Decentralization and Subnational Politics in Latin America (Cambridge Studies in Comparati)

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Decentralization and Subnational Politics in Latin America Is it always true that decentralization reforms put more power in the hands of governors and mayors? In postdevelopmental Latin America, the surprising answer to this question is no. In fact, a variety of outcomes are possible, depending largely on who initiates the reforms, how they are initiated, and in what order they are introduced. Tulia G. Falleti draws on extensive fieldwork, in-depth interviews, archival records, and quantitative data to explain the trajectories of decentralization processes and their markedly different outcomes in Argentina, Brazil, Colombia, and Mexico. In her analysis, she develops a sequential theory and method that are successful in explaining this counterintuitive result. Her research contributes to the literature on path dependence and institutional evolution and will be of interest to scholars of decentralization, federalism, subnational politics, intergovernmental relations, and Latin American politics. Tulia G. Falleti is an Assistant Professor of Political Science at the University of Pennsylvania. Her work on decentralization, federalism, and research methodology has appeared in the American Political Science Review, Comparative Political Studies, Publius, Qualitative Sociology, Critique Internationale (France), Desarrollo Económico (Argentina), Política y Gobierno (Mexico), and Sociologias (Brazil), as well as in edited volumes published in the United States, Argentina, and Brazil. She has received awards and fellowships from the Social Science Research Council; the United States Institute of Peace; the Killam Trusts; the Ford Foundation in conjunction with the Latin American Studies Association; and the Ministry of Science, Technology, and Productive Innovation of Argentina, among other institutions. In 2006, she earned the Gregory Luebbert Award from the American Political Science Association for the best article in comparative politics for her article “A Sequential Theory of Decentralization: Latin American Cases in Comparative Perspective.”

Decentralization and Subnational Politics in Latin America

TULIA G. FALLETI University of Pennsylvania

CAMBRIDGE UNIVERSITY PRESS

Cambridge, New York, Melbourne, Madrid, Cape Town, Singapore, São Paulo, Delhi, Dubai, Tokyo Cambridge University Press The Edinburgh Building, Cambridge CB2 8RU, UK Published in the United States of America by Cambridge University Press, New York www.cambridge.org Information on this title: www.cambridge.org/9780521516792 © Tulia G. Falleti 2010 This publication is in copyright. Subject to statutory exception and to the provision of relevant collective licensing agreements, no reproduction of any part may take place without the written permission of Cambridge University Press. First published in print format 2010 ISBN-13

978-0-511-77612-0

eBook (NetLibrary)

ISBN-13

978-0-521-51679-2

Hardback

ISBN-13

978-0-521-73635-0

Paperback

Cambridge University Press has no responsibility for the persistence or accuracy of urls for external or third-party internet websites referred to in this publication, and does not guarantee that any content on such websites is, or will remain, accurate or appropriate.

To Richard, Tomás, and Emma

Contents

List of Tables List of Figures Acknowledgments List of Abbreviations 1

Decentralization and the Revival of Subnational Politics Advocates and Critics of Decentralization and Their Shared Assumption Postdevelopmental Decentralization in Latin America Rethinking the Causes and Consequences of Decentralization On the Causes of Decentralization On the Consequences of Decentralization A Sequential Theory of Decentralization: The Main Argument in Brief Methodological Considerations The Comparative Sequential Method Context and Periodization: The Decentralization Policies Studied Selection of Country Cases Book Overview

2

A Sequential Theory of Decentralization and the Intergovernmental Balance of Power Types of Decentralization and Recipients Bargaining Actors: Partisan and Territorial Interests Territorial Preferences of National Executives, Governors, and Mayors Decentralizing Coalitions and Territorial Interests

page xi xiii xv xxi 1 4 6 11 11 14 15 20 20 24 27 29

31 33 40 44 47

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Contents Sequences of Decentralization: Layers, Policy-Effect Mechanisms, and the Main Argument Developed The Domain of the Sequential Theory of Decentralization The Intergovernmental Balance of Power A Conceptual Definition An Operational Definition The Evolution of the Intergovernmental Balance of Power in Argentina, Brazil, Colombia, and Mexico Conclusion

3

Argentina: The National Dominance Path to Decentralization Origins, Sequence, and Coalitions of Postdevelopmental Decentralization in Argentina The First Layer: Administrative Decentralization Decentralization of Primary Education Institutional Evolution of the Primary Education System Policy Effects of Unfunded Administrative Decentralization Decentralization of Secondary Education Subnational Territorial Interests in a Ruling Coalition Incrementalism in the Expansion of Responsibilities without Revenues Institutional Evolution of the Secondary Education System The Second Layer: Fiscal Decentralization Reproduction of National Executive Power: Timing and Contents of Fiscal Decentralization Reproduction of National Executive Power: Recentralization of Revenues The Third Layer: Political Decentralization A Failed Attempt at Political Decentralization The Origins of the 1994 Constitutional Reform The Constitutional Convention: Territorial versus Partisan Interests Conclusion

4

Colombia: The Subnational Dominance Path to Decentralization in a Unitary Country Origins, Sequence, and Coalitions of Postdevelopmental Decentralization in Colombia The First Layer: Political Decentralization The Popular Election of Mayors: Competing Explanations of Its Causes The Decentralizing Coalition: The Importance of the Civic Strikes

53 59 60 60 61 64 74

76 78 81 81 85 88 89 91 95 98 101 102 105 109 111 112 114 119

122 124 128 128 130

Contents

5

Policy Ratchet Effect: The Creation of a Mayor’s Association Incrementalism: The Popular Election of Governors The Second Layer: Fiscal Decentralization The Third Layer: Administrative Decentralization Conclusion

133 135 139 143 146

Brazil: The Subnational Dominance Path to Decentralization in a Federal Country

150

Origins, Sequence, and Coalitions of Postdevelopmental Decentralization in Brazil The First Layer: Political Decentralization Return to Popular Election of Governors: Causes, Coalition, and Effects The Second Layer: Fiscal Decentralization Increasing the Subnational Share of Revenues The Constitutional Reform of 1988: Deepening Political and Fiscal Decentralization The Third Layer: Administrative Decentralization The Timing of Health and Educational Reforms Decentralization of Health Care A Subnational Coalition for Administrative Decentralization The Implementation of the SUS and the Decentralization of Health Care Conclusion

6

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Mexico: The Subnational Response Path to Decentralization Origins, Sequence, and Coalitions of Postdevelopmental Decentralization in Mexico Ongoing Reforms in the First Layer: Administrative Deconcentration and Decentralization Decentralization of Education Antecedents and Motivations of the National Executive Phase 1: Deconcentration in the Context of the Developmental State Phase 2: Early Decentralization Reforms and Setbacks Phase 3: Decentralization of Education Takes Hold Why Funded Administrative Decentralization? Comparing the Decentralization of Education in Mexico and Argentina The Second Layer: Political Decentralization Strengthening Municipal Governments Political Reforms in Mexico City From Government to Society: Policy Ratchet Effects of Political Decentralization

151 157 157 164 164 169 171 171 175 177 180 185

188 190 193 194 195 197 199 201 205 211 212 217 218

x

Contents The Third Layer: Fiscal Decentralization Prior Evolution of Intergovernmental Fiscal Relations Fiscal Decentralization Reforms of 1995 and 1997 Reinforcing Effects of the First Cycle of Postdevelopmental Decentralization on Intergovernmental Relations Conclusion

