Politics Beyond the Capital

The Design of Subnational Institutions in South America

STANFORD UNIVERSITY PRESS

Contents

Explaining Decentralization and Re-centralization

ONE OF THE MOST striking political trends of recent times is the growing prominence of politicians who hold governmental office below the national level. Whether they are called mayors or governors, municipal councilors or state legislators, subnational politicians have come to enjoy new types of authority relative to national politicians within their respective countries. Examples abound of the rise of subnational actors. In Russia and China, regional and provincial officials in the 1990s acquired a much greater degree of autonomy from the center, as measured in their enhanced control over fiscal revenues and local resources (Stoner-Weiss 1997; Wedeman 2003). In India, village-level committees received new responsibilities over vital governmental services as a result of constitutional amendments in 1992 (Singh and Srinivasan 2002). In the Philippines, thanks to a 1991 reform that increased the independence of subnational governments, mayors report that they no longer have to go to Manila to get a window fixed in City Hall (Eaton 2001a). In South Africa, architects of the democratic transition accommodated the demands of regionally based ethnic groups by expanding the policymaking authority of provincial governments and by enabling them to write their own constitutions (Steytler and Mettler 2001). And in Latin America, where the strengthening of subnational governments is perhaps most pronounced, many ambitious politicians now calculate that serving as mayor of a large city offers better career opportunities than the traditional legislative path.

Despite tremendous cross-regional and cross-national differences in the scope, extent, and timing of this phenomenon, in every case the rise of subnational politicians can be attributed to some form of decentralization. In some countries, subnational actors have mustered the political strength to impose decentralizing changes from below on national policy makers who otherwise would have preferred to keep government centralized. In other countries, strong subnational pressures have been absent, but national politicians at the top have decided to decentralize anyway in the pursuit of a whole host of political and economic objectives. Politicians in many cases have experimented with only very cautious and gradual approaches to decentralization, but in other cases they have moved quickly to adopt quite radical and aggressive measures. These differences in the paths toward decentralization are important, and they make this topic a particularly rich one for comparative political science, but they are essentially different variations on a common theme: the unmistakable, underlying shift toward more decentralized patterns of government. In most countries, due to a research tradition that long privileged studies of national actors, events, and institutions, this shift has exposed significant gaps in our knowledge of politics below the national level and of the politicians who operate there (Linz and de Miguel 1966; Rokkan 1970; Snyder 2001b).

The attempt to understand why subnational actors have acquired greater salience and what their rise means for the political systems in which they maneuver has begun to generate significant scholarly interest in the causes and consequences of decentralization. As a study designed to contribute to the emerging literature on decentralization, the research presented in this book innovates by significantly expanding the number of cases that can be used to build and test general theories of decentralization. According to one of the book's central premises, while the current wave of decentralization appears to be more widespread than any prior wave, the phenomenon of decentralization itself is not unique to the contemporary period. For a complex set of reasons that have varied across time and space, national officials in earlier periods and in distinct policy areas have decentralized authority to subnational officials. Well before the most recent wave of decentralization attracted notice, the division of authority between national and subnational governments regularly occasioned deep and protracted political conflicts. The basic observation that decentralization is not new provides the major point of departure for this book, and informs its use of a comparative historical approach in studying these earlier episodes alongside contemporary cases. Recognizing the theoretical importance of episodes that pre-date the 1980s and 1990s offers a promising way to begin to close the gaps in our understanding of politics beyond national capitals. Due to its much earlier independence from colonial rule relative to Africa and Asia, Latin America offers a particularly rich set of cases for the study of decentralization across time. Specifically, I focus on the design and re-design of subnational institutions in the four Latin American countries that have amassed the most extensive records with decentralization and re-centralization: Argentina, Brazil, Chile, and Uruguay.

