls & audit systems Lack of contemporary internal controls & audit systems Issues arising from a lack of internal controls High level of indebtedness in local government & failure to provide urban services Impaired safeguarding measures. predictability and control in budget execution. 36. accounting. & public disaffection with government institutions Common problems in compliance with laws & regulations. & irregularities. making audit findings publicly available. comprehensiveness and transparency. financial accountability cannot be ensured. Evidence so far indicates that there are significant shortcomings in preventing the misuse of public resources. efficient.282 Serdar Yilmaz. accounting. © The Authors 2010. 2006: 405). They include strengthening local capacity for budgeting and public financial management. reporting. and monitoring and evaluation) phases. Journal compilation © 2010 Overseas Development Institute. and reporting. observing clear rules for responsible local borrowing. Financial accountability seeks transparency in the management of public funds. The Public Expenditure and Financial Accountability (PEFA) Initiative summarises the core dimensions of good public financial management that promotes transparency and accountability in each step of the cycle (PEFA. unlawful tax practices Bosnia China Ex-ante expenditure control & compliance audits 35. 2006). publishing transfer figures. It also requires that governments manage finances prudently and ensure integrity in their financial reporting. misconduct & misuse of public funds. control. among others (see Table 2 for the situation in selected countries). These include budget credibility. and setting clearly defined rules for hard budget constraints on local governments. fraud. Yakup Beris and Rodrigo Serrano-Berthet Weak or absent local public financial management systems35 ‘are likely to negate any advantages that might be inherent in bringing public services “closer” to local communities’ (Ahmad et al.
& lack of timely financial information Lack of compliance with laws. Participatory budgeting forces local governments to make budget information available to ordinary citizens and to report regularly on the execution of the previous year’s commitments. corruption. See www. and initiates debate on sector-specific implications of budget allocation (such as gender implications). and initiating independent budget analysis and participatory public-expenditure tracking programmes that monitor budget execution and leakage of funds. fraud & irregularities. focus on compliance audits & inadequate follow-up & audit findings Issues arising from a lack of internal controls Negligence. & misuse of public funds Frequent cases of abuse. ineffective internal control mechanisms Inefficient controls & audit practices. particularly at local levels. The most common social accountability mechanisms include making local government financial information accessible to the public (including budgets and endof-year financial statements). Development Policy Review 28 (3) . old-fashioned rule books.org © The Authors 2010. were dominated by the executive branch of national and local governments. influences allocation and revenue policies. rules & regulations. & collusive practices in procurement Weak internal control environment. lack of coherence to the stated rules & procedures Indonesia Weak internal control & audit systems Unethical & uneconomic operations due to pervasive corruption. allowing public involvement in the budgetary process through participatory budgeting practices. compared with 10 organisations a decade earlier. non-existent internal audits. misuse. civil-society organisations have acquired the skills and confidence to intervene in decision-making 37 processes. Social accountability approaches Until recently. Journal compilation © 2010 Overseas Development Institute. & overpaid public purchase & procurement Philippines Source: Baltaci and Yilmaz (2006).openbudgetindex. In 2006.Linking Local Government Discretion and Accountability in Decentralisation 283 Table 2: Cont’d Country Colombia India – Karnataka State Internal control system at the local level Unclear legal framework. Independent budget analysis makes budget information available to the public. for that reason. inefficient cash management. Legislators. As citizens gain ownership of the process. financial management processes were seen as purely technical matters and. irregularities & malpractices in procurement. In the last two decades. they are motivated to oversee the implementation of their approved projects. the International Budget Project launched an Open Budget Index for 59 countries in collaboration with researchers and NGOs. The Project estimates that close to 100 organisations in 70 countries were engaged in this type of activity in 2005. The deeper involvement of 37. civil society and the general public often lacked the capacity to scrutinise them. lack of timely & reliable information. & fraud.