7

Conclusion: Decentralization, Temporal Analysis, and Territorial Politics Sequences of Decentralization, Policy Effects, and Their Impact on the Intergovernmental Balance of Power Territorial Interests and the Origins of Decentralization Processes Decentralization, Subnational Politics, and Institutional Change Looking Back and Ahead

Bibliography Appendix: List of In-Depth Interviews Index

220 221 222 228 229

231 232 239 244 245

249 271 279

List of Tables

1.1 First Cycle of Postdevelopmental Decentralization Policies in Argentina, Brazil, Colombia, and Mexico, 1978–1997 1.2 Types of Decentralization Sequences and Expected Degree of Change in the Intergovernmental Balance of Power 1.3 Criteria for the Selection of Country Cases 2.1 Types of Decentralization and Expected Impact on the Autonomy of Governors and Mayors 2.2 Bargaining Actors of Decentralization by Territorial and Partisan Interests 2.3 Induced Preferences of Bargaining Actors 2.4 Territorial Interests: Hypotheses Regarding the Causes of Decentralization 2.5 Sequences of Decentralization: Hypotheses Regarding the Consequences of Decentralization 2.6 Evolution of Intergovernmental Balance of Power in Argentina, Brazil, Colombia, and Mexico, 1978–1999 3.1 First Cycle of Postdevelopmental Decentralization in Argentina, 1978–1994 3.2 Bilateral Agreements for the Transfer of Secondary Schools in Argentina, 1992–1993 3.3 Effects of the 1992 Fiscal Pact on Provincial Budgets in Argentina, 1993–1999 4.1 First Cycle of Postdevelopmental Decentralization in Colombia, 1986–1994 5.1 First Cycle of Postdevelopmental Decentralization in Brazil, 1980–1988

page 9

19 28 36 43 45 50 56 65 82 96 106 127 155 xi

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List of Tables

6.1 First Cycle of Postdevelopmental Decentralization in Mexico, 1983–1997 6.2 Revenues of States and Municipalities in Mexico, 1998 and 1999 (in millions of 1999 pesos) 7.1 Decentralization Coalitions, Types of Decentralization Policies, and Predominant Territorial Interests in Argentina, Colombia, Brazil, and Mexico, 1978–1997

192 227

240

List of Figures

2.1 Decentralization Coalitions According to Territorial and Partisan Interests 3.1 Decentralization Coalitions, Policies, and Timing in Argentina, 1978–1994 3.2 Evolution of Primary Schools by Level of Government in Argentina, 1810–1994 3.3 Primary Schools by Level of Government in Argentina, 1970 3.4 National Income, Expenditures, and Revenue Sharing in Argentina, 1987–1991 3.5 Evolution of Secondary Schools by Level of Government in Argentina, 1915–1994 3.6 Share of National and Provincial Resources in Provincial Budgets in Argentina, 1991–1999 4.1 Decentralization Coalitions, Policies, and Timing in Colombia, 1986–1994 5.1 Decentralization Coalitions, Policies, and Timing in Brazil, 1980–1988 5.2 Total Revenues by Level of Government in Brazil, 1960–2004 5.3 Evolution of Primary Schools by Level of Government in Brazil, 1950–2000 5.4 Evolution of Secondary Schools by Level of Government in Brazil, 1980–2000 5.5 Federal Expenditures in Health in Brazil, 1994–2005 5.6 Municipal Expenditures in Health and Sanitation as Percentage of Total Subnational Expenditures in Health and Sanitation in Brazil, 1990–2005

page 49 80 86 88 94 99 109 126 154 165 173 174 183

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List of Figures

6.1 Decentralization Coalitions, Policies, and Timing in Mexico, 1983–1997 6.2 Stages and Policy Effects of the Decentralization of Education in Mexico, 1978–1992 6.3 Evolution of Primary Schools by Level of Government in Mexico, 1971–1999 6.4 Students Enrolled in Primary State Schools in Mexico, 1991 6.5 Evolution of Secondary Schools by Level of Government in Mexico, 1971–1999 6.6 National Education Expenditures in Mexico, 1975–2000 6.7 Opposition Victories in Municipal Elections in Mexico, 1980–1998 7.1 Sequence and Policy Effects of Postdevelopmental Decentralization in Argentina, 1978–1994 7.2 Sequence and Policy Effects of Postdevelopmental Decentralization in Colombia, 1986–1994 7.3 Sequence and Policy Effects of Postdevelopmental Decentralization in Brazil, 1980–1988 7.4 Sequence and Policy Effects of Postdevelopmental Decentralization in Mexico, 1983–1997

193 204 207 208 209 210 215 233 235 236 237

Acknowledgments

This book has been a long time in the making. It has been ten years since, in an interview with economist Fabio Sánchez at the National Department of Planning in Bogotá, Colombia, I became intrigued by the process of decentralization of government that Colombia was undergoing. In previous research with my undergraduate advisor Waldo Ansaldi at the University of Buenos Aires, I had studied the relationships between national centers and peripheral regions in the contexts of nation-state formation and consolidation. But it was not until the summer of 1998, after two years of graduate school and while doing pre-dissertation research in Colombia, that I realized that my interests in intergovernmental relations and subnational politics could be studied through the lens of the important transformations in the distribution of authority, resources, and responsibilities among levels of governments that were taking place in Colombia and, as I soon realized, in many other countries. I am most thankful to Waldo Ansaldi for introducing me to the intricacies of regional politics and historical sociological research, and to Fabio Sánchez for that enlightening initial conversation about decentralization reforms. This book stems from my doctoral dissertation, which I completed at Northwestern University in 2003. At Northwestern, in the arduous process of narrowing down the research topic, specifying the tractable research questions, operationalizing the concepts, and shaping the main arguments, I had the privilege of being advised by three outstanding professors: Edward Gibson, Kathleen Thelen, and Ben Ross Schneider. As my main graduate advisor and chair of my dissertation committee, Edward Gibson guided me through the process of researching and writing xv

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a dissertation. He read several drafts of my dissertation and later book chapters and provided excellent comments and probing suggestions for improvement. He pushed me to think about the political and empirical relevance of my research questions (the “big picture”) while at the same time stressing the importance of elegant and concise arguments. Ed’s passion for Argentine politics was both encouraging and refreshing – and it made it easier to be away from home. Ed also introduced me to Mexican politics and was instrumental in facilitating my fieldwork in Mexico City. But much more than all of that, throughout the twelve years I have known him, Edward Gibson has been my mentor. He introduced me to the profession of political science and to American academia. If today, as an Assistant Professor at the University of Pennsylvania, I am part of the American political science academic community, it is largely due to Ed’s guidance and mentoring, both at Northwestern and in the years since then. I am also thankful to Ed’s family for hosting me in Mexico City and on many occasions at their home in Wilmette. Kathleen Thelen and Ben R. Schneider provided excellent guidance throughout the development of my research project and much support in the early stages of my professional career. They read and commented on several drafts of the dissertation and later on book chapters. While I was in graduate school, Ben recommended, on more than one occasion, that I introduce the case of Brazil into my dissertation. At the time, it seemed such a daunting task to understand the complexity of Brazil’s subnational politics that I simply could not do it if I was going to analyze other country cases as well. When revising the dissertation and writing this book, I appreciated how correct Ben’s recommendation was and I did finally embark on the daunting task of incorporating the Brazilian case into the comparative research design. Thus, even after I graduated from Northwestern, Ben’s research and contacts in Brazil were most helpful. Kathleen Thelen’s research on historical institutionalism and institutional change greatly shaped the main argument advanced in this book. Early on in the definition of the research project, she introduced me to the work of Paul Pierson and his ideas on temporal effects and sequencing, which became a central piece for the solution of my research puzzle. Thanks to Kathleen, I also met Paul Pierson and had the pleasure of auditing his and Theda Skocpol’s course on “History, Institutions and Policies” at Harvard University. I took this course as I was writing the first drafts of the theory contained in Chapter 2, and I cannot stress enough how influential their course and ideas were on my own thinking about temporal effects, policy processes, and causal mechanisms.

