Decentralization

This work attempts to determine the degree to which a decentralising state creates a more equitable and progressive distribution of social resources than a centralising one. State decentralisation has received both negative and positive reports in relation to its impact on social resources and this essay presents a balanced picture of these views. The essay begins with a definition of decentralisation and of social resources. The latter definition is based on the Department for International Development’s (DFID) pentagon model of sustainable livelihoods, which identifies social resources as human, physical, social, financial and natural capital. Following this clarification of terms, the work will examine how far state decentralisation has effected the equitable and progressive distribution of each type of social resource using case studies from Asia and Africa gleaned from development literature. The essay concludes that there is strong evidence to support the notion that while decentralisation can equally and progressively distribute social resources some caution must be taken.

For the purposes of this essay “[d]decentralization [is] defined as the transfer of responsibility for planning, management and resource raising and allocation from the central government and its agencies to the lower levels of government.” (Work, 2002: 5-6). Decentralisation to the lower levels of government encompasses “the local (village, town, city) level, to intermediate (province, district, county, etc) levels, or to both at once.” (Manor, 2000a: 4). This definition therefore provides the context in which the prospects of social resources are assessed. In DFID’s pentagon model of sustainable livelihoods, a framework of what social resources constitute is provided. The model views social resources as forms of capital which can be individually or communally built and used in creating the conditions for sustainable development. These forms of capital are utilized to influence and access formal structures such as local government and the private sector and this increasing capacity thus forms the environment for improved livelihood outcomes. Additionally, the model shows how local governments can also access and influence these forms of capital. (See Appendix 1).The forms of capital as set out by the model are defined below:

• “human capital: the skills, knowledge, ability to labour and good health important to the ability to pursue different livelihood strategies;
• physical capital: the basic infrastructure (transport, shelter, water, energy and communications), the production equipment and means that enable people to pursue livelihoods;
• social capital: the social resources (networks, membership of groups, relationships of trust, access to wider institutions of society) upon which people draw in pursuit of livelihoods;
• financial capital: the financial resources which are available to people (whether savings, supplies of credit or regular remittances or pensions) and which provide them with different livelihood options; and
• natural capital: the natural resource stocks from which resource flows useful for livelihoods are derived (e.g. land, water, wildlife, biodiversity and wider environmental resources).” (DFID Rural Livelihoods Department, 1999: para. 11).

This work now discusses how far decentralisation has been a part of the equitable and progressive distribution of human, financial, social, natural and physical capital by looking at each form in turn.

Human Capital

“Since the 1980s when the importance of the role of human capital in the process of development has been recognized, education has become a key sector in development programmes.” (Pellini, 2000: 10). While the importance of education and training has been emphasised in development literature, is its equitable and progressive distribution best served under a centralising or decentralising state? According to evidence decentralisation promises “improved efficiency, improved transparency, improved accountability, provision of services that reflects local priorities, [and] improved quality of education”. (Pellini, 2000: 20). Decentralization therefore offers the prospect of an improvement in the qualitative aspect of education provision through responding to the needs of localized conditions over those at a national level. In addition, decentralised projects such as the Micro-watershed Development Plan in Kondkitunda, Orissa, which attempted to control environmental degradation by using village level institutions and local involvement, demonstrate how localized stocks of human skill can be built. The project found that “[s]kill development…had made a tangible contribution to human capital…through building confidence in local capacity.” (Baumann, 2000: 33).

Natural Capital

Decentralization of natural capital has many implications in terms of equitable and progressive distribution. While it is easier to redistribute natural capital such as water and land on natural lines, areas which have scarce natural resources are likely to experience outcomes incompatible with sustainable livelihoods in such a decentralization programme. The close link between natural and human capital means that some areas would greatly benefit to the detriment of others. The control of natural capital as a result becomes a key question and the ability to decentralize it along equitable lines a political one. It is clear that collective action and ownership certainly have a regenerative effect on natural capital, (Baumann, 2000: 33), yet the necessity of sharing natural capital between natural resource rich and poor areas would be contentious and it is probable that an independent centralized authority would be the only body able to settle disputes.

