Localizing Sustainable Development – Decentralization Net

Jamie Boex, June 2019 – The collective challenge of the global development community is to ensure that global development objectives–such as the U.N.’s Sustainable Development Goals (SDGs)–are achieved across a country at the grassroots level. This is the challenge of “localizing” development, about which I have written in the past (e.g., 2010; 2015). As global development practices evolve, this blog gives a brief bullet-by-bullet overview of my current thinking on the topic.

BACKGROUND: THE NATURE OF SUSTAINABLE DEVELOPMENT

The decisions and activities of households and businesses form the primary driving force behind sustainable human development (economic, social, spatial development and environmental stewardship).
As a platform for collective action, the public sector can be a catalyst for development by providing public infrastructure and services that the market fails to provide efficiently. When the public sector fails to perform in an efficient, inclusive, responsive and/or accountable fashion, the public sector can itself become an obstacle to development rather than a catalyst.
The SDGs seek to promote development, and minimize obstacles to development, through collective action where needed.
Both development itself and interventions to promote development are inherently local (economic activity and public services have a strong spatial, and therefore vertical—subnational and/or intergovernmental—dimension).
Localizing development has strong technical and political economy aspects; both the appropriateness of technical interventions and the political economy context of those interventions may vary considerably across space.

LOCALIZING DEVELOPMENT: ACHIEVING RESULTS AND THE VERTICAL DIMENSION OF DEVELOPMENT

Managing the public sector in a results-based manner at the national level involves an inter-connected cycle of results-based planning, budgeting, implementation, monitoring and evaluation. Even in a centralized single-level public sector, ensuring effective coordination between these various processes can be a considerable challenge; this challenge becomes exponentially complex in a multi-level governance setting.
As populations grow and economies become more complex, the “long route of accountability” becomes weaker and weaker. Over time, the arch of decentralization and localization seems to bend towards devolution.
Decentralization reforms (as well as donor support to decentralization) are often driven by governance reforms or by the desire to resolve conflicts, rather than as a technical solution to a development challenge.
At the margin, however, localization of development does not necessarily require devolution.
The key underlying question is not “whether to decentralize or not” nor even to opt for a specific decentralization model, but to look at ways to improve capacity and co-ordination among public stakeholders at different levels of government to increase efficiency, equity and sustainability of public spending.
In order for an intergovernmental fiscal system to be results-oriented, three things need to occur. First, the vertical allocation of powers and resources needs to be achieved in line with the results that are being pursued (in other words, adequate resources need to reach the local level in order for local actors to effectively perform their functions). Second, the horizontal distribution of resources should be achieved across the national territory in line with the results that are being pursued. And third, the local institutions, systems and procedures ought to be in place to ensure the efficient transformation of resources and inputs into outputs and outcomes at the local level.
The extent to which centralization and decentralization are pursued over time is a pendulum. At the current time, technological progress and the changing structure of the economy and society are unlocking central solutions to development challenges in countries around the world, but these same technological, economic and social forces also seem to weaken power and social cohesion at the national level, while requiring increasingly local responses to collective challenges.

LOCALIZING DEVELOPMENT: THE RELATIONSHIP BETWEEN SPENDING AND OUTCOMES

In LMICs, binding constraints may be shifting with regard to intergovernmental fiscal relations. Whereas for roughly the first 50 years after independence, the adequacy and vertical allocation of public resources often formed a binding constraint in localizing development, this no longer seems to be the main constraint in many countries—increasingly, the inefficient local use of public resources (and in some places, the inefficient and/or inequitable horizontal allocation of resources) seems to be the main binding constraint.
This raises the question whether greater localized spending improve local results? A major problem in answering this question is that our understanding and measurement of “localized” spending has been restricted to devolved spending. The limited available evidence is mixed, may vary from sector to sector, and the impact of localization is likely to depend considerably on the specific mix of institutional arrangements and funding-flows in each country.
Within a country, does greater local spending correlate to proportionately better local results? Although the obvious answer would be ‘yes’, reality seems more complicated, as local conditions vary across space and many public services are actually co-produced between the public sector and residents. Understanding the “production function of public services” requires a deeper understanding of specific sectoral services.
In general, responsive, transparent and accountable governance of local service delivery (required for the effective local use of resources) seems to increasingly be the key to local development, as without it, greater localized spending is unlikely to translate in better results.

THE POLITICAL ECONOMY OF LOCALIZING DEVELOPMENT

Decisions about the assignment of functions, the vertical institutional structure, and the vertical and horizontal distribution of resources—are political!
Local decisions about priorities and the implementation of local services and infrastructure—are political!
The effectiveness of the “last mile” of local service delivery—is political!
The transparency and monitoring of local service delivery information—is political!
The priorities of the global development community (and its own inability to coordinate across stovepipes)—are driven by political economy forces!

CONCLUDING THOUGHTS

In many countries, the main challenge with regard to localizing development seems to be the need to shift from traditional, reactive local institutions to proactive, high-performing local (government) organizations in light of the SDGs. In turn, however, high-performing local government organizations require a high-performance central government organization. There are often multiple political economy challenges to achieving a high-performing multi-level public sector in which development objectives are effectively localized.
Due to the importance of urban area as engines of economic growth and spaces of social transformation, urbanization may be an important entry point into the decentralization/localization debate (but has pros and cons in terms of political economy forces).
“It’s political” doesn’t mean “it’s hopeless”. It means you need to recognize the political economy constraints (both at the local and central levels) as you try to improve the effectiveness and equity of the public sector by identifying and resolving binding constraints to public sector performance.
An obvious first step in many countries is to inform the localization of the SDGs: start tracking SDG-related inputs, outputs, and outcomes at the local level; clarify the roles of national, regional and local actors in improving development results at the local level; and improve capacity and coordination among these actors in a results-based manner?

Learn more about localizing the SDGs.