ABSTRACT
This chapter examines Agency for International Development's (AID) efforts to support Peruvian decentralization in light of research on decentralization and international assistance in developing countries. It presents hypotheses that have been developed to address weaknesses in the literature, guide future research, and inform policy. AID/Peru experience suggests that the incremental capacity-building approach to decentralization emphasized in the comparative literature is fundamentally sound but incomplete. In highly centralized political systems, such as Peru's, capacity-building efforts soon face limitations that can be changed only through institutional reform at the national level. The comparative literature on decentralization maintains that assistance from international donors is often crucial to decentralization efforts: a conclusion strongly supported by this analysis of AID's experience in Peru, which provides additional rationales for donor involvement. AID's experience in Peru suggests that decentralized organizations have some comparative advantages for mobilizing and managing resources.
