Local Governance and Community Development

Concept Note for a Policy Research Report Local Governance and Community Development Overview: The Rationale for Local Development Governments in the developing world are rapidly devolving powers and resources to village and municipal governments, and communities in villages and slums are being increasingly relied upon to select beneficiaries for programs, to construct public goods, and to manage them Multilateral and bilateral aid agencies are funneling billions of dollars via a broad strategy of “local development” (Helling et al, 2005) – utilizing community-based solutions to development problems and enhancing village and neighborhood decentralization Underlying these trends is a widespread belief that such efforts at “going local” will result in better public services, enhance governance, and improve human welfare The aim of this Policy Research Report is to survey the arguments on these themes, sift through the evidence on their efficacy, and provide some guidance for policy Justifications for this push to localize development come from across the disciplinary and political spectrum Some economists have argued that the proximity of decision making bodies to beneficiaries improves information and oversight This proximity allows local governments to tailor public goods to people’s needs and preferences Related to this is the key principal of subsidiarity, which states that the functions of government should be devolved to the level of government which is best suited to handle them This accords with the belief that localizing government has the potential to reduce bureaucratic interference in people’s lives and allows individuals to have more claims on the use of their taxes Moreover, many political scientists and sociologists have argued that community-based initiatives allow the capacity for collective action, or social capital, to be mobilized for the public good, and permit development initiatives to be shaped by local social and cultural contexts By making development more participatory, it is claimed that beneficiaries, especially among the excluded and poor, are turned into stakeholders who can enhance social accountability and sustainability This is in accordance with the belief among advocates that local development empowers the poor by giving them greater control over decisions that affect their lives and makes development more “demand-driven” Thus the recent emphasis on local government decentralization and community-based development aims to: • Make information more widely available; • Allow communities to identify projects and beneficiaries; • Let citizens have a bigger role in decisions that affect their lives; • Expand the resources available to the poor; and • Strengthen the civic capacities of communities by nurturing organizations that represent them, and by enabling them to acquire skills and organizational abilities that strengthen their capacity for collective action And it is claimed that doing these things—will lead to better development outcomes Critiques of Local Development Arguments for “localizing development” have not gone unchallenged Some economists have argued that information and tax arguments for local devolution are not that clear-cut Bardhan (2002) states that the institutional background in developing countries makes a number of economic arguments for local decentralization particularly difficult to justify and raises several concerns: (1) Local accountability mechanisms (whether political or social) are likely to be much weaker in developing countries, than in long functioning democracies; (2) The improved efficiency of local taxation is likely to be limited by the weak capacity of local governments to collect taxes; (3) Better targeting of funds to intended beneficiaries is likely to be limited by weak accounting and monitoring systems; (4) The efficiency-enhancing aspects of fiscal decentralization are likely to be constrained by demands for the satisfaction of distributional goals; (5) Arguments for the subsidiarity of specific functions may not be implementable since technical expertise is likely to be very different across different levels of government Another important concern in this context has been the potential for local decision making to be dominated and “captured” by elites Bardhan and Mookherjee (2002) argue that the probability of ‘capture’ increases with local inequality However they find that a host of other factors, including the characteristics of the national electoral system and the nature of party politics, also influence the likelihood of capture On the basis of their theoretical analysis they conclude that it is unlikely that local governments are universally prone to greater capture, so decentralization of authority to lower levels of government can potentially combine the advantages of greater utilization of local information, without sacrificing accountability and equity On the other hand, the World Bank’s independent evaluation group (World Bank, 2005) has stated that the claim that projects relying on community-based mechanisms are more efficient and sustainable is not justified by the evidence Others have hypothesized that social and political inequality makes it almost inevitable that elites will appropriate much of the resources over which communities are granted autonomy(Abraham and Platteau, 2004), with other scholars putting forward the counter-argument that while elite-domination may be inevitable, it could be benevolent rather than malevolent (Rao and Ibanez 2005, Dasgupta and Beard 2007) The claimed transformatory capacity of local participation has also been challenged on a number of grounds First, it has been noted that the exercise of ‘voice’ and ‘choice’ can be quite costly under certain