Physical Capital

Much like natural capital, the redistribution through decentralization of physical capital can be controversial. For example, control over infrastructure such as roads which may pass through various decentralized areas may create conflicts of interest. However, evidence presented in the 1994 World Development Report, ‘Infrastructure for Development’, illustrates how decentralized control and maintenance of roads, water and sanitation can lead to progressive results. (World Bank, 1994: 74-76). The indication is that local-level decisions on investment and maintenance over physical capital better serves communities because the needs of those communities are known to the decision-makers. Additionally, the inequality of physical capital distribution which occurs in macro-economic growth and globalization should encourage governments to protect micro-enterprise. “[S]mall and medium enterprises can create more employment per unit of capital and can have higher productivity of capital than large enterprises. Their greater labour intensity can contribute to a more equal distribution of income. If redistributing physical capital [under decentralization] proves difficult, government policies can still help,…by promoting broader access to financial capital, removing restrictions on the growth of small and medium enterprises and providing incentives for employment-intensive patterns of growth.” (McKinley, 2001: 12). In theory, the access to financial capital to build the physical capital of micro-enterprises therefore creates a more equitable distribution of both these forms of capital.

Financial Capital

“It is unrealistic to expect democratic decentralization to assist very much in mobilizing local resources - if by this we mean financial capital.” (Manor, 2000a: 13). The unpopularity and loss of legitimacy which accompanies the raising of financial capital through taxation is likely to prove a deterrent to most representatives of newly decentralized bodies. This delicate balance between taxation and popularity means that those “[d]centralizers who expect devolved tasks to be funded by new taxes put decentralized systems at risk by under-funding them.” (Manor, 2000b: 13). Equitable distribution of financial capital therefore seems better served under a centralized system where progressive taxes allow wealthier areas to subsidize those areas of a state which are poorer. New levels of government also have the potential to add new levels of corruption, which can result in a loss of financial capital at the individual level. For example, Baumann and Sinha relate the case of Kontikunda, Orissa, where villagers offered bribes to local officials who had the power to grant contracts on newly decentralized projects. (Baumann and Sinha, 2001: 3). However, in contrast when financial capital is spent in a decentralized system it “often give[s] citizens local development projects that they prefer, [and] citizens tend to maintain them with care. And since decentralization helps to increase the uptake on (for example) health services, citizens using them increasingly recognise their benefits - so that the increased uptake is sustained.” (Manor, 2000b: 13).

Social Capital

Decentralisation and the promotion of local democracy through the election of new legislative bodies creates a mixed picture for the equitable and progressive distribution of social capital. “[E]lections tend to be divisive; [they] can undermine trust, harmony and social capital. But because [they] also tend strongly to cause associational activity within local arenas to quicken, it can simultaneously strengthen networks of interaction, and enhance social capital.” (Manor, 2000b: para. 3). The introduction of decentralisation may either reinforce or shift existing patterns of social capital; consequently, the arena which decentralisation provides for more local participation points to a more progressive distribution of social capital as groups form to represent and sustain their interests in the context of political empowerment. (Vorley, 2002: para 9). However, decentralisation in countries such as Kenya created a quite different picture as centralised elites sought to strengthen their power across the country. “‘[E]lite capture’ of local power structures has been facilitated by the desire of ruling elites to create and sustain power bases in the countryside. Popular perceptions of the logic of patronage politics, combined with weak accountability mechanisms, have reinforced this outcome. The conclusion from… African cases is that decentralization has not empowered challenges to local elites who are resistant or indifferent to pro-poor policies. Thus, decentralization is unlikely to lead to more pro-poor outcomes without a serious effort to strengthen and broaden accountability mechanisms at both local and national levels.” (Crook, 2003: 1).

