Municipal Government Corruption and Responsiveness under Decentralization

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The Latin American Policy Process Research Initiative (LAPPRI) seeks to deepen understanding of unique policy dynamics and challenges across Latin America. LAPPRI Research Seminars feature scholars from around the world who use policy process theories and methods to generate new insights into Latin American policymaking.

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Following multiple waves of public sector decentralization, social service delivery in Latin America is now routinely co-produced by local governments and non-state providers. This raises important questions about how municipal governments respond to contemporary decentralization reforms, namely whether they choose to engage in particularistic politics or affirmative public management. This paper leverages variation in the implementation of health sector reform in Honduras to identify the consequences of decentralization on the behavior of municipal governments. Empirically, it draws on original data from a survey list experiment conducted in about 9,000 households within a matched sample of 65 decentralized and centrally-administered municipalities. The paper confirms the existence of a meaningful degree of corrupt activity at the municipal level and finds that corruption is less prevalent in decentralized municipalities relative to centrally-administered ones. This highlights an important difference in perceptions of corruption between members of the public and civil servants in the same areas. Moreover, the role of intermediary managing organizations under these reforms is critical to understanding municipal government responses to decentralization. Where non-state actors, like NGOs, are empowered under decentralization, there appear to be negative and positive responses by municipal governments: greater incidence of both corruption and actions indicative of governmental responsiveness. In contrast, where decentralization is limited to the municipal government itself, there are no reported increases in either corrupt or affirmative governmental actions relative to centrally-administered municipalities. This work shows an important tradeoff associated with empowering new governance actors at the municipal level and suggests greater attention is warranted on the multiple response strategies municipal governments are likely to deploy after decentralization reform.