conditions At the most basic level it can involve real or imputed financial losses due to the time commitments required for adequate participation Perhaps, even more significantly, substantive participation by the most socially and economically disadvantaged may lead to significant psychological and even physical duress where genuine participation requires the taking of positions that are contrary to the interests of more powerful groups The premise of participatory approaches, which typically target precisely the most disadvantaged, is that the potential benefits of participation generally outweigh such costs But this is by no means obvious Second, it is argued that mainstreaming of community participation into a variety of development projects and programs has focused attention on the pragmatic use of social/political activism at the community level While this may have achieved specific policy goals such as the cost effective delivery of public services and private benefits, and the maintenance of community assets, the short-term, and goal-oriented refocusing of community level activism has diluted its capacity to serve as a vehicle for radical transformation Further, critics claim that the main outcome in such contexts may simply be to shift some of the costs of service delivery to potential beneficiaries Indeed, participation by the poor in the community management or construction of infrastructure has been described by some observers as a form of forced or corvée labor (Ribot 1995, Bowen 1986), since the relative burden of contributions can be substantially higher for the poor It is also argued that the routinization of participatory planning exercises into the work of public sector implementation agencies puts new pressures on resources, while often leaving implementers unclear about the potential gain to themselves, or the communities they serve, from this new mechanism for enforcing accountability (Mosse 2005) The Policy Research Report on Local Governance and Local Development This debate on the merits and demerits of local development is not just academic The sharp increase in resources channeled towards local management and control makes it a central policy concern, with community development projects alone receiving more than $ billion in loans from the World Bank But the debate, while vibrant and important, is still largely anchored on prior beliefs rather than on evidence Evidence can also be used somewhat selectively to bolster or weaken specific arguments Hence a review of all of the reliable evidence available is both timely and essential This PRR will assess the evidence on a number of issues that are central concerns of policy-makers and donors The report will critically examine the evidence on the various debates surrounding community-driven development (CDD) and local governance, including: How well electoral, deliberative and social accountability mechanisms work in practice? How effective and equitable are local development mechanisms in building and maintaining public goods? How effectively communities and local governments target beneficiaries for anti-poverty programs? What are the determinants of participation and how well does it work? Can local development alter the preferences and value systems of citizens and build the capacity for collective action? What are the ways in which inequalities of wealth, status, gender, caste/race, and power shape and constrain the potential of both electoral and social accountability and the distribution of gains from development? What is the role of elites in local governments and community development projects? How effectively can social exclusion be addressed by political reservations and other methods of affirmative action? What is the evidence on the effectiveness of measures taken to improve the quality of local governments and community development projects? What lessons can developing countries learn from the experience of local governments in rich countries? Is local development more sustainable? Can it be easily scaled-up? What are the most effective ways of monitoring local development projects? Since the answers to these questions are likely to depend upon the social, historical and political context where the project is located, we will draw on the literature on community development and local government in political science, history, anthropology and sociology, in addition to the economics literature Much of this is highly relevant to the central questions addressed by the report The report will assess available evidence from: (1) evaluations of decentralization efforts and community based/participatory antipoverty programs, which have used rigorous evaluation designs; (2) the broader theoretical and empirical literature in economics, as relevant; (3) case-studies of both small and large-scale local initiatives; and (4) ethnographies of local government and community-based development projects conducted by sociologists, anthropologists, and political scientists, (5) Historical work on local governance Since few empirical studies have a design or scale that would allow them to focus seriously on the ways in which specific pre-existing features of the societies studied shape the reported outcomes, one expects the evidence from qualitative studies to be of considerable relevance These studies will serve two purposes First, they will allow the report to look more carefully at the processes underlying observed impacts in order to understand, for example, how local governments actually work in specific contexts, what challenges CDD projects face on the ground, how history, culture, community norms, political incentives and local inequalities shape project design, project priorities and outcomes on the ground Second, they will help us, in conjunction with