While decentralization is considered as a good way to reform the public sector in developing countries, there are opponents who argue that it has even negative or inconclusive impacts.
In CESinfo DICE report 2004, the paper titled “The Impact of Decentralization on Service Delivery, Corruption, Fiscal Management and Growth in Developing and Emerging Market Economies: A Synthesis of Empirical Evidence” written by Anwar Shah, Theresa Thompson, and Heng-Fu Zou reviews the empirical literature on the impact of decentralization in mainly three areas: service delivery, corruption, and fiscal management and growth. The paper gives a guidance to inform the debate on decentralized public management.
Theoretically, decentralization in local government is expected to have positive impacts on the efficiency and equity of public service delivery. However, we can see various outcomes in practice. According to the paper, these outcomes of decentralization depend upon the existing institutional arrangements and coherence of decentralization policies to create incentive environment for bottom-up accountability. The author concludes, “Nevertheless, the empirical evidence presented here is broadly supportive of a positive influence of decentralization policies in reforming public sector in developing countries”.
You can download the paper from here.
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