The causes and process of decentralization in Latin America

This dissertation examines the causes and the process of decentralization in Latin America. Decentralization, the transfer of functions from higher levels of government to lower ones, has both political and fiscal forms. The current literature suggests ten possible explanations for both political and fiscal decentralization. Using data from 18 Latin American countries between 1985 and 1995, I tested these different explanations. Political decentralization (measured as the election rather than the appointment of governors) resulted from federalism, legitimacy, presidential power, democracy, economic conditions, level of development and ethnic diversity. Economic and social factors including structural adjustment, level of development, urbanization, and social and religious diversity, in addition to presidential decree authority, played a strong role in predicting the election of mayors. Federalism, presidential power, structural adjustment, level of development, and social and religious diversity were all predictors of the level of subnational expenditures (a measure of fiscal decentralization). As a companion to the region-wide statistical analysis conducted above, I also studied the process of decentralization in Colombia, Costa Rica, and Venezuela. These case studies allowed me to observe the broader variables studies above "in action." In each of the case studies I traced the path decentralization has taken and I considered the major actors in the process of decentralization. I found that decentralization in both Colombia and Venezuela is relatively advanced. In contrast, decentralization in Costa Rica is not nearly as advanced. Among the most important causes of these differences is the absence, in Costa Rica, of strong local actors demanding decentralization and the fact that while presidents have supported decentralization, they are weak relative to the congress. In Colombia and Venezuela, the opposite is true, in part explaining the higher levels of decentralization