Strategic Inefficient Decentralization: Local and Regional Devolution as Substitutes

Most contemporary decentralization has occurred at the local (district) rather than regional (provincial) level. Why? We advance a theory highlighting the political incentives of central authorities to bypass the regional tier of government in favor of decentralizing to smaller, more fragmented units. Regional decentralization can better take advantage of economies of scale and scope in public service provision, but it also enables regional political opposition to scale more effectively. Central authorities may therefore have an incentive to forgo the welfare benefits of regional decentralization in favor of the imperfect substitute of local decentralization, which provides some of the same benefits at less risk. Drawing on cases from Africa and Latin America, we discuss when and how strategic local decentralization can be an effective strategy to maintain political control in divided societies and when it is likely to be ineffective.