Acknowledgments

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Doing extensive fieldwork in four countries (one of them my own native country of Argentina) has been fascinating. Undoubtedly, it has been the most enjoyable and rewarding portion of researching and writing this book. Nonetheless, being abroad, especially in Brazil, Mexico, and Colombia, away from loved persons and known places, was also challenging. In each country, I had the good fortune of being hosted by outstanding colleagues and institutions, whose help was instrumental in getting my research done. In Brazil, Celina Souza was essential to the successful completion of my research. She shared her knowledge of Brazil’s federalism, public policy, and intergovernmental institutions; provided me with contacts in academia and government; and hosted me in Salvador, Bahia. Argelina Figueiredo taught me a great deal about Brazilian politics, facilitated contacts, and generously shared her office at the Instituto Universitário de Pesquisas do Rio de Janeiro (IUPERJ). Marta Arretche taught me about policy reforms in Brazil and introduced me to the Centro Brasileiro de Análise e Planejamento (CEBRAP) and to the Political Science Department at the University of São Paulo. In Mexico, I benefited from institutional affiliation with the Centro de Investigación y Docencia Económicas (CIDE), where Professors Blanca Heredia, Joy Langston, Enrique Cabrero Mendoza, Yemile Mizrahi, Gabriel Negretto, and Allison Rowland provided excellent comments over afternoon lunches and coffees. Yemile Mizrahi also generously shared the transcripts of her interviews with PAN officials. In Colombia, Fabio Sánchez helped me establish contacts with key informants and, without knowing it himself, was extremely influential in my selection of a research topic. In my home country of Argentina, I benefited from institutional affiliations with the Fundación Gobierno y Sociedad and the Political Science Department at the Universidad Torcuato Di Tella. Many friends and colleagues have welcomed me every time I have been back in Argentina, but particularly noteworthy to this book project were my ongoing conversations with Waldo Ansaldi, Silvia Senen González, Dora Orlansky, Catalina Smulovitz, Mariano Tommasi, and Enrique Zuleta Pucceiro. Maria del Carmen Feijoo not only granted me several hours of interviews but also a copy of all the archival materials (debates and proposals) of the 1994 Constitutional Convention. I am also extremely grateful to all those people who in Argentina, Brazil, Colombia, and Mexico generously agreed to give me an interview and shared their experience and knowledge with me. This book could not have been written had those people not agreed to answer my questions. Their names are listed in the Appendix.

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In the United States and Canada, a host of friends, colleagues, and students helped to improve this book. For their research assistance, I am thankful to the University of Pennsylvania undergraduate students Agustín Diniz, Tatiana Gumucio, Maria José Lamadrid, and Corinne Smith. Carly Weinreb skillfully and in a timely manner edited the whole manuscript (twice!), and Dan McIntosh helped with the last edits. For their comments on different parts of this book, I am indebted to Isabella Alcañiz, Dawn Brancati, Daniel Brinks, Katrina Burgess, Ernesto Calvo, Maxwell Cameron, Maria Escobar-Lemmon, John Gerring, Lucas González, Merilee Grindle, Patrick Heller, Anil Hira, Wendy Hunter, José Itzigsohn, Alan Jacobs, Georgia Kernell, Vidal Llerenas, James Mahoney, Alfred Montero, Ato Kwamena Onoma, Marco Palacios, Paul Pierson, Dietrich Rueschemeyer, Theda Skocpol, Benjamin Smith, Richard Snyder, Celina Souza, and Deborah Yashar. David Samuels and Matthew S. Shugart shared their legislative data on Brazil and Colombia, respectively, which I use in Table 2.6; and Amir Kahir generously shared his intergovernmental fiscal data on Brazil, which I use in Figure 5.2. Two anonymous reviewers for Cambridge University Press provided extensive and helpful comments, which guided the final revisions of the book manuscript, and a third reader presented challenging observations that led to further adjustments in Chapters 1 and 2. Margaret Levi’s longstanding interest in the project was extremely helpful and appreciated. I am also grateful to Lew Bateman, who promptly turned the manuscript into this book and graciously accommodated my various requests. In this process I had the good fortune of working with Elise M. Oranges as my copy editor. The Watson Institute for International Studies and the Center for Latin American Studies at Brown University, the Helen Kellogg Institute for International Studies at the University of Notre Dame, and the Liu Centre for Studies of Global Issues at the University of British Columbia, with which I was institutionally affiliated while working on this book, were stimulating environments to work and discuss my research. Since my arrival at the Political Science Department of the University of Pennsylvania, I have had the good fortune of having two excellent departmental chairs, Rogers Smith and Avery Goldstein, who have protected my time and supported my teaching and research endeavors. Besides them, a wonderful group of colleagues, among them Jennifer Amyx, Thomas Callaghy, Ann Farnsworth-Alvear, Marie Gottschalk, Nancy Hirschmann, Richard Johnston, Donald Kettl, Ian Lustick, Julia Lynch, Edward Mansfield, Gerald McDermott, Brendan O’Leary, Rudy

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Sil, Mary Summers, Henry Teune, and Robert Vitalis, provided – in their varied ways – much support and many insights. A group of institutions supported this project with generous financial support. At Northwestern University, financial support from the Graduate School, the Center for Comparative and International Studies, and the Alumnae Association helped me to get a head start on the fieldwork in Argentina, Mexico, and Colombia. Fieldwork in those three countries was then extended with an International Dissertation Field Research Fellowship from the Social Science Research Council. Field research in Brazil was supported with a fellowship from the Christopher H. Browne Center for International Politics at the University of Pennsylvania. Further research and writing were conducted with financial support from a Peace Scholar Fellowship from the United States Institute of Peace; a Killam Fellowship; and fellowships and grants from the University of Pennsylvania Research Fund, the Trustees Council of Penn Women, and the Penn Lauder Institute of Management and International Studies. Some of the material in Chapters 2, 3, and 4 draw from an article that appeared in the American Political Science Review (copyright © 2005 by the American Political Science Association) and are reprinted here with permission. Finally, the unconditional support of my family and friends was indispensable to complete this book. My dearest friend, Isabella Alcañiz, not only has given me helpful and timely substantive comments whenever solicited (and usually under short notice) but also has helped me cope with the stress and frustrations of graduate school, and, later, professional and family life. I terribly miss living in the same neighborhood as Isa and being just a few minutes away, as we were in graduate school. To my life-long friend, Marina Travacio, I owe a great debt for introducing me to partisan politics in the early years of Argentina’s last transition to democracy. Since I left Buenos Aires, she has also been my cable a tierra in Argentina, for which I am very grateful. I am uncertain my parents Rosa and Brunello fully understand what I do, why I am passionate about it, and why it means so much to me. Nonetheless, through their example and education, they instilled in me an ethic of hard work and an aspiration to always realize one’s full potential. Both these life lessons have been essential in my academic endeavors. In more concrete albeit equally instrumental ways, my parents and parents-in-law, Marion and Desmond Moore, have provided much good care and, over the last three years, many hours of grandparenting. My brother, Sergio, and my sister, Valeria, transcribed many hours of interviews and, Sergio, being the

