Decentralization for improving the provision of public services in developing countries: A critical review

Figures & data

Table 1. Decentralisation and service provision nexus

Reference	Contributions	Methodology	Objectives	Findings
	Positive result
World Bank (1995)	Presented an empirical insight into the allocative efficiency argument using local governments in Colombia	Survey and expenditure data of 16 municipalities in Columbia	To examine the match between service provision by government (local and central) and local preferences	*Respondents trusted elected local governments executives on provision of service The allocation of resources by local governments were more consistent with community preferences
Faguet (2000) Fiscal decentralisation in Bolivia	Interested in the influence of fiscal decentralisation reforms on the expenditure patterns at the local level	Survey and expenditure data	To assess the influence of fiscal decentralisation reforms on the expenditure patterns at the local level	*Fiscal decentralisation reform changed the spending patterns in favour of water and sanitation, education, water management, urban development and agriculture Faguet’s study found that these changes are strongly positively related to real local needs, supporting the argument of allocative efficiency with decentralized service provision
Robalino et al. (2002)		Panel study: Low and high income countries were used for the panel study falling on the socio-economic indicators such as Gross Domestic Product per capita and infant mortality rate The authors measured fiscal decentralisation using the share of public expenditures managed by sub-national government	To investigate the linkages between fiscal decentralisation and health outcomes	*The result of their study proves a positive relationship between health outcomes and fiscal decentralisation, meaning increases in fiscal decentralisation matched higher outcomes for health, thus low infant mortality rates
Elhiraika (2007)	Greater fiscal autonomy for local government is key for improved service delivery.	Uses cross-sectional data of nine provinces in South Africa to investigate the relationship between fiscal decentralisation (intergovernmental transfers and own-source revenue) and public service delivery Health and education equations were estimated using random and fixed effects procedures	To investigate the relationship between fiscal decentralisation and public service delivery	*Own-source revenue demonstrated a negative and significant impact on the demand for health than for other public services.
Akpan (2011)	Akpan concludes that more efficient and equitable provision of public services increases willingness to pay tax. Thus, the importance of investigating, whether, fiscal decentralisation influences economic growth through service provision	Akpan uses empirical study to test these arguments. The choice was based on availability of data on relevant data from 2002 to 2009 for 36 states in Nigeria. Data are drawn from World Development Indicators (WDI) CD-ROM 2009 and annual publications of the National Bureau of Statistics (Nigeria) 2009. From a panel data 36 states and 296 observations were used.	To observe the relationship between decentralisation and service delivery outcomes	*Decentralisation allows better matching of public policies to local needs These are: Higher fiscal decentralisation matches lower infant mortality rate and higher literacy rate. The Internally generated revenue enhances literacy rates and reduces infant mortality.
Dick-Sagoe (2017)	Dick-Sagoe looks into decentralised service provision, health and education, in reducing poverty in the Central Region of Ghana; which is one of the leading poverty regions in Ghana. Recommends an intensive local provision to further improve service outcomes.	A panel study of health and education outcomes, measured at the local level over a period of 10 years, for all the 20 Metropolitan, Municipal and District Assemblies (MMDAs) in the Central Region were used. Additionally, amounts spent (expenditure) on the provision of these services by the local governments, over a period of 10 years, were also used. Correlation and multiple regression analyses were employed to analyse the panel data to test the public choice theories on service provision and its impact on poverty reduction, at an alpha of 5 percent.	With the main objective of measuring the impact of service provision (in terms of expenditure) on service outcomes (with particular reference to education and health) and assessing the impact of service provision on poverty levels in the region	*Services provision has improved levels of poverty and more expenditure on service provision improves service outcomes at the local level, however, the corresponding increase in service delivery improvement was low.
Aramov and Asante (2009)	The authors were interested in the access to public service disparities among decentralised districts in Ghana	Using district and household level data	To identify the disparities in access to local public service among the District Assemblies in Ghana	*They conclude the causes of the inequalities in access to public service provision to respondents’ characteristics (such as education and ethnicity) and location of the district (geography). Thus determinants of service delivery are ethnicity and geography.
	Negative result
Oriakhi (2006) conducts a study in Nigeria	Recommends aligning of expenditure to community-based projects and community empowerment to hold sub-national government to account for expenditure and revenue.	Uses descriptive studies on mainly health and education indicators	To observe how fiscal decentralisation contributes to efficient service delivery	**He attributes his observation of poor service provision to mismatch between expenditure and revenue assignment and uneven vertical allocation formula, favouring federal government. The rest according to him were ineffective monitoring of public expenditures.
Kaufmann et al. (2002)		Survey of local agencies	To assess the effects of decentralisation on access to public services	**Their study found that both local and central service providers in Bolivia fell short in delivering an adequate quantity and quality of services, but local agencies were more successful in accessibility to citizens, particularly for the poorer brackets of population segments.
Arze and Martinez-Vazquez (2003)	Improvements in allocative efficiency may be taking place as a result of further fiscal decentralisation	Review of literature	To observe if further fiscal decentralisation results in improvements in allocative efficiency	**Higher fiscal decentralisation results in changes in expenditure composition. Developing countries, on average, spent a smaller share of their budgets in these sectors and have poorer education and health outputs and outcomes
Sow and Razafimahefa (2015)	Fiscal decentralization can worsen the efficiency of public service delivery if sufficient expenditure decentralisation is not backed with sufficient revenue decentralisation.	The study uses a stochastic frontier method to estimate time-varying efficiency coefficients and analyzes the impact of fiscal decentralization on those efficiency coefficients	To assess the impact of fiscal decentralization on the efficiency of public service delivery	**Fiscal decentralization can improve the efficiency of public service delivery but only under specific conditions (adequate political and institutional environments, sufficient degree of expenditure decentralization seems necessary to obtain favorable outcomes and decentralization of expenditure needs to be accompanied by sufficient decentralization of revenue)

