Political Obstacles to Decentralization: Evidence from Argentina and the Philippines

Abstract

Decentralization has swept across the developing world in recent years. Although the speed and scope of the shift toward more decentralized practices is striking, decentralization is neither inevitable nor irreversible. Rather, it faces enormous political obstacles and can be subject to serious setbacks. This article accounts for attempts by national politicians to thwart decentralization in two countries that recently adopted some of the most significant decentralizing changes in their respective regions: Argentina and the Philippines. Based on fieldwork in each country, it suggests that even after the political decision to decentralize has been made, national politicians may face deep‐seated incentives to preserve centralized control over fiscal policy. In Argentina, President Carlos Menem partially reversed the previous decentralization of revenue because fiscally‐independent provincial governors were a challenge to his political interests and capabilities. In the Philippines, legislators attempted to reverse and then circumvent decentralization since it threatened their status as brokers claiming personal credit for negotiating fiscal transfers from the centre. The article identifies an intermediate outcome in both countries, according to which decentralizing policies are neither entirely reversed nor implemented as initially designed.

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