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graphic designer in the family, helped with some figures. Finally, I owe a great deal to my husband, Richard O. Moore. Part of my debt could be counted in the many hours he single-handedly looked after our son, Tomás, and, more recently, also our daughter, Emma, so I could finish this book. But more importantly perhaps, his unwavering confidence that the project would be successfully completed was a source of reassurance through the tough patches of writing and revising the manuscript. And whereas this book will not make up for the many Saturdays and evenings that I had to spend away from Richard and Tomás, I nonetheless dedicate this book to them and to Emma, with all my love and gratitude.

List of Abbreviations

A AI-3 ABM ABRASCO

AMMAC ANAGO ANMEB

ARENA CA CEBES CEBRAP

CEDEMUN CESEM

Administrative decentralization Ato Institucional No. 3 (Institutional Act Number 3), Brazil Associação Brasileira de Municípios (Brazilian Association of Municipalities), Brazil Associação Brasileira de Pós-Graduação em Saúde Colectiva (Brazilian Graduate Association in Public Health), Brazil Asociación de Municipios de México A.C. (Association of Mexican Municipalities), Mexico Asociación Nacional de Gobernadores (National Association of Governors), Mexico Acuerdo Nacional de Modernización de la Educación Básica y Normal (National Agreement for the Modernization of Basic Education), Mexico Aliança Renovadora Nacional (National Renovation Alliance), Brazil Constitutional Amendment Centro Brasileiro de Estudos de Saúde (Brazilian Center of Health Studies), Brazil Centro Brasileiro de Análise e Planejamento (Brazilian Center of Analysis and Planning), Brazil Centro de Desarrollo Municipal (Municipal Development Center), Mexico Centro de Servicios Municipales Heriberto Jara A.C. (Center of Municipal Services Heriberto Jara), Mexico xxi

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CFCE CFE CFI CIDE

CNEM CNM CNS CNTE

CONAGO CONAMM

CONASEMS

CONASS CUD F FAEB FAFOMUN

FAM FCM FECODE

List of Abbreviations Consejo Federal de Cultura y Educación (Federal Council of Culture and Education), Argentina Consejo Federal de Educación (Federal Council of Education), Argentina Consejo Federal de Inversiones (Federal Council of Investments), Argentina Centro de Investigación y Docencia Económicas (Center for Economic Research and Teaching), Mexico Centro Nacional de Estudios Municipales (National Center for Municipal Studies), Mexico Confederação Nacional de Municípios (National Confederation of Municipalities), Brazil Conferência Nacional de Saúde (National Health Conference), Brazil Coordinadora Nacional de Trabajadores de la Educación Nacional (Coordinating Committee of Education Workers), Mexico Conferencia Nacional de Gobernadores (National Conference of Governors), Mexico Conferencia Nacional de Municipios de México (National Conference of Mexican Municipalities), Mexico Conselho Nacional de Secretarias Municipais de Saúde (National Council of Municipal Secretaries of Health), Brazil Conselho Nacional de Secretários de Saúde (National Council of State Secretaries of Health), Brazil Convenio Unico de Desarrollo (Development Agreement), Mexico Fiscal decentralization Fondo de Aportaciones para la Educación Básica (Fund for Basic Education), Mexico Fondo de Aportaciones para el Fortalecimiento de los Municipios y del Distrito Federal (Fund for the Strengthening of Municipalities and the Federal District), Mexico Federación Argentina de Municipios (Argentine Federation of Municipalities), Argentina Federación Colombiana de Municipios (Colombian Federation of Municipalities), Colombia Federación Colombiana de Educadores (Colombian Federation of Educators), Colombia

List of Abbreviations FENAMM

FER FG FGV FNP FONAVI FPE FPM FUNDEB

FUNDEF

GDP IFAM IFE INAMPS

IPEA LCF M-19 MDB MODIN

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Federación Nacional de Municipios de México (National Federation of Mexican Municipalities), Mexico Fondo Educativo Regional (Regional Educational Fund), Colombia Frente Grande (Big Front), Argentina Fundação Getulio Vargas (Getulio Vargas Foundation), Brazil Frente Nacional de Prefeitos (National Front of Mayors), Brazil Fondo Nacional de la Vivienda (National Housing Fund), Argentina Fundo de Participação dos Estados (States Revenue-Sharing Fund), Brazil Fundo de Participação dos Municípios (Municipalities Revenue-Sharing Fund), Brazil Fundo de Manutenção e Desenvolvimento da Educação Básica e de Valorização dos Professionais da Educação (Basic Education Development and Teacher Valorization Fund), Brazil Fundo de Manutenção e Desenvolvimento do Ensino Fundamental e de Valorização do Magistério (Elementary Education Development and Teacher Valorization Fund), Brazil Gross Domestic Product Instituto Federal de Asuntos Municipales (Federal Institute of Municipal Issues), Argentina Instituto Federal Electoral (Federal Electoral Institute), Mexico Instituto Nacional de Assistência Médica da Previdência Social (National Institute for Medical Assistance in Social Security), Brazil Instituto de Pesquisa Econômica Aplicada (Institute of Applied Economic Research), Brazil Ley de Coordinación Fiscal (Fiscal Coordination Law), Mexico Movimiento 19 de Abril (Movement April 19), Colombia Movimento Democrático Brasileiro (Brazilian Democratic Movement), Brazil Movimiento de Dignidad e Independencia, (Dignity and Independence Movement), Argentina

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NOB NR-SO P PAL PAN PCB PDP PDS PEC PEMEX PFL PJ PMDB PRD PRI PRONASOL PT PTB SEP SHCP SNCF SNTE SR-NO

List of Abbreviations Normas Operacionais Básicas (Basic Operational Norms), Brazil Mixed coalition of national-ruling and subnationalopposition actors Political decentralization Partido Autonomista Liberal (Autonomist Liberal Party), Argentina Partido Acción Nacional (National Action Party), Mexico Partido Comunista Brasileiro (Brazilian Communist Party), Brazil Partido Democrático Progresista (Democratic Progressive Party), Argentina Partido Democrático Social (Democratic Social Party), Brazil Proposta de Emenda a Constitução (Constitutional Amendment Proposal), Brazil Petróleos Mexicanos (Mexican Oils), Mexico Partido da Frente Liberal (Party of the Liberal Front), Brazil Partido Justicialista (Justicialist Party), Argentina Partido do Movimento Democrático Brasileiro (Party of the Brazilian Democratic Movement), Brazil Partido Revolucionario Democrático (Democratic Revolutionary Party), Mexico Partido Revolucionario Institutional (Institutional Revolutionary Party), Mexico Programa Nacional Solidaridad (National Solidarity Program), Mexico Partido dos Trabalhadores (Workers Party), Brazil Partido Trabalhista Brasileiro (Brazilian Labor Party), Brazil Secretaría de Educación Pública (National Ministry of Education), Mexico Secretaría de Hacienda y Crédito Público (National Ministry of Finance), Mexico Sistema Nacional de Coordinación Fiscal (National System of Fiscal Coordination), Mexico Sindicato Nacional de Trabajadores de la Educación (National Union of Education Workers), Mexico Mixed coalition of subnational-ruling and nationalopposition actors