Source: Author’s construct based on literature, 2019.

*Decentralisation has improved service delivery.

**Decentralisation has not improved service delivery.

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Elhiraika, A. B. (2007). Fiscal decentralization and public service delivery in South Africa. ATPC Work in Progress No. 58. A paper was presented at a workshop on “Public expenditure and service delivery in Africa: Managing public expenditure to improve service quality and access” organized by ECA from 11-13 October 2006, Lusaka, Zambia.

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Akpan, E. O. (2011). Fiscal decentralisation and social outcomes in Nigeria. European Journal of Business and Management, 3(4), 1-18. http://citeseerx.ist.psu.edu/viewdoc/download?doi=10.1.1.1013.7794&rep=rep1&type=pdf

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Dick-Sagoe, C. (2017). Reducing poverty through decentralised public service provision of district assemblies in the Central Region, Ghana. A paper presented at the 7th African Union and Renaissance Conference, South Africa 2017, 31st March to 1st April, 2017, Pretoria, South Africa.

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Aramov, T. K., & Asante, F. (2009). Decentralization and local public services in Ghana: Do geography and ethnic diversity matter? IFPRI Discussion Paper 00872. IFPRI.

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Oriakhi, D. E. (2006, October 9-11). Fiscal decentralization, public expenditure and efficient service delivery: An assessment of the performance of sub-national levels of government in Nigeria. Paper presented at a workshop on public expenditure and service delivery in Africa, Lusalka Zambia.

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Kaufmann, D., Mehrez, G., & Gurgur, T. (2002). Voice or public sector management: An empirical investigation of determinants of public sector performance. The World Bank.

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Arze, F. J., & Martinez-Vazquez, J. (2003). Descentralización en Latinoamérica desde una perspectiva de países pequeños: Bolivia, El Salvador, Ecuador y Nicaragua‖. Working Paper. p. 3. Andrew Young School of Policy Studies.

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