Improving Access and Quality of Public Services in Latin America

This chapter summarizes the main conclusions from a Global Development Network (GDN) research project that was designed and directed by the authors. It supports them with detailed references to the three Latin American case studies published in this volume, which examined the impact of decentralization reforms on quality of education and water supply in Colombia, the effects of citizen participation in municipal budgeting on the quality of water supply in Peru and the consequences of a wide set of reforms—decentralization, teacher incentives, school autonomy—on the quality and equity of basic education in Chile and Uruguay. It also makes occasional references to some of the other 13 country or multi-country case studies of the GDN project (four in Asia, six in Africa and three in Central and Eastern Europe), covering 30 countries in total.

By the 1990s a consensus emerged that traditional bureaucratic forms of service delivery were incapable of increasing efficiency and quality. Government reformers turned instead to a variety of new organizational innovations, quasi-markets central among them. Quasi-markets raise a range of theoretical and empirical problems including agency dilemmas, information costs, shifting incentives and motivations, partial implementation, unequal access, insufficient accountability, and policing and enforcement. Introducing market mechanisms in the delivery of social services is an institution-intensive reform best accompanied by complementary policies to enhance the collection and dissemination of information, to permit personnel flexibility, and to manage the entry and exit of private providers. Nonetheless, quasi-markets often have side effects in narrowing employee incentives, aggravating social inequality, and providing additional incentives for opportunism, for which reforming governments have sought further compensatory measures. Politically, quasi-markets strengthen the short route of accountability (from consumers to providers), but can weaken the already tenuous long route (from consumers to politicians to providers). Examples and illustrations are drawn from recent reform experiences in Latin America.

The chapter explores the relationship between political competition and effective public goods delivery systems in a decentralized context to study whether the awareness generated through such a competitive environment and the existence of more political options are a part of the causal mechanisms for effective governance. In particular, we want to observe the effect of electoral competition on the incentives to build fiscal capacity and provide public goods, such as education and water, that are, to a large extent, the responsibility of the local municipalities. The research hypothesis is that political competition strengthens the decentralized municipalities through building their local fiscal capacity. In turn, the fiscal capacity is the fundamental variable that explains the differences in sector performance across local governments. Local fiscal capacity brings about better policy outcomes, as well as a better match between resources and the needs—what we call responsiveness—which simultaneously ensures greater efficiency in local spending. Using a rich panel municipal data set from 1994 to 2009, we have shown that on comparing the differences across education and the water and sewerage sectors, the power of fiscal effort appears to be the driving force behind better policy outcomes than any other resource commonly made available to the municipalities, such as national transfers or royalties.

This chapter presents a discussion of the effects of participatory budgeting (PB) on coverage and quality of public services in Peru. Using econometric techniques, the authors analyze the link from PB to coverage and water service quality indicators, showing that there is no evidence of a positive relationship. In effect, they do not find a statistically significant relation between PB and water and sanitation coverage and service quality indicators (mainly water continuity), regardless of whether they are measured in levels or in changes. These results are complemented and reinforced with a qualitative analysis based on interviews with relevant actors in the PB process and the water sector.

This research analyzes the effects of educational governance on the quality of basic education in two Latin American countries. Educational governance is operationalized using four factors: decentralization, accountability, provision and financing, and incentives. Through the use of a mixed-methods approach—using statistical techniques and 60 semi-structured interviews with different key players in the education field—the study illuminates some mechanisms through which governance influences quality. The main findings are that, contra some assertions made by policy makers, institutional arrangements matter in a non-unidirectional way. However, the research shows that educational governance is not the main explanatory variable when explaining the quality of basic education.