List of Abbreviations SUS UCEDE UCR USEDES

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Sistema Único de Saúde (Unified National Health System), Brazil Unión del Centro Democrático (Union of the Democratic Center), Argentina Union Cívica Radical (Radical Party), Argentina Unidades de Servicios Educativos a Descentralizar (Units of Educational Services to be Decentralized), Mexico

1 Decentralization and the Revival of Subnational Politics

Once administrative centralization has lasted for a while, the same power that founded it, were it later to want to destroy it, is always incapable of bringing about its ruin . . . [A]dministrative centralization assumes a skillful organization of authority; it forms a complicated machine of which all the gears engage each other and lend each other mutual support. Alexis de Tocqueville1

If Alexis de Tocqueville were alive today, he would be surprised to find that over the last quarter of the twentieth century, processes of decentralization of government – that is, the downward transfer of resources, responsibilities, or authority from national to subnational governments – have taken place in countries around the world (Manor 1999, vii).2 Part of a larger wave of economic and political reforms, the decentralization of governments followed the collapse of economic and political regimes with centralized commands and planning structures. Various world changes – the collapse of communism in the former Soviet Union and in Eastern Europe, the reforms to societal corporatism in Western Europe, and the demise of the developmental state in Latin America – all contributed to 1

2

In “Political Effects of Administrative Decentralization,” Original Working Ms., Yale, CVIa, tome 1, cited in Schleifer (1980, 137–38). By “subnational” governments I refer to both the intermediate (e.g., states, provinces, departments) and the local levels of government. Scholars of multinational settings, where territorial subunits often encompass entire nations and the idea of the “nationstate” is highly contested, could rightly take issue with this use of “subnational.” However, Latin American countries are largely mononational, even if a multiplicity of ethnicities exist. Thus, I take the liberty of referring to the territorial member units of the nation-states in Latin America, as most of the literature does, as “subnational.” I thank Brendan O’Leary for his related comment.

1

2

Decentralization and the Revival of Subnational Politics

the search for new forms of articulation among the nation-states, their economies, and their societies. The decentralization of government policies that emphasized the principle of subsidiarity (of collecting, spending, and making public-policy decisions at the lowest possible level of government) proved functional to those larger political and economic changes. Decentralization policies have changed governments and politics in fundamental ways. Due to decentralization, the subnational shares of revenues and expenditures have increased in countries around the world, with sizable macroeconomic consequences in some cases.3 The decentralization trend has also involved the transfer of major public services such as education, health, housing, transportation, and poverty alleviation programs to subnational governments, which are now held accountable for the funding, delivery, management, and quality of these public services. Moreover, recent constitutional and territorial reforms in countries as varied as Belgium, Bolivia, Brazil, Colombia, and Ethiopia, to name a few, have changed relations among levels of governments and subnational regions as well as the political incentives and career paths of politicians. As a result of decentralization, intergovernmental relations can no longer be considered the “hidden dimension of government,” as United States Senator Edmund Muskie said at a Senate hearing on federal–state– local relations in1962.4 Due to decentralization, in addition to national and international politics, ordinary citizens are paying closer attention to state-level and local politics and to the negotiations taking place among the different levels of government. In countries around the world, subnational governments have to meet the needs of their constituencies, establish direct electorates, put forward their own perspectives, and face constant scrutiny. In Latin America, the most fascinating change that the latest wave of decentralization has produced in contemporary politics is the revival of 3

4

Whereas in 1980 subnational governments around the globe collected approximately 15% of the total national revenues and spent 20% of the total national expenditures, by 1997 those figures had risen to 19% and 25%, respectively (author’s calculations based on data available at http://www1.worldbank.org/publicsector/decentralization/ fiscalindicators.htm, last accessed January 2010). On that occasion Senator Muskie said, “The field of intergovernmental relations might be considered as the ‘hidden dimension of government.’ Performing as almost a fourth branch of government in meeting the needs of our people, it nonetheless has no direct electorate, operates from no set perspective, is under no special control, and moves in no particular direction” (Edmund Muskie, “Problems of Federal-State-Local Relations,” cited in Wright 1978, 5).

Decentralization and the Revival of Subnational Politics

3

subnational interests and territorial politics. I would argue that in no period since the formation and consolidation of the nation-states in the nineteenth century have subnational actors, politicians, and interests been as important as they have been since the enactment of decentralization reforms in the last quarter of the twentieth century. As Sidney Tarrow wrote with admirable foresight three decades ago (in the heyday of centralized governments!), and is nowadays truer than ever before, “how central governments and their territorial subunits are linked politically is not only a problem of intergovernmental relations but also one of managing the class and interest conflicts of modern societies” (Tarrow 1978, 1–2). Decentralization policies are bringing the issue of the relationship and balance of power between national “centers” and “peripheries” to the forefront of the political analysis. Old questions such as what accounts for the origins of federal systems or what keeps countries together are coming back in comparative politics, after decades of research that tended to focus on the national, rather than the subnational, level of analysis. These political and analytical shifts are largely due to the renewed importance of subnational actors in contemporary politics. However, the effects of decentralization on subnational politics and on the revival of territorial interests have varied widely from one country to another and in ways that our existing theories are unable to account for. While in some countries (such as Brazil and Colombia) the decentralization of government policies has produced the expected effect of increasing the power of subnational governments and officials, in others those changes have been moderate (such as in the case of Mexico) or insignificant (as in Argentina). Our existing theories (on political party systems or constitutional types of governments, for example) cannot explain these patterns of variation. Yet understanding why, in some countries, the policies of decentralization bring about the expected results of increasing the power of governors and mayors, while in others they do not, is the crucial first step we must take before we can further evaluate the positive or negative impact of decentralization policies on issues as critical as the management of public resources, the delivery of public social services, and the political participation of local communities. Drawing from the theoretical and methodological insights of the recent literature on path dependence and institutional evolution, in particular from the works of James Mahoney, Paul Pierson, and Kathleen Thelen (e.g., Mahoney 2000; Mahoney and Rueschemeyer 2003; Mahoney and Thelen 2009; Pierson 1992, 1993, 2000; Streeck and Thelen 2005; Thelen 2000, 2004), and on the effects of time on political processes

4

Decentralization and the Revival of Subnational Politics

(Pierson 2004), in this book I advance a sequential theory of decentralization. The theory espouses that, after the demise of the developmental state, the effects of decentralization on the intergovernmental balance of power among national executives, governors, and mayors is dependent on the temporal sequencing of different types of decentralization policies (administrative, fiscal, or political in nature). Moreover, I argue that the consequences of decentralization on the balance of power among national and subnational executives are tightly linked to the territorial interests and impulses found at the origins of the process. In this sense, this book underscores the importance of the “origins” of processes of institutional change. While I do not endorse a deterministic argument that suggests that the evolution of a process follows entirely from how it began, I do claim that the originating decentralization reform places strong constraints on the opportunities and strategies available to political actors in the negotiations over other intergovernmental reforms that follow. As is the case with other path-dependent types of processes, in the process of decentralization of governments, “earlier events matter much more than later ones” (Pierson 2000, 253). Moreover, the empirical analysis of the first cycle of postdevelopmental decentralization in the four largest countries of Latin America leads to the conclusion that “when things happen within a sequence affects how they happen” (Mahoney 2000, 511) and to what consequence.5

