chapter  14
37 Pages

Decentralized provision of public infrastructure and corruption

WithANWAR SHAH

Introduction During the past two decades a silent revolution has swept the globe and a large number of industrial and developing countries have pursued decentralization reforms that attempt to move public decision making closer to people. The reform agenda has been pursued through varying combinations of political, administrative, and fiscal decentralization initiatives that aim to shift some traditional central government functions to intermediate or lower orders of government. These reforms have proven to be controversial. This is because decentralization is perceived as a solution to some problems such as a dysfunctional public sector with lack of voice and exit as well as a source of new problems such as capture by local elite, aggravation of macroeconomic management due to a lack of fiscal discipline, race to the bottom, and potentially greater barriers to common economic and social union through beggar-thy-neighbor policies. The impact of decentralization on corruption (defined as the abuse of public office for private gain or exercise of official powers against public interest) is an area of growing interest inviting much controversy and debate. While this debate has largely centered on the overall impact of decentralization, the focus of the current chapter is to examine various arguments in this debate in the specific case of decentralized provision of infrastructure-a yet largely unexplored area of research.