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Discussion and Conclusions

This chapter is an attempt to study the interaction between a range of governance structures and variables with policy outcomes in two sectors: education and water. We were particularly interested in the effect of political competition on the provision of public goods in a decentralized context. Indeed, during the last two decades, Colombia moved from being an extremely centralized political and fiscal system to a highly decentralized environment where local actors have the ultimate responsibility of executing policy. From the theory behind the decentralization reforms, one should have expected that the closeness between the elected officials and citizens would have brought virtuous cycles of representation in which public goods provision could have flourished in a very natural way around the territory. However, results have not been uniform around the country, and even with abundant resources, some municipalities have been unable to achieve decent socio-economic indicators.

What is the underlying reason for these differences across the Colombian municipalities? Our argument has two parts. The first part suggests that the local authorities are faced with the dilemma of how to get things done. They can either rely on their regional and national networks to search for resources in exchange for political support, or they can build their own political support by raising taxes, thereby increasing their political autonomy and capacity to deliver. National politicians too are faced with a dilemma. When they get their votes across different municipalities and on more diverse issues, they can compete over votes in two forms: one via providing rents, and the other via national policy programs. Whenever they control a territory big enough to get elected, they will choose to provide rents. This in turn is a tempting option for the local politician, who knows he or she will assume a cost if he or she decides to raise local taxes. Thus, in the absence of competition, the traditional political networks will keep transferring the resources to the municipalities, and the mayor will continue delivering to his political network his political support and that of his voters. If there is competition at the national level, and there is no obvious relation to the politicians at the municipal level (House members), the mayor would feel more pressured to increase his own resources in order to get things done and fulfill his prospective ambition. Thus, the greater the diversity and political competition at the national level, the greater are the incentives for the local political actors to increase their fiscal capacity. Equally, this virtuous use of the resources that are directly assumed by the local population may result in greater accountability, as the population is empowered to demand better public provision of these goods.

In line with this first part of the argument, we find that national political competition at the local level matters insofar as it provides mayors with the right incentives to build their own fiscal capacity. Consequently, it is not the local political context that matters; what matters is the type of political networks within which local authorities perform to increase their capacity. We operationalize this capacity and the fiscal effort, and show that greater competition for national office at the local level, both among parties and candidates at the local level, both for parties and for candidates, matters when it comes to mayors’ decision to update their local cadaster—the single most important decision in terms of increasing their own resources.

We also find that the resources resulting from taxes are more gainfully employed toward better provision of services as well as improved quality of water and education in Colombia, compared to resources provided by the nationalgovernment in the form of transfers and royalties with specified uses. Although we could not measure the impact of local politics in the provision of these services through the variables included in the model measuring the politics at the local level, the differences across these diverse funding sources in terms of efficiency suggest that there is more virtuous use of the resources that are directly assumed by the local population. This result holds true for both the sectors, which have very different structures. For royalties, results even show a negative correlation with the quality of education.

Thus, further research is required to understand how the government can prevent the municipalities from falling on a more client-based path, and instead opt for one on which they can build their own capacity to respond to the needs of the population. It is also important to continue searching for the links between national and local political competitions, as from our results it would seem clear that holding elections at the local level does not automatically lead to better policy outcomes.

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