Essay on Decentralization and Public Service Delivery
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Since the 1980s many developing countries
have started to devolve central government
functions to local jurisdictions. This shift
has occurred partly in response to political
pressures for local autonomy, but also
to deliver public services more efficiently.
It has been argued that decentralization
improves governance and public service
delivery by increasing:
• Allocative efficiency—through better matching
of public services to local preferences.
• Productive efficiency—through increased
accountability of local governments to
citizens, fewer levels of bureaucracy, and
better knowledge of local costs.
But decentralization has had mixed
effects on public service delivery. Limited
evidence suggests that the effectiveness of
decentralized service delivery depends on
the design of decentralization and on the
institutional arrangements governing its
implementation. Specifically, the argument
that decentralization promotes allocative
and productive efficiency assumes that the
devolution of functions occurs within an
institutional environment that provides
political, administrative, and financial
authority to local governments, along with
effective channels of local accountability
and central oversight. These channels
include:• Voice mechanisms for citizens to express
their views to government bodies.
• Exit mechanisms for citizens to switch to
nonpublic service providers or to move
to other localities.
• Central government laws, rules, budget
constraints, and oversight over local government
operations, and channels for
local governments to influence central
government decisions concerning them.
• Public sector management arrangements
that promote accountability—
such as merit-based personnel policies
and rules and arrangements promoting
fiduciary accountability and constraining
corruption.
A recent study by the University of Maryland
analyzed the validity of this argument
by assessing decentralized health and education
services in the Philippines and
Uganda. Using surveys of government officials,
households, health facilities, and
schools, the study explored whether local
governments are aware of local preferences
and whether they adjust public service delivery
accordingly. The study also tested the
extent to which local governments contain
corruption, costs, and other waste. Thus the
study analyzed whether allocative and productive
efficiency are achieved, as stated by
the theory. In addition, the study assessed
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