The political economy of decentralisation processes / Tulia G. Falleti

1. Tulia G.
Falleti
Associate
Professor of
Political
Science and
Senior Fellow
L. Davis
Institute for
Health
Economics
University of
Pennsylvania,
Philadelphia
PA, USA
The political
economy of
decentralisation
processes

2. 0.00
5.00
10.00
15.00
20.00
25.00
30.00
35.00
40.00
45.00
50.00
1972
1973
1974
1975
1976
1977
1978
1979
1980
1981
1982
1983
1984
1985
1986
1987
1988
1989
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
Argen na
Bolivia
Brazil
Chile
Colombia
Ecuador
El Salvador
Guatemala
Honduras
Mexico
Nicaragua
Paraguay
Peru
Uruguay
Venezuela
Subnational Share of Expenditures in Latin America, 1972-2010
rce: IMF Government Finance Statistics and World Bank Fiscal Decentralization D2

3. Drivers of Change:
The bargaining Actors
e National government:
– President and Cabinet
– National Legislators
e Subnational governments:
– Governors
– Provincial ministers
– Mayors
– City Councilors
e In all cases: partisan interests and territorial
interests
Tulia Falleti - Political Economy of
Decentralization - Quito, Junio 2013
3

4. Types of Decentralization and their effects
on Subnational power
Effects
Type of Dec Hypoth. Effect
on IBOP
Dependent on
Administrative + / - Institutional design
Fiscal + / - Institutional design
and characteristics of
subnational units
Political +
4
Tulia Falleti - Political Economy of
Decentralization - Quito, Junio 2013
Ref: IBOP = Intergovernmental Balance of Power

5. Territorial Interests of
Bargaining Actors
Induced Preferences
Level of.
Gov. Type of Dec Recipient
Central A > F > P L > SL > S
State P > F > A S > SL > L
Local P > F > A L > SL > S
Notes: A: administrative decentralization; F: fiscal
decentralization; P: political decentralization; L: local
level; S: state level; SL: state and local levels jointly.
5
Tulia Falleti - Political Economy of
Decentralization - Quito, Junio 2013

6. Political actors
Classification of Actors
Territorial
Interests
Partisan Interests
Ruling Party Opposition Parties
National National-ruling National-opposition
Subnational Subnational-ruling Subnational-opposition
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Tulia Falleti - Political Economy of
Decentralization - Quito, Junio 2013

7. Political actors
Territorial
Interests
Partisan Interests
Ruling Party Opposition Parties
National National-ruling (President;
his cabinet; ruling legislators
and const. conv. elected in a
national district; officialist
national unions)
National-opposition
(Opposition legislators and const.
conv. elected in a national district;
opposition national unions)
Subnational Subnational-ruling
(Ruling governors and mayors
and their cabinets; ruling
state legislators and city
councilors; ruling associations
of governors and mayors;
ruling regional unions; ruling
pro-decentralization civic
movements; ruling national
legislators and const. conv.
elected in provincial-level
districts)
Subnational-opposition
(Opposition governors and mayors
and their cabinets; opposition
state legislators and city
councilors; opposition associations
of governors and mayors;
opposition regional unions;
opposition pro-decentralization
civic movements; opposition
national legislators and const.
conv. elected in provincial-level
districts) 7
Tulia Falleti - Political Economy of Decentralization - Quito, Junio 2013

8. Decentralization coalitions
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Tulia Falleti - Political Economy of
Decentralization - Quito, Junio 2013
Partisan Interests
Ruling Party Opposition Parties
Territorial
Interests
National
Subnational
National-Level Coalition
RulingCoalition
Subnational Coalition
OppositionCoalition
Mixed
Coalitions
T

9. Hypotheses Regarding types of drivers and
types of change
Notes: A: administrative decentralization; F: fiscal
decentralization; P: political decentralization; N/A: not
applicable.
9
Tulia Falleti - Political Economy of
Decentralization - Quito, Junio 2013
Type of Coalition Expected Prevailing
Territorial Interests
Expected Type of
Decentralization
National-level Coalition National A
Subnational Coalition Subnational P or F
Ruling Coalition National A
Opposition Coalition Subnational P or F
Mixed Coalition Type I
(national-ruling and subnational-
opposition actors)
Subnational P or F
Mixed Coalition Type II
(national-opposition and
subnational-ruling actors)
N/A N/A

