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The incoherence of institutional reform: decentralization as a structural solution to immediate political needs

Monday June 8, 2020, at 13:30
Room 24.120 (First floor). Mercè Rodoreda 24 building
Research seminar

Institutional reforms are structural changes in the rules and norms of authority, with long-term, unpredictable effects on government, politics and society. But leaders undertake them to solve unrelated, discrete, short-term political problems. Understanding the latter is key to understanding the characteristics of real reforms, and hence their fate. We introduce the concept of instrumental incoherence, and use it to construct a theory of decentralization where reform is motivated by orthogonal objectives. We show that reformers’ incentives map onto the specifics of reform design via their side effects, not their main effects, which in turn lead to the medium and long-term consequences eventually realized. We characterize downwardly accountable decentralization, which ties the hands of the center to empower local voters, vs. upwardly-accountable decentralization, which ties the hands of local government to empower the center. We use these ideas to explain highly divergent outcomes in two extreme cases: Bolivia and Pakistan, using detailed, original evidence. Our analysis likely extends to a broader class of reforms where the incentives of agents pursuing a change, and the effects of that change, are highly asymmetric in time and dimension. It also implies a serial reform dynamic corrosive to institutions and to voters’ faith in politics.

Dr. Jean-Paul Faguet is Professor of the Political Economy of Development at the London School of Economics, and Co-Programme Director of the MSc in Development Management. He is also Chair of the Decentralization Task Force at Columbia University’s Initiative for Policy Dialogue. He works at the frontier between economics and political science, using quantitative and qualitative methods to investigate the institutions and organizational forms that underpin development transformations. He has published in the economics, political science, and development literatures, including Is Decentralization Good for Development? Perspectives from Academics and Policymakers (Oxford, 2015), and Governance from Below: Decentralization and Popular Democracy in Bolivia (Michigan), which won the W.J.M. Mackenzie Prize for best political science book of 2012.

Professor Faguet’s current work focuses on historical institutions, inequality and long-term, divergent development outcomes in Colombia and Latin America. More broadly, his fields include political economy, comparative politics, institutional economics, economic development and economic history. Before coming to the LSE he worked for the World Bank in La Paz, Bolivia on health, education, early childhood development and the environment. He trained in both politics and economics at Princeton, Harvard and the LSE, where his dissertation won the William Robson Memorial Prize.