Excerpts from http://www.ifpri.org/pubs/newsletters/ifpriforum/if200703.asp (via Yahoogroups FDRI, IFPRI stands for International Food Policy Research Institute):
“Joachim von Braun, director general of IFPRI, sees this trend toward decentralization as driven not only by democracy, but also by economic globalization. "Globalization requires local decisionmaking power that will efficiently provide the infrastructure and services demanded by investors," he says. "This economic necessity drives 'glocalisation'—the combination of globalization with localization and decentralization."
When it works properly, decentralization can help to alleviate poverty and food insecurity by providing infrastructure and services that poor people require, like drinking water, roads, schooling, and health care. "The goal is to bring government closer to the people, with the hope of giving poor people a greater voice and making government more effective and more accountable," says IFPRI senior research fellow Regina Birner. Given that most poor people in developing countries live in rural areas, out of sight of the political elites in national capitals, "decentralization can be the single most important governance reform for rural areas," she says.
But making decentralization work effectively for poor people is a challenge, and it takes time. A 2004 study from the Organisation for Economic Co-operation and Development (OECD) examined the impact of decentralization on poverty in 18 developing countries and 3 states of India. Decentralization helped to reduce poverty in only one-third of the cases, and in some of the poorest countries with weak institutions and post-conflict situations decentralization worsened poverty.
It is perhaps understandable that central governments become reluctant to go all the way with decentralization. Faguet points out that decentralization is not a policy prescription with predictable results, like, say, lowering tariffs. "It's a process with very uncertain outcomes," he says. "The center has to let go of power and resources and pass them to local government. You don't know what's going to happen, and you have to live with that."
When local governments gain power, do they actually empower poor people? Are their decisions about delivery of infrastructure and services any different from those of central governments? Research shows that in many cases local governments are indeed more responsive to the poor.
Where transparency is lacking, poor people have been less satisfied with the services provided by local government, a study from India shows. IFPRI's Regina Birner and others examined local governance and poverty in two Gram Panchayats (village councils) in the state of Karnataka, India. In the case of drainage, for example, village residents expressed high levels of dissatisfaction, and one-third to one-half of them did not know who was responsible for drainage service in their community.
"It's also possible that decentralizing government functions will decentralize corruption," explains IFPRI's Birner. Poor people may be no better off under a corrupt local government than under a corrupt centralized one. Corruption is often more visible, however, at the local level, she points out. People see, for example, who can suddenly afford a big house. Therefore, decentralization may increase the possibilities for fighting corruption. “