Advocates and Critics of Decentralization and Their Shared Assumption Around the world, heterogeneous coalitions of political and social actors spanning the ideological spectrum supported the movement toward decentralization. Politicians of the right and the left; democrats and authoritarian leaders; policymakers in finance, education, health, and urban development; international financial institutions; and scholars in academia all advocated for decentralization. In fact, many of the studies on decentralization, particularly the earlier works, were written to advance policy recommendations, most often to espouse its adoption. Decentralization was seen as a solution to political and economic problems, especially for countries that had experienced centralized economic programs and exclusionary politics.

5

Mahoney takes this quotation from Tilly (1984, 14).

Advocates and Critics of Decentralization

5

Policy recommendations were, for the most part, based on two theories. On the political side, they drew from local government theories, which argue that decentralization improves democracy by bringing the government closer to the people. This thesis dates back to Alexis de Tocqueville, who saw in the civic life of New England townships the roots of democracy in America (Tocqueville 2000 [1835–1840], 56–79). On the economic side, the advocates of decentralization based their recommendations on fiscal federalism theory, which, traced back to Charles Tiebout (1956), argues that fiscal decentralization improves resource allocation through better knowledge of local preferences and competition among jurisdictions (e.g., Bennet 1990; Oates 1972, 1977; Shah 1994; Weingast 1995). In Latin America, scholars and political activists thus recommended decentralization as a means to increase citizens’ participation and to end centralized rule, particularly for the countries of the region that were transitioning from authoritarianism to democracy (e.g., Borja et al. 1989; Cabrero Mendonza 1995; Calderón and Dos Santos 1991). But decentralization policies also met with opposition. National bureaucrats, national union leaders, and political brokers felt threatened by the transfer of services and resources to subnational governments and therefore mobilized against these reforms (Murillo 1999). Scholars also pointed to the negative effects of devolving fiscal resources and authority to the subnational governments, such as soft-budget constraints, macroeconomic instability, enlargements of bureaucracies, and increasing regional inequalities (e.g., Díaz Cayeros 1997; Dillinger and Webb 1999; Prud’homme 1995; Rodden 2000; Rodden and Wibbels 2002; Stein 1998). Similarly, others emphasized the negative consequences that devolving political power to local elites or caudillos carries for democracy, such as the strengthening of clientelism at the local level (Cornelius et al. 1999; Fox and Aranda 1996). Interestingly, both the advocates and the critics of decentralization share a common assumption, albeit erroneously. They take for granted that these reforms necessarily increase the power of subnational governments. In both approaches, an increase in the power of subnational officials is the intervening variable between decentralization policies and either good or bad outcomes. But contrary to what friends and foes of decentralization assume, a close examination of the effects of decentralization on the intergovernmental balance of power among national and subnational executives – that is, on the relative distribution of their economic resources, legal authority, and organizational capacities – reveals

6

Decentralization and the Revival of Subnational Politics

a wide variation from one country to another. In fact, a substantial body of work on the consequences of decentralization on democratization and economic reforms hinges on this critical, yet uncorroborated, assumption, that decentralization always devolves power to governors and mayors. Analyzing whether or not this is actually the case thus becomes crucially important for future studies on the consequences of decentralization and for the public-policy recommendations that might follow.

Postdevelopmental Decentralization in Latin America After the demise of the developmental state, Latin America was the first region of the world to systematically implement decentralization policies (Camdessus 1999).6 These were the set of policies, electoral reforms, or constitutional reforms that transferred responsibilities, resources, or authority from higher to lower levels of government. Part of the neoliberal move away from state intervention in the economy and toward free-market economies, decentralization reforms were labeled “secondgeneration reforms,” even if they unfolded together with the free-market economic reforms of the 1980s and 1990s. The earliest decentralization policies of the postdevelopmental era began in the late 1970s and the process continued throughout the following two decades, becoming one of the most significant political and economic developments in the region during that time (Willis et al. 1999, 7).7 Latin America was also the region of the world that underwent the most radical changes due to decentralization. After Spain, Latin American

6

7

As defi ned by Ben R. Schneider (1999, 278), in its relation to the economy and the polity, the developmental state in Latin America had four essential characteristics: “(1) political capitalism, where profit and investment depended on decisions made in the state; (2) a dominant developmental discourse on the necessity of industrialization and of state intervention to promote it; (3) political exclusion of the majority of the adult population; and (4) a fluid, weakly institutionalized bureaucracy.” Although there were temporal variations across countries in Latin America, the developmental state was characteristic of the 1950s and 1960s. For more on the ideas of developmentalism in Latin America, see Sikkink (1991). The term “neoliberal” decentralization could also apply to these policies. However, I prefer the term postdevelopmental decentralization because in some countries there was a significant time lapse between the demise of the developmental state (with heavy intervention in the economy and corporatist mediations with society) and the emergence of the neoliberal one (characterized by market-oriented economic reforms and the erosion of corporatism). Unlike neoliberal decentralization, the term postdevelopmental decentralization has the advantage of capturing the reforms of this transitional period.

Postdevelopmental Decentralization in Latin America

7

countries experienced the most significant increases in the devolution of revenues and expenditures in the world, which doubled between 1980 and 2000.8 The administration of public social services, such as that of education and health care, has also been transferred to lower levels of government in Argentina, Bolivia, Brazil, Chile, Colombia, and Mexico, among other countries (Di Gropello and Cominetti 1998). And after centuries of being governed by appointed subnational officials, as a result of decentralization, all South American citizens now elect their mayors and most of them elect their governors.9 After the late 1970s, Argentina, Brazil, Colombia, and Mexico – the four largest countries of Latin America, accounting together for 70% of the region’s population – enacted similar decentralization policies in the administration of their public social services, which, as defined in Chapter 2, I call administrative decentralization reforms. In 1978 and 1992, the administration and management of Argentina’s national schools (some of them prestigious centennial institutions) were transferred to the provinces and the city of Buenos Aires. During the same period, a gradual process of the transfer of responsibilities from the central offices of the Ministry of Education (Secretaría de Educación Pública, SEP) in Mexico City toward its offices in the member-states took place in Mexico. This process culminated in 1992 when Ernesto Zedillo, at that time the Minister of Education, signed an agreement with the leaders of the national teachers’ union (Sindicato Nacional de Trabajadores de la Educación, SNTE) and the governors to transfer education to the states. Similarly, in 1993, the Colombian Congress passed a law that transferred education from the central government to departments (the intermediate level of government) and municipalities. In Brazil, the Constitution of 1988 decentralized the health care system and in 1996 educational services were also decentralized. During the same period, these four countries underwent decentralization reforms in their systems of revenue-collection and revenue-sharing, which I classify as fiscal decentralization reforms. At the end of 1987, Argentina’s governors and President Raúl Alfonsín agreed on a new 8

9

The subnational share of expenditures in Argentina, Bolivia, Brazil, Chile, Colombia, Mexico, Paraguay, and Peru (for which comparable data are available) increased from an average of 16% in 1980 to 29% in 2000. Likewise, the revenues collected by subnational governments increased from an average of 14% of the total tax revenue to 29% in that period (author’s calculations based on data from International Monetary Fund, various years, and World Bank 1999a). Chile and Suriname are the only two countries in South America that still appoint offi cials at the intermediate level of government (World Bank 1999a, 216–17, and national constitutions).