The interest in earlier episodes of decentralization represents a major departure from the current literature (Angell, Lowden, and Thorp 2001; Manor 1999; O'Neill 1999; Willis, Garman, and Haggard 1999). Though theoretically sophisticated and empirically rich, this literature has suffered from its nearly exclusive focus on the contemporary period. The presentist bent of recent scholarship is easy to understand. Decentralization is a highly complex issue affecting multiple policy areas and a number of different political actors operating at several levels of government. Ironically, decentralization has emerged as one of the most exciting and important research topics just as political science as a discipline has come to place less value on field research. Relative to previous scholarly norms that neglected the subnational realm in favor of national-level politics, decentralization has significantly increased the costs and complexity of field work by requiring researchers to collect and analyze information on a multiplicity of subnational actors and institutions rather than just national-level data. The research challenges involved in accurately documenting change in these many policy areas and in the roles played by these different actors are daunting, with the result that few scholars have reviewed evidence from earlier periods or compared waves of decentralization through time.

Despite these obstacles, I contend that broadening the frame of reference to include prior experiences with decentralization holds out real promise. First, empirically speaking, placing the recent shift toward decentralized governance into historical perspective will help us see what is unique and what is not about the current wave of decentralization. How does the current wave compare with earlier waves? In what ways does the mix of rights and responsibilities devolved in earlier periods differ from the mix preferred in the current period? What lessons can be learned by studying what happened when earlier waves of decentralization receded? Second, and perhaps more importantly, this research design can contribute significantly to theory-building in the area of decentralization. The exclusive focus on the contemporary period, in which such widespread phenomena as globalization, democratization, economic liberalization, and the rise of ethnic conflict all may be said to encourage decentralization, makes it difficult to isolate the influence of any one of these factors on the adoption of decentralizing policies. Incorporating earlier periods into the analysis makes it possible to control for some of these factors and expands the number of observations that can be used to identify cross-national and cross-temporal patterns and trajectories. Are the preferences of national and subnational actors toward decentralization consistent through time? Is it possible to generalize about these preferences cross-nationally? Under what conditions does decentralization deliver the benefits anticipated by politicians when they decide to devolve resources and responsibilities?

If history shows that decentralization is not unique to the contemporary period, it also indicates that we should not think of decentralization as irreversible. Again, for reasons that vary across cases, previous experiments with decentralization have almost always met with re-centralizing reactions. Attention to the historical record suggests that powers devolved by national policy makers to their counterparts at the subnational level can also be reclaimed. Sometimes re-centralization is promoted as a solution to the problems created by decentralization itself (e.g., macroeconomic instability and perceived declines in the quality of governmental services), but sometimes it occurs for exogenous reasons that have little to do with the consequences of decentralization, including such events as military coups or national electoral victories for parties hostile to decentralization. Although there are important reasons to think of the wave of decentralization that began in the 1980s as one that is still ongoing, in some countries this latest wave has already crested and begun to experience significant reversals (Dickovick and Eaton 2004).

There are important parallels here with the earlier literature on regime change, which carefully identified and compared transitions back and forth between democratic and non-democratic regimes (Linz 1978; O'Donnell, Schmitter, and Whitehead 1986). Despite the optimism generated by democracy's third wave (Huntington 1991), continued democratization is certainly not inevitable in the developing world, and neither is continued decentralization. Rather than being a one-shot deal, the decision to decentralize opens up a new and contentious arena for political struggle. Even a cursory survey of experiences in developing countries demonstrates that the division of power between levels of government can be highly unstable and contingent, with nearly constant pressures to re-divide power in the attempt to benefit either subnational or national actors. Considering that decentralization reallocates the very authority to make decisions, the contentious nature of intergovernmental relations is hardly surprising. Stepping back from the current period, one can observe changes back and forth along a continuum marked by greater degrees of decentralization at one end and greater degrees of centralization at the other. At the heart of this book is the consideration of a variety of explanations for movement along this "continuum of decentralization."

Puzzles of Decentralization and Re-centralization

Articulating persuasive explanations of decentralization is particularly challenging because the rationale behind the decision to decentralize is seldom obvious. Many scholars have emphasized the puzzling nature of decentralization (Doner and Hershberg 1999; Grindle 2000; O'Neill 1999). If decentralization transfers authority and resources to subnational actors, then the individuals who stand to lose power from decentralizing changes — politicians at the center — control the very decision to decentralize. Why would politicians surrender power?

