Decentralisation in Bolivia: a success story for the poor

Since 1994 Bolivia has undergone a dramatic process of political decentralisation. Recent research has analysed this decentralisation process and argues that it has made the Bolivian government more responsive to the needs of the poor by redirecting public investment to areas of greatest need.

A report from the Development Research Centre at the London School of Economics compares the effects of political decentralisation in two different towns in Bolivia, and places this in the context of what was happening in the Bolivian national economy during this time. The report argues that the decentralisation of Bolivia’s political institutions has resulted in the redirection of public investment to areas of greatest need.

Up until 1994, the relatively few central government officials that were stationed beyond the national and regional capital had little incentive to concern themselves with local demands. The only route to success and career advancement was to implement policies that were set by central government. In 1994 however, Bolivia introduced the Law of Popular Participation, making local authorities responsible to local voters for the first time.

As a result, there has been a dramatic change in the way government money is spent, and this has been a change which has benefited the poor. Resources have been redirected into Bolivia’s smallest and poorest municipalities and government investment has shifted from economic production and infrastructure to spending on social services, education and training. The amount of money spent on education, water and sanitation services has risen in those places where it is most needed – areas with the highest rates of illiteracy and lowest rates of water and sewage connection.

Other results of the process have included:

• The allocation of government funding amongst municipalities has switched from being based on unsystematic, highly political criteria to a strict per capita basis – as a result the share allocated to the country’s three largest cities has declined from 86 to 27 per cent.
• Decentralisation has allowed groups such as neighbourhood councils, peasant communities, traditional indigenous peoples’ organisations, interest groups and business associations to be more actively involved in the political process. In the old system these groups had very little say in how their communities were run.
• Lower tiers of government have become more accessible to lobbying and grass-roots pressure, a marked change from a centralised administration that effectively ignored large areas of the country.

Overall, the report argues that, under the right circumstances, decentralising resources and political authority can generate real democratic accountability where none existed before. The transformation of political institutions and of the way in which resources are distributed, can bring about significant social and political changes across the nation within a relatively short time.

Source(s):
‘Decentralization and local government in Bolivia: an overview from the bottom up’ by Jean-Paul Faguet, London School of Economics, Crisis States Programme, Working papers series no 1, May 2003 Full document.

Funded by: Economic and Social Research Council, UK

id21 Research Highlight: 23 January 2004

Further Information:
Jean-Paul Faguet
Crisis States Programme
Development Research Centre
DESTIN
London School of Economics and Political Science
Houghton Street
London WC2A 2AE
UK

Tel: 44 (0) 020 7955 6435
Fax: 44 (0) 20 7955 6844
Contact the contributor: j.p.faguet@lse.ac.uk

London School of Economics and Political Science, UK

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'Can decentralisation promote pro-poor development planning systems?'

'Political Decentralisation – a complementary rather than a substitution approach'

'Indonesia: Managing decentralisation and conflict in South Sulawesi'

'The dialectics of decentralisation'

'The political economy of Latin America: decentralisation the key to growth?'