The Selectivity of the benefits of Decentralization

(Note: This reflection paper was written in the second quarter of 2018–1 May, 2018 — as part of a Policy Evaluation course)

Most of us from large families still remember that seething period from childhood where one of our parents or elders had bought some gift for one of our siblings and some right now still remember the incidence with some animosity. It didn’t happen once. It happened again and again till we lost count and accepted fate while hoping for an opportunity for vengeance. Countries, Nation states, Communities, are like families too. Nature and other forces that be chose some privileged class for some privileged status and when they flaunt it in our face we can’t handle it. The battle ensues, and often ends with some mediation we do not accept. “Just forgive and forget” the non-committed peacemakers advice. “You know you are all a part of one family”. So as not to be labelled the belligerent one, you maintain a façade of peace while a multiplex of issues lies unresolved. In the same way, unequal treatment in any society is the source of agitations at the slightest provocation. The cry for equity and fairness expresses itself sometimes in a depressing resolve in fate but in most times in outbursts of violence.

Let us stick with Nation states, families are too complex, nothing ever gets resolved, everyone grows up and leave, leaving their baggage behind and taking up some other baggage. Unequal treatments in nation states is not only unfair and a source of instability, it leads to unequal development; negative impacts on economic growth. The group with the undue advantage keeps enjoying them at the expense of other groups. They become vocal and able to bully other groups to do their bidding. When the need arises for cooperation to attain a certain goal, other groups are resistant, but the advantaged groups force their way or coerce other groups based on some conditions. When things get to a head, advantaged groups decide it’s time to discuss, “Let us decentralize”. “Let us seat at table stripped of this tussle”. “I am willing to share some of this advantage with you”. Another façade?

These are some of the issues many nation states have faced or are still facing; Kenya inclusive. Kenya has only recently began experimenting with its dose of decentralization as palliative for marginalized groups hoping that this will pave the way for real stability and development in the country. The country adopted a devolved system of government in 2010. The international community, including Kenya itself awaits with bated breath what the effects of decentralization would be on economic equality, and the prospects of minimizing ethnic conflict between “poorer” marginalized groups and groups who want to hold on to power to feather their nests and maintain their status as Kenya’s privileged class. Like a farmer who uproots his plant every day to see if it is growing ends up only destroying the chances of the plant’s growth, it will be preposterous for anyone to assume that expected outcomes from decentralization are not forthcoming. It is just too soon to say. However, we have some information that could be a basis for valid conjectures.

Rodrıguez-Pose and Roberto Ezcurra study on the relationship between decentralization and regional inequalities among countries in the developed and the developing world show that while fiscal decentralization significantly decreased spatial inequality in high income countries, it significantly increased spatial inequality in low income countries. When there is enough to go around, decentralizing resources and authority to subnational units help attain the goal of even development and vice versa. When there isn’t enough to go around, or certain groups want to claim the right to access to available resources, inequality deepens. Furthermore, in developing countries, sectors central to economic growth are in the cities and high-income areas, they attract more investments as auxiliary infrastructure and services gravitate towards them. Whereas in developed countries, the distribution of economic activity is spatially diverse, spending patterns are inclusive and chances of areas growing at the expense of other areas is minimal or nonexistent.

What other reasons cause the rich to get richer and the poor get poorer under decentralization. Sebastian Galiani et al offers some answers from his study on school decentralization in Argentina. Positive outcomes such as improvement in test scores occurred exclusively in schools located in non-poor municipalities because non-poor communities had more resources to voice and defend their preferences, and successfully captured more of the education resources. Providing another example of the cycle of reinforcing mechanisms of development in high income/non-poor communities and of underdevelopment in low income/poor communities despite decentralization. After some effort, low income/poor communities settle for the status quo. Behavioural economists Karla Hoff and James Walsh describe this loss of drive as, “within group socio-psychological barriers in poor communities that creates and sustains self-perpetuating systems, institutions and behavior that feed inequalities”.

It is either decentralization is not the solution or decentralization needs to be augmented by other factors. Some of these factors include tackling corruption especially the allocation of public resources to personal gain, developing need focused comprehensive development plans with specific, measurable, achievable, realistic and time bound goals. Decentralization will not lead to even development in free drive mode, decision makers in decentralized countries must consciously make choices and take actions that are pro-development and pro-equity. Without these commitments, quick fixes such as “forgive and forget” and “let us decentralize” are time bombs waiting for the right time to explode in our faces.

References

Karla Hoff and James Walsh. 2008. The Whys of Social Exclusion: Insights from Behavioral Economics. The World Bank Research Observer, Volume 33, Issue 1, 1, Pages 1–33. https://doi.org/10.1093/wbro/lkx010

Rodrıguez-Pose, A., & Ezcurra, R. (2011). Does decentralization matter for regional disparities? A cross-country analysis. Journal of Economic Geography 10 (2010) pp. 619–644. doi:10.1093/jeg/lbp049

Sebastian Galiani, Paul Gertler, Ernesto Schargrodsky. School decentralization: Helping the good get better but leaving the poor behind. Journal of Public Economics 92 (2008) 2106–2120.

World Bank (2000) The World Development Report 1999/2000. Entering the 21st Century. Washington, D.C.: The World Bank and Oxford: Oxford University Press.