Journal compilation © 2010 Overseas Development Institute. in 1988. 39.284 Serdar Yilmaz. Development Policy Review 28 (3) . primarily to upper levels of government which make the major decisions. Yakup Beris and Rodrigo Serrano-Berthet citizens in planning and budgeting creates conditions for them to demand more accountability. Figure 1 shows three possible trajectories. (ii) discretion is high but lacks accountability – this combination may actually create perverse incentives for local governments. Countries are at different starting points for decentralisation reforms. and local revenues. administrative. these demand-side pressures have opened a public space to demand budget discipline. and (iv) local governments have a high degree of discretionary power accompanied by a high degree of accountability towards citizens. in many cases in the form of ex ante approvals and input controls.(public) and demand-side (social) perspectives. all based on combination (i). local governments are overloaded by accountability requirements. which we analysed from supply. they have had a strong impact on preventing such misuse (Khemani. (iii) countries are more focused on establishing accountability structures for local governments. tax reforms. administrative. and it successfully integrates both public and social accountability approaches. for local governance turnarounds and sequencing of local governance reforms (none of which is superior to the others). One of the more remarkable examples is the social audit of local government public works programmes in the State of Rajasthan. it is mandatory and regulated by national legislation. 5 Conclusion: applying the diagnostic methodology In this article we have discussed a methodology for better analysing the linkages between local discretion and accountability in three dimensions: political.39 Today. In Bolivia and Peru. This scenario assumes that decentralisation in all dimensions (political. Where targeted measures such as publicising local government expenditures through the media were introduced (Uganda). © The Authors 2010. Brazil. 2006). 1999). participatory budgeting has been taken up voluntarily by more than 140 municipalities. and the media are reporting the misuse of public expenditures. making them vulnerable to capture by elites or prone to reckless decision-making. and pursue different trajectories in terms of their progression in providing local governments with the necessary discretion and ensuring accountability. After its start in Porto Alegre. with little incentive for being accountable towards citizens. the methodology should be applied with attention to country contexts. and in the state of Kerala in India. administrative. and fiscal. and fiscal discretionary powers of local governments. national and local legislators are becoming increasingly involved in budget debates. as in 38. India (Jenkins and Goetz.38 In general. There are four possible combinations of discretion and accountability in any given country context: (i) both are very low – highly centralised countries with no local government accountability. the focus is on local discretion in the short run. and fiscal) is fully implemented. However. In the first. Bigbang decentralisation reforms are a good example. the emphasis initally on increasing political. but without a high degree of discretion for decision-making.
Development Policy Review 28 (3) Accountability Desirable follow-through Accountability Accountability Initial turnaround Linking Local Government Discretion and Accountability in Decentralisation 285 Source: Adopted from Levy (2006). .Figure 1: local governance turnarounds: trajectories Trajectory I Discretion Discretion Trajectory II Trajectory III Discretion High II IV I III Low © The Authors 2010. Journal compilation © 2010 Overseas Development Institute.
e. non-profit. dependent on the historical. regulators). © The Authors 2010. and frontline providers (those who come in direct contact with clients – teachers. doctors. Yakup Beris and Rodrigo Serrano-Berthet Indonesia. Decentralisation incorporates a new set of actors and additional relationships in this framework: local governments. the poor and vulnerable). local governments. and so on). In the third trajectory. necessitating particular attention and caution in proposing a way forward in decentralisation reforms. This was the case with the transition countries of Eastern Europe. resident associations. Development Policy Review 28 (3) . Non-governmental organisations. This is why decentralisation reforms often face strong resistance during their implementation. Each of these actors has a particular relation of accountability with the others. questions will remain about who will have what kind of powers over what kind of functions. both discretion and accountability are strengthened simultaneously. lawmakers. it reshapes power and accountability 40 relationships among four key classes of actors involved in service delivery. Even within local governments. to what extent should local governments be given discretion and autonomy over local decision-making? When different country contexts and conflicting interests come into play. policy-makers (politicians. different actors (appointed versus elected officials) may not share the same vision or goal in the reforms. producers of local government services. The scenario of moving countries from combination (i) to the ideal combination (iv) is further complicated when the interests of different actors diverge. heredity. See World Bank (2004a). Against this background. 2004: 9). As reforms proceed. traditional leaders such as chiefs. Supporting laws and regulations. national decision-makers put a higher priority on promoting political pluralism. appointment or other means (Agrawal and Ribot. which initially established plural democracy and strengthened local government systems and later transferred more decision-making power to local governments.286 Serdar Yilmaz.. or other powerful individuals also play a role in mediating accountability relationships between local citizens and local governments. reforms are frequently revisited and sometimes reversed. where the big bang devolved functions and resources through two national laws (Law 22/1999 and Law 25/1999). namely. ideology. In many cases. Decentralisation is ultimately a political reform. 1999). as they pursue different and sometimes conflicting roles and incentives. election. the answer is not as simple as the theory would suggest. civilsociety organisations. private sector. administrative accountability. and so on). Schroeder (2004: 5) categorises four different actors that are typically relevant in local accountability systems: local residents. In the second. and financial safeguards in the short run. decentralisation is often blamed for not fulfilling its promises – and for failing to make a positive impact on development. engineers. Given all this complexity. There are few instances of such a perfect diagonal. Many central governments respond to such 40. and higher-level governments (including central government) (Schroeder. Analysing these relationships and the impact of decentralisation reforms among them can be quite challenging. organisational providers (ministry. citizens-clients (i. social and political constitution of their powers which may be based on ethnicity. as well as other institutional measures to improve local accountability were introduced much later. Journal compilation © 2010 Overseas Development Institute. coupled with the inexperience and weak capacity of local governments. wealth. community-based organisations.
