Politics, Intergovernmental Relations, and Public Finance Reform in Fragile States: The Case of Afghanistan

Thesis (Ph.D.)--University of Washington, 2019Few works within the extant literature of public finance management and intergovernmental transfer examine how the public funds are managed and distributed to provide effective and efficient public goods and services in conflict affected and fragile states. This dissertation attempts to do so by explaining the key factors for the allocation of discretionary development budget under a recent planning and budgeting reform—Provincial Development Planning Guideline (PDPG) and Provincial Budgeting Policy (PBP)—during the last four fiscal years in Afghanistan. This dissertation shows that the implementation of the formal rules—PDPG and PBP—administrative capacity, and socio-economic conditions do not determine the allocation of discretionary development budget in Afghanistan. Instead, there is an informal mechanism that underlies the allocation of discretionary development budget. This informal mechanism elaborates the specific political considerations of the Afghan central government and the lobbying strategies of the local actors regarding the allocation of discretionary development budget. Accordingly, the local administrations, with stronger political affiliation—specifically, political relationship, political importance, and strong position vis-Ã -vis the central government—and more active lobbying strategies tend to achieve higher amounts of budget. This dissertation holds several implications for intergovernmental transfer studies in the conflict affected and fragile states. The stubborn reliance on centralization and lack of flexibility to adapt to the current conditions significantly affect the path towards reforming dysfunctional planning and budgeting that directly influence the efficiency and equity of the intergovernmental transfer mechanism. As such, these reforms end up being window dressing only. The functionality of the planning and budgeting processes depend on improving the role of local actors, enhancing the coordination among the local and central actors, and reducing the political influence over the allocation of intergovernmental transfers. The methodological approach and the informal mechanism, developed in this dissertation, may be applicable for analyzing similar conflict affected and fragile contexts. The key characteristics consist of (1) systematic measurement of the local governments performance under specific policies regarding allocation of budget; (2) a focus on similar or diverse set of explanations for political considerations of the central government actors and lobbying strategies of the local actors; (3) a mix of quantitative and qualitative methods; and (4) interpretation of the findings in the context of intergovernmental political economy relations