the theoretical literature, in identifying specific aspects of context, which are salient in particular situations and to assess the empirical evidence using this lens In this context, the PRR will focus broadly on societal features such as the level of social polarization, the extent of economic inequality, literacy and access to information, history of conflict/violence, quality of legal and political institutions and social-structures such as caste based hierarchies, patriarchal norms, etc In addition to the salience of socio-cultural and historical context, local governance and participatory development interventions also vary greatly in their design, manner of implementation and size These differences can be salient for understanding the efficacy of specific programs/projects and their potential for success as scale expands While few, if any, empirical studies tell us much about how outcomes change as scale increases, or precisely how specific aspects of project design or implementation strategy impact outcomes, a careful reading of available case studies should provide important insights about the role of program design, implementation and scale in shaping observed outcomes While an effort will be made to derive some clear, generalizable, principles that have broad applicability, it is unreasonable to expect unambiguous, black and white answers about “what works” There are two important reasons for this First, mechanisms of local governance vary widely across countries, and CDD projects are highly diverse in the policies they oversee are distinct both in kind and in the number of people they affect (e.g., the size of the community) Second, the socio-political environments within which local governments and communities function vary widely, which means that local development is shaped by the context within which it is embedded Consequently, the PRR will aim to provide clarity on the ways in which specific aspects of context and of the project/intervention (design, implementation and scale) shape the types of outcomes that are observed The answers offered by the PRR will, in this sense, be conditional The challenge will be to uncover how/when these conditions – history, institutions, sociocultural conditions, and political factors, interact with economic incentives to create the pre-conditions for effective local development, and how project design can be best prepared to adjust to unexpected contextual challenges Authors, advisers and conferences The co-authors of the report will be Ghazala Mansuri and Vijayendra Rao of DECRG The team will seek reaction and advice from DECRG management and staff and key people in the SDV and local governance sectors of the Bank Additionally it is intended to consult a small group of scholars who specialize in the area who will read and react to drafts of the PRR from different disciplinary perspectives These will include: Arun Agrawal, Pranab Bardhan, Tim Besley, Kent Eaton, Peter Evans, Archon Fung, Patrick Heller, Jane Mainsbridge, Dilip Mookherjee, Jesse Ribot, Judith Tendler and Lily Tsai It is hoped to organize a conference with some of these advisors to react to an early draft of the PRR in May 2009, with an expected publication date of December 2009 Time-Table Concept Note Review Meeting: September 11, 2008 Conference + Draft Presented to Bank: June, 2009 Final Draft: October 2009 Publication: December 2009 Chapter Why Local Development, and Why Not? The overview chapter in the PRR will expand on the discussion above about the justification for, and critique of, local approaches to governance and development The chapter will summarize the conceptual underpinnings of local development from economists, social theorists, political scientists and proponents of participatory development Following this conceptual review, the chapter will review the history of local development approaches – both in the sphere of bilateral and multi-lateral lending and the colonial and post-colonial underpinnings of local governance in different parts of the developing world In particular, the chapter will will illustrate some of this historical evolution with an in-depth examination of the history of local development in South Asia and Sub-Saharan Africa This is the chapter that will help set the context for the discussion of the evidence in Chapters 2, and Chapter will conclude the PRR by assessing the evidence for its lessons for policy Chapter The Challenge of Local Governance Good governance has come to be seen as central to the pursuit of equitable, inclusive and efficient economic development This idea has been strengthened by evidence that development, beyond a point, hinges on well functioning and sustainable institutions, and that the quality of governance, at both the national and sub-national levels, is an important indicator of institutional maturity In this context, decentralization is seen as an important instrument for fostering institutional development at the grassroots level Local governments, it is argued, are not only better placed to serve their constituents by virtue of having better information on local preferences and needs for specific public goods, they are also more likely to be responsive to local preferences because of the discipline of electoral accountability The uneven record of national governments in the delivery of basic public services has further strengthened this argument for economists, for whom, historically, decentralization has been simply a means to achieve a more efficient allocation of public goods One consequence of this is that decentralized public service delivery and community development initiatives have come to be perceived as particularly advantageous in contexts where, for a variety of historical reasons, state institutions are weak, since