8

Decentralization and the Revival of Subnational Politics

distribution of taxes (coparticipación) that gave the provinces a higher level of general revenue-sharing. In 1988, the Brazilian Constitution sanctioned higher levels of revenue-sharing for states and municipalities, following a trajectory of fiscal changes that had been initiated in 1983. Similarly, in 1991, Colombian constitutional conventionalists modified the system of revenue-sharing, such that the departments and municipalities received higher and increasing rates of automatic transfers from the center. In Mexico, between 1995 and 1997, budgetary reforms transferred more revenues to the states and municipalities, decreased earmarks, and practically eliminated the president’s discretionary fund. Argentina, Brazil, Colombia, and Mexico also underwent decentralization of political offices and authority, or political decentralization reforms, during this period. In 1980, still under military rule, the Brazilian Congress passed a constitutional amendment for the direct popular election of governors starting in 1982. In 1983, the Mexican Congress approved a constitutional reform to Article 115 that strengthened municipalities and gave mayors greater political autonomy. This political reform was followed by the creation of a popularly elected legislative assembly and a constitutional reform that made the mayor of Mexico City – the largest city in Latin America – popularly elected. In Colombia, a law was passed in 1986 by which mayors, previously appointed by governors, became popularly elected. Decentralization was also extended to governors who, previously appointed by the president, were popularly elected for the first time in 1991. In Argentina, a constitutional reform in 1994 decentralized the most important mayoral position in the country, that of the mayor of the City of Buenos Aires. Table 1.1 summarizes the decentralization policies that Argentina, Brazil, Colombia, and Mexico enacted in the administration of public services, and in their fiscal and political intergovernmental institutions since the demise of the developmental state and until the mid- to late 1990s. As I explain later in this chapter, these twenty policies comprise the first cycle of postdevelopmental decentralization in the four countries. Despite the similarities in the decentralization reform processes, their effects on the power of governors and mayors varied widely from one country to another. Whereas decentralization policies devolved a significant amount of power to governors and mayors in Brazil and Colombia, such devolution was moderate in Mexico and practically nil in Argentina.10 10

What follows is a summary account of the variations observed in the intergovernmental balance of power in the four countries. For more detailed accounts and measurements, please refer to the second part of Chapter 2.

Postdevelopmental Decentralization in Latin America

9

Table 1.1. First Cycle of Postdevelopmental Decentralization Policies in Argentina, Brazil, Colombia, and Mexico, 1978–1997

Argentina

Administrative Decentralization

Fiscal Decentralization

Political Decentralization

1978: Primary schools transferred to the provinces

1988: New revenue-sharing law

1994–1996: Popular election of the mayor of Buenos Aires; autonomy to the City of Buenos Aires

1988: Decentralization of health

1983: Passos Porto Amendment

1980–1982: Popular election of governors

1993–1994: Decentralization of education to departments and municipalities

1991: Increase of automatic transfers of revenues to departments and municipalities

1986: Popular election of mayors

1983–1986: Bilateral agreements with some states for the decentralization of education

1995: Reform of the fiscal coordination law

1983: Article 115 on municipal autonomy

1997: Creation of new budget line (Ramo 33) directed to states and municipalities

1986: Creation of Mexico City’s legislative assembly

1992: Secondary schools transferred to the provinces Brazil

Colombia

Mexico

1992: Decentralization of education to all the states

1988: Increase of 1988: Municipal automatic transfers autonomy recognized of revenues to states in the constitution and municipalities

1991: Popular election of governors

1996: Popular election of the mayor of Mexico City

As a result of postdevelopmental decentralization, Brazilian and Colombian governors and mayors currently have more fiscal resources, deliver and manage more social services, have greater constitutional autonomy from the central government, and are better organized to collectively represent their territorial interests. In Mexico, an intermediate situation has resulted. Governors and mayors are responsible for an increasing share of expenditures, but their

10

Decentralization and the Revival of Subnational Politics

share of revenues has not augmented to the same level as in Colombia or Brazil and they must rely more heavily on the fiscal transfers that come from the center. Mexican governors are responsible nowadays for the delivery of social services that used to be in the hands of the central government, but the central government still retains a significant amount of authority in determining national standards and guidelines. In terms of political leverage, governors and mayors are better organized to lobby for their common interests vis-à-vis the national government than they used to be, but at the municipal level division among three partisan associations makes coordination of municipal action less likely in Mexico than in Brazil or Colombia. Finally, in Argentina, despite the implementation of decentralization policies, the power of governors and mayors has remained practically unchanged. Whereas the subnational share of expenditures increased during the period of reforms, the share of revenues decreased slightly, thus heightening the dependence of subnational governments on fiscal transfers originating at the center. Practically overnight, provincial governments in Argentina became responsible for more social services, but those administrative transfers were unfunded and posed serious policymaking and political constraints on the governors. Despite the enactment of a constitutional reform in 1994, the constitutional autonomy of governors and mayors did not change in Argentina. And, although a mayoral association was formed in 1997, it remains weak and ineffective for organizing the corporatist interests of Argentine municipalities. As succinctly stated in a World Bank report, “Argentina is arguably one of the most decentralized countries [in Latin America] but has essentially the same political and fiscal structure it had before the military intervened in 1976. In contrast, Colombia has radically increased the power and responsibilities of subnational units of government” (Burki et al. 1999, 11). Why, despite the implementation of decentralization reforms, did Argentina’s fiscal and political intergovernmental structure remain unchanged while Colombia’s fiscal and political intergovernmental relations changed so radically? Why did Brazil, whose intergovernmental institutions resembled those of Argentina before the reforms, experience such an extraordinary movement toward further devolution of resources, responsibilities, and authority to subnational governments after decentralization? Why did Mexico experience an intermediate increase in the power of governors and mayors? More generally, do decentralization policies always increase the power of governors and mayors? And, if so, what explains the resulting variation in the degree of change experienced

Rethinking the Causes and Consequences of Decentralization

11

across countries? Before elaborating on my answers to these questions, the next section briefly surveys the main accounts in political science on the causes and consequences of decentralization, with which I will soon further engage.