In some cases, a closer look at the actual content of "decentralizing" policies makes the decentralization puzzle altogether less puzzling. For example, the detailed analysis of decentralizing measures frequently shows that national policy makers write legislation in such a way that it preserves their ability to continue to control subnational actors, even after the formal transfer of revenues and expenditures. National legislators can be quite ingenious in this respect. For example, though the 1991 Local Government Code in the Philippines has certainly proved to be one of Asia's most significant experiences with decentralization, the Code protected the interests of national legislators in a variety of ways. Most importantly, it introduced nationally controlled audit mechanisms of local officials and forced local governments to absorb employees of the national government, many of whom had been hired at the behest of national legislators (Eaton 2001a, 118). As another example, decentralizing reforms in Venezuela in 1996 increased the states' shares of tax revenues but gave a central government agency "responsibility to allocate these resources contingent upon the submission and approval of specific earmarked projects by regional and local governments" (Penfold Becerra 2004).

A common tactic by national decision makers is the transfer of political authority to subnational actors, by allowing their direct election, without transferring additional resources, or, in the reverse, transferring resources but not allowing subnational elections. An important example of the latter phenomenon is authoritarian Chile (1973-90), where the Pinochet government transferred schools and hospitals to municipalities but replaced democratically elected mayors with individuals who were closely controlled by the regime. In these and other cases, what is called decentralization looks a lot less radical upon closer inspection. Thus, we should maintain a healthy degree of skepticism when national actors announce that they have decentralized; the changes they introduce may fall well short of genuine decentralization.

In another sense, concerted attempts by national actors to re-centralize authority in the wake of decentralization may also help make certain aspects of the decision to decentralize less puzzling. Two cases in point are Argentina and Brazil, where national authorities began to pursue re-centralizing measures in the early 1990s shortly after the adoption of decentralizing changes in the late 1980s. The frequency of re-centralizing attempts so soon after decentralization suggests that national politicians may indeed remain fundamentally opposed to decentralizing changes, even as they are forced to adopt them by short-term political circumstances. At any given point in time, national politicians may endorse decentralizing measures that undermine their institutional interests when they are forced to do so by other actors. In short, the weakness of the actors who oppose decentralization and the strength of those who advocate it may explain why decentralization occurs. If so, then we need to do more than search for evidence that decentralization is in fact always compatible with the underlying interests of national decision makers.

Despite these caveats, in many cases, decentralization is truly puzzling. The literature is full of examples of decision makers at the center who, rather than being forced to decentralize against their wishes, were proactive in adopting decentralization for a variety of strategic reasons (Montero and Samuels 2004; O'Neill 1999, 2003; Willis, Garman, and Haggard 1999). As explained later in this chapter, I find it useful to distinguish between "bottom-up" dynamics, in which decentralization is forced on national decision makers from below, and "top-down" patterns, in which national actors, operating in a more strategic mode, choose to decentralize. According to one of the central findings of this study, much of the content of decentralizing measures can be traced to the identity of the actors (e.g., national or subnational in origin) who are responsible for inserting decentralization into the policy agenda.

The success of re-centralizing efforts generates its own set of explanatory puzzles. What explains the ability of national decision makers to build sufficient political support to reclaim authority from subnational governments? In his 1999 study for the World Bank, which provides one of the most comprehensive surveys of the recent experience with decentralization, James Manor argues that attempts to re-centralize seldom face popular pressures in defense of decentralization. "In all of the many cases where higher-ups have eroded or destroyed decentralized authorities ... there is no evidence of preventative action at the grass roots" (Manor 1999, 76). The absence of a more vigorous grassroots defense of decentralization may be explained by the reality that decentralization does not deliver tangible benefits to ordinary people, or does not deliver them soon enough (e.g., before the onset of re-centralizing pressures). But this fails to explain why subnational officials, who do stand to lose from the reversal of decentralization, are unable to prevent recentralization. Whether or not pressures from governors and mayors were critical in the adoption of decentralization to begin with, one would expect them to defend acquired rights and resources. In addition to suggesting that we should investigate the failed responses of governors and mayors, the fact of recentralization also directs our attention to the tools and strategies that centralizers use in seeking to reverse decentralization. Explaining recentralization can thus be as intellectually challenging as accounting for the decentralizing episodes that so far have received more attention from scholars.