Local governments, like their higher-level counterparts, are not a monolithic entity. As such, local governments should be understood as political bodies with complex internal workings: while working together, the motivations and incentives acting on the mayor or executive; the council or assembly; the local administrative officers; local department heads; and local frontline staff are all likely to differ slightly depending on their location in the organization.

It is again useful to distinguish between the motivations facing elected local politicians – who are facing electoral, party-political, and other incentives and constraints (both locally and from above) – and the motivations and incentives faced by appointed local bureaucrats and administrators – who may be more interested in advancing a more limited agenda (consolidating institutional or personal power, improving career trajectories, and checking rival agencies) than with the overarching mission and vision of the local or regional government.

It is important in political economy analysis to set value judgements aside. While we would like to believe that a mayor should care about clean water and sanitation as a human right for her constituents, the real question is: Is she able to care about such long-term sectoral investments when faced with competing demands over scarce resources, including demands from her political party headquarters, or incentives to spend available resources on projects that have a more immediate impact of the livelihoods of her constituents, and thus help secure re-election? Likewise, we know that as professionals, teachers and medical workers should be committed to effectively providing public services to their students and patients, but it is nonetheless important to explore what incentives and institutional constraints cause the absenteeism and weak local service delivery performance at the front line in education and health identified in so many countries.

In fact, the incentive being faced by local stakeholders—including local politicians, local administrators, as well as citizens and local civil society actors—is likely to be highly context specific. For instance, a big city mayor may be a champion of decentralization, but will mainly be interested in more own source revenue instruments. By contrast, a chairman of a rural district may see decentralization in a positive light, but—lacking a strong economic base—is likely to be interested in receiving more unconditional equalization grants (Bahl 1999).[12]

Box 3.2 Background and resources on (general) political economy analysis of decentralization

Implementation Rules for Fiscal Decentralization (Roy Bahl): World Bank, 1999.

Making Decentralization Work: Democracy, Development, and Security (Ed Connerley, Kent Eaton, and Paul Smoke, eds.): Lynne Rienner, 2010.

The Political Economy of Decentralization Reforms: Implications for Aid Effectiveness (Kent Eaton, Kai-Alexander Kaiser, Paul J. Smoke): World Bank, 2011.

A Comparative Overview of Local Governance Systems in Selected Countries (Jamie Boex and Renata Simatupang 2015): Local Public Sector Initiative, 2015.

The Technical Is Political – Why Understanding the Political Implications of Technical Characteristics Can Help Improve Service Delivery (Daniel Harris, Claire Mcloughlin and Leni Wild): ODI, 2013.

[12] Similarly, the willingness of citizens or civil society to be part of local participatory processes will depend on the effectiveness of vertical or intergovernmental mechanisms. Anecdotal evidence suggests that citizens and community leaders may not care to be involved in local planning or oversight activities—for instance, as part of health facility committees or as part of user committees—if local officials have no meaningful discretion to improve frontline services. In these cases, such committee may exist and function on paper only.