10. A Sequential Theory of
Decentralization
Type of
Territorial
Interests
Type of
Decentralization
Reform
Policy
Feedback
Effects
Degree of Change in
Intergov. Balance of Power
Remaining
Sequence
of Decentralization
Reforms
10
Tulia Falleti - Political Economy of
Decentralization - Quito, Junio 2013

11. Dynamic Account of Institutional
Evolution: Hypotheses on Consequences
of Decentralization
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Tulia Falleti - Political Economy of
Decentralization - Quito, Junio 2013
Dominant
Territorial
Interests in
Dec.
Coalition
Exp.
First
Type
Of
Dec.
Type of
Causal
Mechanisms
Exp.
Second
Type
of Dec.
Third
Type
of Dec.
(Residual)
Expected
Degree of
Change in
IBOP
Exemplary
Cases
SN « P Self-
enforcing
« F « A = High Brazil
Colombia
N « A Self-
enforcing
« F « P = Low Argentina
N « A Reactive « P « F = Medium Mexico
SN « P Reactive « A « F = Low/Medium
Tie « F Reactive « A « P = Medium/Low
Tie « F Self-
enforcing
« P « A = High

12. First Cycle of Post-developmental
Decentralization Policies (N=20)
Admin. Decentralization Fiscal Decentralization Political Decentralization
Argentina 1978: Primary schools
transfer to provinces
1992: Secondary schools
transfer to provinces
1988: New revenue-sharing
law
1994-6: Pop. elect mayor of
Buenos Aires; autonomy to
the city of Buenos Aires
Brazil 1988: Creation of SUS
(Health)
1983: Passos Porto
Amendment
1988: Increase automatic
transfers of revenues to
states and municipalities
1980-2: Pop. elect of
governors
1988: Municipal autonomy
Colombia 1993-1994: Decentralization
of education to departments
1991: Increase automatic
transfers of revenues to
departments and
municipalities
1986: Popular election of
mayors
1991 Popular election of
governors
Mexico 1983-86: Bilateral
agreements for
decentralization of education
to states
1992: Decentralization of
education (ANMEB)
1995: Reform of fiscal
coordination law
1997: Creation of new budget
line (Ramo 33)
1983: Article 115 on municipal
autonomy
1986: Creation of Mexico
City’s legislative assembly
1996: Popular election of
mayor of Mexico City
12Tulia Falleti - Political Economy of
Decentralization - Quito, Junio 2013

13. Brazil: Subnational Path to
Decentralization
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Tulia Falleti - Political Economy of
Decentralization - Quito, Junio 2013

14. Territorial Interest Partisan Interests
Ruling Opposition
National
Subnational
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Brazil: Subnational Path to
Decentralization
Subnational Coalition
Political Decentralization (T1)
Constitutional Amendment No. 15, 1980
Subnational Coalition
Fiscal Decentralization (T2)
Constitutional Amendment No 23 “Passos Porto”, 1983
Subnational Coalition
Political and Fiscal Decentralization (T3)
Constitutional Reform 1988
Administrative Decentralization (T3)
Creation of SUS
Tulia Falleti - Political Economy of
Decentralization - Quito, Junio 2013

15. Argentina: National Path to
Decentralization
15
Tulia Falleti - Political Economy of
Decentralization - Quito, Junio 2013

16. Territorial Interests Partisan Interests
Ruling Opposition
National
Subnational
16
Argentina: National Path to
Decentralization
Ruling Coalition
Administrative
Decentralization (T3) (Dec.
Secondary Schools, 1992)
National Coalition
Political Decentralization (T4)
(Constitutional Reform, 1994)
Nat. Executive
Adm. Dec. (T1) (Dec.
Primary Schools, 1978)
Subnational Coalition
Fiscal Decentralization (T2)
(Changes Revenue-Sharing 1988)
Tulia Falleti - Political Economy of
Decentralization - Quito, Junio 2013

17. Colombia: Subnational Path Dec. in Unitary Country
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Tulia Falleti - Political Economy of
Decentralization - Quito, Junio 2013

18. Mexico: Intermediate Path to
Decentralization
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Tulia Falleti - Political Economy of
Decentralization - Quito, Junio 2013

19. Conclusions
e Decentralization policies do not necessarily transfer
power to subnational authorities
e The extent to which they do is dependent on:
– Prevailing territorial interests in coalition
– Sequence of decentralization reforms
19
Tulia Falleti - Political Economy of
Decentralization - Quito, Junio 2013