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What is decentralization, what is its underpinning rationale, and why might it matter for least-developed countries? This chapter has two goals: (i) to distill the enormous academic and policy literature on international experiences of decentralization into clear empirical conclusions; and (ii) to derive policy lessons relevant to least-developed countries. It first reviews the different definitions of decentralization employed in the literature before proposing one best suited to countries with the lowest levels of development. It reviews the most important theoretical arguments in favour of decentralization in low-income nations with low levels of human development that are often ethnically and religiously diverse. It then reviews empirical evidence on decentralization's ability to overcome some of the key obstacles holding back such countries' development, before concluding with key questions still to be answered, for which additional research is required.

For fifty years, Bolivia's political party system was a surprisingly robust component of an otherwise fragile democracy, withstanding coups, hyperinflation, guerrilla insurgencies, and economic chaos. Why did it suddenly collapse around 2002? This article offers a theoretical lens combining cleavage theory with Schattschneider's concept of competitive dimensions for an empirical analysis of the structural and ideological characteristics of Bolivia's party system from 1952 to 2010. Politics shifted from a conventional left-right axis of competition, unsuited to Bolivian society, to an ethnic/rural–cosmopolitan/urban axis closely aligned with its major social cleavage. That shift fatally undermined elite parties and facilitated the rise of structurally and ideologically distinct organizations, as well as a new indigenous political class, that transformed the country's politics. Decentralization and political liberalization were the triggers that politicized Bolivia's latent cleavage, sparking revolution from below. The article suggests a folk theorem of identitarian cleavage and outlines a mechanism linking deep social cleavage to sudden political change.

AbstractI examine decentralization through the lens of the local dynamics it unleashed in Bangladesh. I argue that the national effects of decentralization are largely the sum of its local-level effects. Hence, to understand decentralization, we must first understand how local government works. This implies analysing not only decentralization, but also democracy, from the bottom up. I present a model of local government responsiveness as the product of political openness and substantive competition. The quality of politics, in turn, emerges endogenously as a joint product of the lobbying and political engagement of local firms/interests, and the organizational density and ability of civil society. I then test these ideas using qualitative data from Bangladesh. The evidence shows that civic organizations worked with non-governmental organizations and local governments to effect transformative change from the grass roots upwards—not just to public budgets and outputs, but to the underlying behaviours and ideas that underpin social development. In the aggregate, these effects were powerful. The result, key development indicators show, is Bangladesh leap-frogging past much wealthier India between 1990 and 2015.

The rise of outsider, populist, and nativist politicians across the West is no coincidence, nor a "sign of the times". It is symptomatic of political party systems disintegrating from the bottom up, as structural changes in the economy and society unmoor them from the major social cleavages that defined political contestation throughout the twentieth century. Predicting how the process will unfold is difficult. But we can open an analytical window into the future by examining the experience of Bolivia, where politics was much less institutionalized than the West, allowing disintegration and realignment to happen much earlier and faster. A first lesson is that left/worker vs. right/capital politics is probably doomed in societies where industrial workers as a self-conscious group have dwindled to a small fraction of the workforce. What will replace it? The current front-runner is the politics of identity, anchored in social cleavages of ethnicity, religion, language, and place. This is a danger not just for affected societies, but for democracy as an ideal, as identity politics revolves much more than class politics around exclusionary categories and zero-sum games. In the UK and Europe, realignment would likely be triggered by Brexit, and the (partial) collapse of the Eurozone. Lastly, while Evo Morales is an experienced politician with deep roots in the social organizations that now define Bolivian politics, Donald Trump is a self-created, top-down, ultimately directionless triumph of social media. Morales transformed Bolivia. Trump will likely destroy much but build little.

For 50 years Bolivia's political party system was a surprisingly robust component of an otherwise fragile democracy. How did a gas pipeline dispute spark a revolution that overturned the political system, destroyed existing political parties, and re-cast the relationship between state and society? I examine how the arrival of local government shifted the nation's politics from a typical 20th century, left-right axis of competition deeply unsuited to a society like Bolivia, to an ethnic and cultural axis more closely aligned with its major social cleavage. This shift made elite parties redundant, and transformed the country's politics by facilitating the rise of structurally distinct political organizations, and a new indigenous political class. Decentralization was the trigger - not the cause - that made Bolivia's latent cleavage political, sparking revolution from below. I suggest a folk theorem of identitarian cleavage, and outline a mechanism linking deep social cleavage to sudden political change.

Mohammed, North, and Ashton find that decentralization in Fiji shifted health-sector workloads from tertiary hospitals to peripheral health centres, but with little transfer of administrative authority from the centre. Decision-making in five functional areas analysed remains highly centralized. They surmise that the benefits of decentralization in terms of services and outcomes will be limited. This paper invokes Faguet's (2012) model of local government responsiveness and accountability to explain why this is so – not only for Fiji, but in any country that decentralizes workloads but not the decision space of local governments. A competitive dynamic between economic and civic actors that interact to generate an open, competitive politics, which in turn produces accountable, responsive government can only occur where real power and resources have been devolved to local governments. Where local decision space is lacking, by contrast, decentralization is bound to fail because it has not really happened in the first place.

I examine decentralization through the lens of the local dynamics it unleashed in the much-noted case of Bolivia and the less-noted case of Bangladesh. I argue that the national effects of decentralization are largely the sum of its local-level effects. Hence to understand decentralization we must first understand how local government works. This implies analysing not only decentralization, but also democracy, from the bottom up. Beginning with Bolivia, I explore the deep economic and institutional determinants of government quality in two extremes of municipal performance. From this I derive a model of local government responsiveness as the product of political openness and substantive competition. The quality of politics, in turn, emerges endogenously as a joint product of the lobbying and political engagement of local firms/interests, and the organizational density and ability of civil society. The model explains the micro-foundations of good vs. bad local government performance, and hence of Bolivia's overall decentralization success. I then test these ideas using qualitative data from Bangladesh. The evidence shows that civic organizations worked with NGOs and local governments to effect transformative change from the grass-roots upwards - not just to public budgets and outputs, but to the underlying behaviours and ideas that underpin social development. In the aggregate, these effects were powerful. Key development indicators show Bangladesh leap-frogging past much wealthier India between 1990 and 2015. The combination of tests shows that the model generalizes to very different institutional, cultural, and economic contexts.

Bolivia is one of the most radical and sincere of decentralization reformers. It recently implemented new reforms granting autonomy to departmental, regional, municipal, and indigenous and rural governments. What effects might these have on public investment patterns, government responsiveness, intergovernmental fiscal relations, the sustainability of public finances, and political accountability? I examine autonomies in light of both fiscal federalism theory and evidence on the effects of Bolivia's 1994 decentralization. By submitting new reforms to the dual rigors of theory and evidence, we can arrive at contingent projections of their likely effects. I identify adjustments to improve efficiency and sustainability in intergovernmental relations, and reduce horizontal imbalances. In sum, the reform has the potential to improve citizen participation, make government more accountable, and deepen Bolivian democracy. Adapted from the source document.