they open up the opportunity of bypassing the state to a large degree The chapter will discuss the potential risks of this strategy as well as the potential opportunity it presents At the same time, governance is not always supplied by the government There are other social institutions of governance, which can be of considerable relevance, particularly in niches that the government serves poorly or not at all Governmental and private institutions of governance coexist even in modern market economies and many economic transactions routinely take place outside conventional markets, e.g., within families, social networks, and firms It has been argued that such institutions can also serve to constrain dysfunction in governments and may have informational/enforcement advantages relative to formal institutions or law Community development programs, and participatory citizen’s councils in the context of decentralization, are often seen as important social institutions of governance, at the local level, which ensure that community preferences are reflected in the setting of development priorities and that citizens have the capacity to articulate, envision and implement these priorities In line with this, many CDD programs claim to deliberately build bridges between local governments and citizens by inducing or facilitating linkages between community level organizations and various tiers of government In addition to accomplishing greater transparency in government allocations and actions, this is also seen as a crucial facet of the longer term sustainability of the community development initiative itself, particularly where such programs create local public goods In sum, the argument is that social institutions of governance enhance civic participation, beyond voting, which not only improves information flows between political actors, the civil bureaucracy and citizens, it makes the allocation of public resources more transparent and better aligned with societal preferences and checks opportunities and incentives for corruption Proponents of community driven development initiatives argue that the need for such civic capacity building and civic engagement only increases when decentralization brings government to the local realm The objective of this chapter will be to examine the evidence base for this set of arguments Specifically, this chapter will examine: • The types of electoral and social accountability mechanisms which decentralization projects and participatory anti-poverty programs actually foster and how these are influenced by o the specific features of decentralization projects including -the politics of local development in specific contexts (role of authoritarian regimes, democratic politics at the national level, decentralization as instrument of indirect rule, history of conflict etc.) - electoral rules - transfer of financial resources and decision making to local governments (taxation, earmarked funds versus preset transfers, principal of subsidiarity) o the specific features of participatory anti-poverty programs, such as - the primary focus (economic betterment or social and political empowerment) - types of activities undertaken (community infrastructure, livelihoods, micro credit, building civic responsibility and awareness, fostering collective action - the extent of community control over resources and decision making - the extent and types of linkages between communities and local governments • The ways in which various types of accountability mechanisms, electoral and deliberative, have worked in practice and their consequences for improved governance In doing this, the chapter will pay careful attention to issues of context, spillovers, preference heterogeneity, the principal of subsidiarity and the actual allocation of decision making authority and the devolution of financial resources Specifically, the focus will be on the actual record of local governments o in achieving significant improvements in public services o in the targeting of beneficiaries of specific anti-poverty programs o in heightened transparency and responsiveness to local preferences • The role of participatory mechanisms Here, the focus will be on both communitybased anti-poverty programs as well as deliberative spaces within the structure of local governments The chapter will examine o whether such programs induce the type and quality of participation they aim to foster o the implications this has for building civic capacity and the ability or willingness to engage in local collective action or community self-help initiatives o the ways in which participatory development programs impact community and household welfare In particular, the chapter will look for the extent to which organized communities are able to better manage their collective resources, effectively articulate their priorities and engage with governments and private providers to improve targeted and untargeted services o the extent to which such efforts are sustainable • The relationship between electoral, social and bureaucratic accountability mechanisms and the implications for improved governance and sustainable economic and political development Specifically the discussion will examine o the role of community organizations as venues for fostering social accountability o the evidence for the relationship between civic engagement and heightened levels of transparency in government institutions, electoral and bureaucratic o the evidence on preference matching of public goods o the effectiveness of community-based selection of beneficiaries for private goods o improved targeting of specific public benefits o improvements in the quality of public goods o the incidence and level of corruption Chapter Fostering Local Governance and Civic Participation This chapter will