GOLD Report I - UCLG

287A companion principle in the internationalfinances institutions (IFI) framework ismanagement of economic systems freefrom distortions (for instance, due to interferencein local decision-making). Efficientresource allocation places a premium onexpression of demand, especially at thelocal level. The banks also recommend clarityin the division of labor among levels ofgovernment. All of the development banksespouse a similar line in connection withreform of the state.The World Bank recently cast decentralizationissues in terms of poverty alleviationand services for the poor. Building on earlierwork devoted to reform of the state(World Bank 1995), the World Bank’sWorld Development Report (WDR) of 2000dedicated a chapter to decentralization,and the 2004 report focuses on services tothe poor, arguing that politicians, providersand the poor must be brought into tighterjuxtaposition with one another in order toimprove provision of and access to basichealth-care and education. A key mechanismis “local voice.” Expression ofdemand at the local level goes hand in glovewith the idea of participatory democracy.The Bank points out that localgovernment plays a key role in certain circumstances,for instance, when local populationsare more or less homogeneous andwhen services are easy to monitor. Thesetests could prove useful in evaluating policiesof nations and roles of local governments.Thus, governments have the benefit of severalinternational sources on general principles.We shall see in the ensuingdiscussion that more practical strategies ofimplementation might be useful. Beforemoving on, note should be taken of importantareas that have been largely ignoredand should be addressed in the future. Onegap is the calculation of the cost to thenation of decentralizing in a piecemeal orhaphazard way. None of the regional chaptersspeak of the economic and social costsof burdens being transferred to localauthorities in the shape of half-baked orunder-financed decentralization schemes imposedon poorly-equipped local governments.Organization of the StateThe inchoate nature of national decentralizationpolicies is mirrored by piecemealmeasures, either explicit or tacit, to organizeadministration of the state at thelocal level. This may be partly due to thedual nature of governmental units. Governmentshave both territorial andfunctional aspects. They are put in placeto connect to citizens and they operate todeliver services. Decentralization experiencessometimes get wrapped up withthese multi-dimensional features – federal,unitary, territorial, functional – producinga system of governance which isincomplete or out of sync.Many federated systems accord to states,with their own constitutions or legal statuesor both, the powers to govern, regulate,sometimes even create, lower tier,municipal governments. For the most partfederated systems have been adopted inlarge territories, as for instance in Russia,Brazil, and India, and often, national governmentslike Argentina, USA and Indiahave left many issues for the states todecide. This can either compound or helpto solve problems, depending on the systemin question, i.e., states can help coordinate,but as the regional reports haveshown, they can also introduce confusionand interfere with national policy on bothfunctional and representational issues.Some states were more inclined to respondto a clamor for representation, as in themajority of African, some Latin Americanand some Asian countries in the 1990s.Most states in Eurasia have created or extendedlocal government units to accommodateregional or ethnic groups. Othercountries (New Zealand, Germany) focuson the functional side, aiming to improvethe extension or efficiency of services. Thissometimes means a diminution of numbers