Decentralization in Latin America: Learning Through Experience

This report focuses on the critical choices for those nations undergoing decentralization in Latin America and the Caribbean. During the last ten years, the region has gone through a vast democratic transition, carrying along the decentralization initiatives, thereby expanding power-sharing arrangements to local governments, with a local spending increase of twenty to forty percent of public sector revenues. These changes pose an obvious challenge for central leaders, as well as for the civil society and technical assistance organizations. The report provides perspective and insight into issues of public choice raised by decentralization, which can strengthen democratic participation in government and improve the quality and coverage of local public services. Three main challenges for decentralization to succeed are analyzed: 1) establishing national fiscal frameworks; 2) placing governments closer to the people; and, 3) improving municipal service delivery. These challenges present an efficient arrangement for service delivery and financing, as well as a support for democracy.