assess the successes and failures of decentralization efforts and community based anti-poverty programs in the context of the economic, political and social environment in which they are implemented, and the specific history of the local space in each case There is a large and important literature across the social sciences that has documented the ways in which the political, cultural and historical context shapes the opportunities for economic and social development over very long periods of time The literature on poverty traps, inequality traps, entrenched gender and caste gaps in achievement, and even in the capacity to aspire, has demonstrated the many ways in which history and context matter and inequalities can be reproduced and reified For example, work by economists and political scientists has shown that elections are often insufficient to produce the types of change that decentralization promises In particular, studies have shown that local elections often fail to challenge the dominance of established local elites who use clientelism of various types to capture/retain power On the other hand, the inclusion of otherwise excluded groups does not necessarily increase investment in broad based public goods Access to fiscal resources can instead generate a demand for larger private benefits for group members Decentralization has also been undertaken in numerous cases, by authoritarian governments who seek to significantly transform the economic and political landscape, whether in the direction of greater privatization or greater state control over national resources and economic activity and view decentralization as one means to limit the role of national political parties, and dissent more broadly, while this is accomplished Often, the performance of local governments is also inhibited by their ability to access resources over which they have decision making power Studies also show that decentralization without adequate financial devolution and/or decision making authority can simply transfer unfunded mandates to local governments who cannot possibly deliver what they are tasked with In the worst case, this can simply be a backdoor to forced privatization of key public goods A growing literature within political science also argues that even where the decentralization of decision making authority and fiscal resources to local governments has challenged the vertical concentration of power in the central government, it has often replicated, at the local level, the horizontal concentration of power in executive rather than legislative bodies While this process can sometimes enable reform minded local leaders to push through policy changes that are important, it can also weaken the institutionalization of such reforms by making them vulnerable to shifts in the political fortunes of individuals or parties Moreover, it can further weaken the administrative structure of the state, through politically motivated appointments of civil bureaucrats which are also vulnerable to reversal after every electoral cycle In many contexts, the power divide within branches of local governments can also exacerbate local conflicts over resources where sub-groups of constituents may favor particular local institutions Examples of this include conflicts between urban and rural constituents of municipalities in Latin America and tensions over the allocation of land rights in parts of Africa Often such conflicts lead to demands for further decentralization to accommodate the interests of new sub-groups, referred to in the literature as the “decentralization of decentralization,” and the consequent push back from national governments seeking to limit the autonomy of the local government On the other hand, research has also shown that, regardless of why decentralization is initiated, it can often set in motion a process which can significantly impact the way politics is done at both the local and national level One channel is through the emergence of new local leaders from among previously excluded groups, another is the creation of opportunities for the emergence of new political parties at the local level which eventually become national players It has also been argued that, in some contexts, the lower costs of entry into politics at the local level can create a space for the emergence not just of new leadership but also of new political parties The objective of this chapter is to assess the extent to which local context, and specifically, the history of local development and governance, political institutions and incentives, the distribution of political power and local inequalities, ideologies, beliefs, norms and practices interact with the design of specific projects/policy interventions to shape the outcomes described in chapter Whether there is evidence that participatory programs reduce the stickiness of historical processes and entrenched inequalities and the social norms and attitudes which accompany these, and create new spaces in which a more inclusive process of development becomes possible This chapter will examine: • The ways in which inequalities of wealth, status, gender, caste/race and power shape and constrain the potential of both electoral and social accountability and the distribution of gains from development o the potential for program or legislative capture by prevailing elites o the systematic exclusion of groups otherwise disadvantaged by virtue of gender, caste race or economic status o the role of local political and social inequalities in shaping the deliberative process • The extent to which elite dominance of decision making is inevitable in an environment rife with low capacity and information deficits • How often such capture is likely to be benevolent 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