Studies in Fiscal Federalism and State–local Finance series
Edited by Ehtisham Ahmad and Giorgio Brosio
Chapter 3: Governance Dilemmas in Service Delivery
Pranab Bardhan In discussing the governance issues on the question of service delivery in developing countries one inevitably faces several trade-offs, which make the often-recommended exercises in decentralized governance rather ambiguous as a project and the outcomes dependent on how the tradeoffs play out in the different socio-economic context of different areas. Policymakers have to be particularly sensitive to these issues. In this chapter I shall focus on delineating the nature of some of these governance dilemmas, looking at them mostly at the analytical level, with occasional examples from some empirical work: ● ● ● ● autonomy versus accountability capture versus exit by local elite stake in delivery of public versus private goods local elections versus local accountability. 1 AUTONOMY VERSUS ACCOUNTABILITY A central dilemma of governance institutions in a poor country is a trade-off between autonomy (or commitment to an autonomous agency) and accountability. On the one hand, one needs institutions of credible commitment to insulate the system from marauding special interest groups and partisan or faction politics. It is easy to cite many instances of short-sighted political interventions in economic decisions in developing countries. In particular, long-term investment projects or economic policy decisions that have consequences over a prolonged period will not get off the ground without such commitment. (A major example is the lack of political commitment to implement adequate user charges in some developing countries, hurting long-term investment, domestic or foreign, in projects for supply of drinking water or electricity.) Commitment is also difficult when the tenure of top administrative...
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