In recent years, governments worldwide have increasingly devolved powers to locally elected leaders. This has led to a growing interest in understanding the impact of local democracy on governance outcomes. A recent policy research paper titled “The Added Value of Local Democracy: Evidence from a Natural Experiment in India” by the Development Research Group, Development Economics, World Bank contributes to this ongoing debate by examining the impact of local democracy on governance outcomes.
The study analyses the effects of local democracy by exploiting a unique natural experiment in the Indian state of Karnataka. Local elections were postponed in 2020, resulting in appointment of administrators taking over governance in villages whose elected leaders completed their terms that year. This created a quasi-random variation in the governance region across villages. Another salient feature of this research study is its hyper-local focus, as it encompassed nearby villages governed by varying regime types. Additionally, it was of a temporary nature, as a new council was eventually elected and assumed office in the subsequent year. The study estimates the impact of local democracy on various outcomes such as budgetary expenditures, delivery of social assistance during the pandemic and implementation of local development projects, bureaucratic attendance, welfare benefits and COVID-19 well-being.
Methodology
The research methodology adopted in this study is both comprehensive and robust. It draws from an extensive array of administrative datasets, comprising budgetary allocations spanning 6,000 villages, over a million public works projects, data on local bureaucratic attendance, welfare benefit distributions, and a primary survey from 11,810 households. The research leverages a difference-in-differences approach to estimate the causal impact of local democracy. By comparing villages where elected leaders completed their terms in 2020 with those where appointed administrators took charge, the study dissects the transformational consequences of local democracy and explores the variations in effects across different types of villages and households.
Key Findings
- Local Democracy aligns spending more closely with citizen preferences, but these gains accrue more to men, upper castes, and other advantaged social groups.
- Elected leaders are more responsive to citizen needs and cause local bureaucrats to exert more effort.
- Appointed administrators perform better on aspects of governance that are aligned with their specialized skills.
- Local democracy improves governance in some domains, but it has no overall impact on economic outcomes or effectiveness of COVID-19 management.
The authors argue that the presence of local democracy improves citizen welfare, for reasons not entirely unanticipated; elected leaders have better information on citizens’ needs and elections serve as incentives to work in the interest of citizens. Relative to appointed administrators, elected leaders make local bureaucrats work harder and engage more with citizens in their jurisdictions. However, it should be noted that elected leaders tend to prioritize the needs of upper-caste individuals and men over those of lower-caste individuals and women. On the other hand, appointed administrators bring valuable specialized skills and experience to the table, which elected officials often lack, making them valuable when implementing complex technical projects.
Policy Implications
- There is value in both representative democracy and empowering local actors.
- Local decisions are best left to local elected representatives but biases against women and under privileged groups should be guarded against and rectified
- Elected leaders would benefit if they were paired with bureaucrats with technical domain expertise.
“India’s own experiment with decentralization via the 73rd and 74th amendments of the constitution stand incomplete: powers are devolved patchily to the local level and the higher state continues often to treat village administrators as implementation outposts as opposed to empowered local policymakers”. If elected representatives add value despite these severe constraints, the gains from a more systematic thrust towards devolving powers could reap rewards, conditional on “designing an architecture that allows elected leaders and higher-level bureaucrats to complement each other’s strengths.”
Conclusion
The paper highlights the transformative potential of local democracy. By analyzing the unique natural experiment, this research underscores the significant positive impacts of locally elected leaders on governance outcomes. As governments worldwide continue to navigate the complexities of decentralization, the insights drawn from this empirical study call for a “thrust towards democratic decentralization seen across the developing world in the past few decades”. The evidence presented in the study serves as a compelling argument that the full benefits of local democracy are realized when mechanisms are in placed to mitigate elite capture and when elected leaders work in tandem with bureaucrats with specialized skill sets. This research contributes valuable insights to the ongoing debates on governance and decentralization, offering a path towards more inclusive and effective governance structures in the future.
Full report : Arora, Abhishek; George, Siddharth; Rao, Vijayendra; Sharan, MR. 2023. The Added Value of Local Democracy: Evidence from a Natural Experiment in India. Policy Research Working Papers; 10555. © World Bank, Washington, DC https://openknowledge.worldbank.org/handle/10986/40300
