Mexican municipalities: Institutional performance and accountability during the democratic transition

In the context of the recent democratic transition in Mexico, this dissertation explores the affect that new institutional arrangements have on municipal performance and accountability. The hegemonic one party regime that ruled Mexico for seventy-one years was marked by an extreme centralization of financial and political power that left local governmental functions and responsibilities ill defined and municipal government ill equipped to provide for its citizenry. ^ Decentralization emerged as a widely promoted management strategy for the public sector as a means to reverse the negative policy effects wrought by years of centralized control. In Mexico, the first concrete decentralization reform came with the passage of the Municipal Reform Act of 1983 that granted municipalities the constitutional authority to levy and collect the property tax in order to provide basic services. The Act marks a watershed in Mexico\u27s public finance system by empowering municipalities to garner their own financial resources and in the process a degree of autonomy from federal and state government, historically dominant within Mexico\u27s federalist system. ^ The purpose of this dissertation is to test the decentralization-performance thesis positing that such reforms enable governments to improve their performance. Decentralization reforms are also believed to increase opportunities for citizen participation, which is a more democratic and effective means of targeting service delivery when citizen preferences are taken into account. In the case of Mexico, the decentralization-performance thesis is further refined by testing for the impact of a variety of independent variables on government performance. Direct revenues, the decentralization measure, is found to be the most potent predictor of performance along with other contributing factors such as increased party competition, governance quality and population size. ^ The contribution of this dissertation to the decentralization literature is that instead of a single case study, a more systematic approach testing a representative sample of 300 Mexican municipalities is undertaken. Such a large sample permits a thorough testing of the theory. The results of the study are potentially generalizable to other federalist states in Latin America.