In conclusion, these forms of capital do not develop in isolation and the essay has referred to some of the overlaps which occur and although the decentralisation process varies from state to state, some general lessons can be made. Decentralisation doesn’t always guarantee success in the reduction of poverty. There are many instances that the increased participation which decentralisation sometimes permits has contributed to equitable and progressive distribution of social resources for areas which may have suffered neglect under centralising states. Deciding what is best for oneself has seen an improvement in natural, human and physical capital in examples from Asia. “Decentralisation provides [the] means which local groups can use to deploy, manage and enhance the human, natural and physical resources or assets that exist, and to address shortages thereof”. (Manor, 2000b: para. 3) However, the discussion of social and physical capital illustrates how the some of the failures of decentralisation to provide equitable and progressive distribution of social resources, require the increased accountability of the newly created institutions of decentralisation.

References:

Baumann, P., (2000) ‘Sustainable Livelihoods and Political Capital: Arguments and Evidence from Decentralisation and Natural Resource management in India’, [Online], Available at: http://www.odi.org.uk/publications/wp136.pdf (Accessed 12 March 2005).

Baumann, P., and Sinha, S., (2001) ‘Linking Development with Democratic Processes in India: Political Capital and Sustainable Livelihoods Analysis’, [Online], Available at: http://www.odi.org.uk/nrp/68.pdf (Accessed 12 March 2005).

Crook, R., (2003) ‘Decentralisation and Poverty Reduction in Africa: The Politics of Local-central Relations’, [Online], Available at: http://www.undp.org/governance/marrakechcdrom/concepts/Crook.pdf (Accessed 12 March 2005).

DFID Rural Livelihoods Department (1999) ‘Sustainable Livelihoods & Poverty Elimination - Background Briefing’, [Online], Available at: http://www.livelihoods.org/info/docs/dec99bbfg.htm (Accessed 10 March 2005).

Dulic, M., (2004) ‘Is Decentralization Vital for Poverty Reduction’, [Online] Available at: http://topics.developmentgateway.org/poverty/sdm/previewDocument.do~activeDocumentId=1001360 (Accessed 15 March 2005).

Katsiaouni, O., (2003) ‘Decentralization and Poverty Reduction: Does it Work?’, [Online], Available at: http://unpan1.un.org/intradoc/groups/public/documents/un/unpan012251.pdf (Accessed 16 March 2005).

McKinley, T., (2001) ‘Introduction’ in Macroeconomic Policy, Growth and Poverty Reduction, (ed.) McKinley, T., New York, Palgrave.

Manor, J., (2000a) ‘Decentralisation and Sustainable Livelihoods’, [Online], Available at: http://www.livelihoods.org/pip/pip/dcback.html (Accessed 12 March 2005).

Manor, J., (2000b) ‘Note for Discussion on Decentralisation’, [Online], Available at: http://www.livelihoods.org/pip/pip/discus7.html (Accessed 14 March 2005).

Pellini, A., (2000) ‘Development, Decentralization and Education: Main Issues and Open Questions’, [Online], Available at: http://www.uta.fi/~arnaldo.pellini/papers/Questions.pdf (Accessed 12 March 2005).

Vorley, B., (2002) ‘Sustaining Agriculture: Policy, Governance, and the Future of Family-based Farming: A Synthesis Report of the Collaborative Research Project 'Policies that Work for Sustainable Agriculture and Regenerating Rural Livelihoods’, [Online], Available at: (Accessed 12 March 2005).

Work, R., (2002) ‘Overview of Decentralisation Worldwide: A Stepping Stone to Improved Governance and Human Development’, [Online], Available at: http://www.undp.org/governance/docsdecentral/overview-decentralisation-worldwide-paper.pdf (Accessed 10 March 2005).

World Bank, (1994) World Development Report 1994: Infrastructure for Development, Washington D.C.. World Bank.