worldbank. Admittedly. Ahmad. Shekhar (2005) Decentralisation and Service Delivery. Handbook of Fiscal Federalism.. Agrawal. Arun. Akin. UK and Northampton. But. Yet. A. Junaid. Charla and Kanel. Albino-War. Journal of Development Studies 39 (4): 148-59. A. Raju (2006) ‘Sub-national Public Financial Management: Institutions and Macroeconomic Considerations’ in Ehtisham Ahmad and Giorgio Brosio (eds). As mentioned earlier. Journal of Developing Areas 33 (Summer): 473-502. K. The cause of failure vis-àvis all these complexities is the absence of effective accountability systems. Journal compilation © 2010 Overseas Development Institute. (2005) ‘Decentralisation and Government Provision of Public Goods: The Public Health Sector in Uganda’. Ahmad. Without sound mechanisms for downward accountability. Policy Research Working Paper 3603. Ehtisham. DC: World Bank. first submitted June 2009 final revision accepted December 2009 References Agrawal. Oakland. Asian Development Bank/Department for International Development/World Bank (2004) Devolution in Pakistan: An Assessment and Recommendations for Action (http://siteresources. J. there are limited examples of decentralisation reforms that successfully link the two and bridge supply. both upward and downward. the methodology presented here can help in studying the implications for accountability and designing appropriate mechanisms where discretion and accountability support each other. © The Authors 2010. The decision to decentralise is ultimately a political one. Shantayanan. Keshav (1999) Decentralisation in Nepal: A Comparative Analysis.pdf). Stuti and Shah. Asthana. Journal of Development Studies 41 (8): 1417-43. Khemani. (1999) ‘Accountability in Decentralisation: A Framework with South Asian and African Cases’. MA: Edward Elgar. reducing powers and functions is not a form of accountability. moving to the perfect state of discretion and accountability may not always be possible. Maria and Singh. (2003) ‘Decentralisation and Supply Efficiency: The Case of Rural Water Supply in Central India’. Washington. N. sometimes revoking crucial aspects of the discretionary powers and resources extended to them. A key message of this study is that upward accountability mechanisms introduced by central governments are necessary but not sufficient to ensure appropriate local discretion. It simply makes local governments irrelevant. CA: Institute for Contemporary Studies Press. negating the intended empowering of local governments. Cheltenham. this article argues. Hutchinson. and Ribot. Some of the challenges and risks associated with adverse local country contexts and power relationships have been discussed here.org/EXTSAREGTOPDECENTRALISATION/Resource s/496899-1095189822590/521764-1096384315479/PakDevolutionMain. J.Linking Local Government Discretion and Accountability in Decentralisation 287 frictions by imposing stricter controls and excessive accountability measures on local governments. Devarajan. Development Policy Review 28 (3) . once the decision is made. and Strumpf. P. a sole emphasis on upward accountability limits local government autonomy in decision-making and service delivery.and demand-side approaches. Britt.
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