ReThinking the Causes and Consequences of Decentralization On the Causes of Decentralization The temporal concurrence of the movement toward decentralization of government and the turn toward neoliberalism and the third wave of democratization in Latin America led some scholars to establish a connection between decentralization and these two macroeconomic and political processes. However, studying the origins and evolution of subnational institutions of governance in Argentina, Brazil, Chile, and Uruguay, Kent Eaton (2004) conclusively demonstrates that, when evaluated over a period of a century or longer, neither economic liberalization nor democratization are necessary or sufficient causes to explain the moves toward decentralization of government. What else, then, could account for the move toward decentralization in the region? Also at the macro level, other scholars have attributed the decentralization “euphoria” to international trends such as regional integration and globalization, which have undermined the role of the nation-state and highlighted the importance of local governments (Schuurman 1997). In this interpretation, international financial institutions were one of the main conduits of pressures to decentralize. But while international financial institutions introduced decentralization proposals in the areas of urban planning and development in the late 1970s and early 1980s (see, for example, Rondinelli et al. 1984), further-reaching recommendations for the decentralization of fiscal systems and for the delivery of public services did not enter the agenda of the international financial institutions until the 1990s (e.g., IDB 1994). This was after Latin American governments had already embarked on postdevelopmental decentralization policies. Another macro-level explanation states that structural changes such as urbanization and economic development strengthen the tendency to decentralize over time (Samuels 2000). The Brazilian and Colombian cases nicely exhibit the relationship between urbanization and decentralization. As Brazil became more urbanized in the 1950s, 1960s, and

12

Decentralization and the Revival of Subnational Politics

1970s, urban protests and mobilizations increased, which demanded better local services and the devolution of resources and responsibilities. The same was true in Colombia. This explanation, nonetheless, begs the question of where causation resides – is it in the process of urbanization or in the intervening process of social mobilization and protest? As I show in Chapters 4 and 5, social mobilization and protests were directly linked to the pressures that pushed the decentralization of government forward in Colombia and Brazil. However, it is not clear that those protests were directly linked to prior processes of urbanization in both cases. In Colombia, the civic strikes of the 1970s and 1980s were indeed a response to the failures of the urban and regional development policies implemented after a period of rapid urbanization. In Brazil, instead, the social mobilizations in favor of decentralization, dating back to the 1970s, stemmed from within the political system. Social and political actors who opposed the military regime demanded the decentralization of government as a first step or strategic move toward a more encompassing democratization of the nation-state. In other words, it was a political process that had little to do with urbanization and much to do with the political opportunities created by federalism, which, as noted in Chapter 5, allowed for political openings at the local and state levels earlier than at the national level (Samuels and Abrucio 2000). Finally, as Alfred Montero and David Samuels (2004, 19–20) note, there are decentralization policies that are not directly tied to the increasing importance of cities. The decentralization of education in Argentina and Mexico, both of which targeted the intermediate level of provinces and states, constitute two such examples. At the micro level, scholars have searched for the causes of decentralization on the incentives of politicians and have asked, why would national politicians agree to give power away? At this level of analysis, the most elegant and encompassing theory for the adoption of fiscal and political decentralization in electoral democracies in Latin America is found in the works of Kathleen O’Neill (1999, 2003, 2005). Focusing on the electoral incentives of politicians and analyzing the countries of the Andean region (Bolivia, Colombia, Ecuador, Peru, and Venezuela), O’Neill argues that presidents are more likely to propose decentralizing measures when electoral support for their parties is weak at the national level but strong at the subnational level, and when the overall electoral support for their parties has been stable over time, such that they can strategize over decentralization with some degree of certainty. Under these electoral conditions, the seemingly paradoxical decision of presidents to transfer

Rethinking the Causes and Consequences of Decentralization

13

power downward can actually be viewed as a rational strategy allowing their political parties to hold on to power. O’Neill’s theory is quite robust in explaining the adoption of political and fiscal decentralization in democratic contexts,11 but it falls short of explaining the causes of the policies analyzed in this book for two main reasons. First, O’Neill’s theory is silent in regard to the adoption of administrative decentralization, which, depending on its timing, could be highly consequential for the adoption and design of political and fiscal decentralization reforms. Second, the domain of O’Neill’s theory – competitive electoral democracies with relatively stable political party systems – also does not allow for the study of political and fiscal decentralization reforms adopted under authoritarian or hegemonic regimes. As O’Neill (2005, 238) recognizes, in such contexts, “[d]emocratic restoration tends to trump electoral considerations.” The question remains: What accounts for the broader set of postdevelopmental decentralization policies (i.e., political, fiscal, and administrative) that Latin American countries adopted under democratic and authoritarian regimes? In this book, I advance a middle-range theory of the causes of decentralization. I argue that the type of territorial interests (national or subnational) that prevail in the reforming coalitions is the main factor leading to the adoption of different types of decentralization policies. I do not account for the adoption of decentralization at large, but rather spell out the political dynamics that lead to the adoption of different types of decentralization policies (administrative, fiscal, or political in nature). Moreover, my theory is time-bound. I argue that because the meanings and overarching goals of decentralization policies vary across the type of nation-state they seek to reform, to be analytically equivalent, decentralization processes must be temporally bound to the context of the particular type of nation-state in which they take place. Thus, in this book, I advance a middle-range theory that applies to postdevelopmental types of nation-states.12

11

12

Exceptions exist such as in the case of political decentralization in Argentina in 1994. On that occasion, President Carlos Menem agreed to the popular election of the mayor of the City of Buenos Aires (until then appointed) knowing that his Peronist party would lose the forthcoming mayoral elections. The district had historically been a stronghold for the opposition to his party. Note that in other types of states, such as oligarchic and developmental, the preferences of territorial actors may be different than those outlined by my theory in Chapter 2.

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Decentralization and the Revival of Subnational Politics

On the Consequences of Decentralization A sizable set of studies has shed light on the consequences of decentralization for a wide range of economic and political variables, including local governance (Borja et al. 1989; Cabrero Mendoza 1998; Rosenfeld 1995; Tendler 1997), fiscal efficiency, resource allocation, macroeconomic stability (Bird et al. 1995; Dillinger and Webb 1999; Kraemer 1997; Litvack et al. 1998; Lopez Murphy 1995; Rodden 2000; Wibbels 2005), bureaucratic reforms and the size of the bureaucracy (Gimpelson and Treisman 2002; Orlansky 1997; Stein 1998), democratization and political accountability (Manor 1999; Rodrigues Afonso and Lobo 1996; Veltmeyer 1997), and ethnic and intrastate conflict (Brancati 2009; Suberu 2001). Of particular interest to me, however, are those explanations that could account for the cross-country variation in the effects of decentralization on the balance of power among national and subnational executives. With reference to my cases of study, one possible explanation is that Argentina did not devolve more power to governors and mayors because it enjoyed a high initial level of absolute decentralization. In other words, it could be argued that there is an upper limit on the degree of change that decentralization can bring about in intergovernmental relations, or a devolution-of-power threshold above which a country cannot pass. However, the evolution of the intergovernmental balance of power in Brazil challenges this interpretation. As shown in Chapter 2, Brazil started the period of reforms with an intergovernmental institutional structure as highly decentralized as that of Argentina. However, by the end of the period, decentralization policies in Brazil had significantly increased the autonomy of governors and mayors. This was evident within the subnational share of expenditures and revenues, the distribution of policy-making authority, and the political reforms introduced in the 1988 Constitution. Interestingly, Argentina underwent similar policies in the administrative, fiscal, and political arenas, but their impact in augmenting the power of governors and mayors was far more limited. The second explanation draws on William Riker’s (1964) theory of federalism and argues that the degree of autonomy of subnational officials after the implementation of decentralization reforms can be explained by the internal structure of the political parties (e.g., Garman et al. 2001; Penfold-Becerra 1999; Shefter 1978). This argument states that if – given certain electoral and nomination procedures – national legislators are more accountable to the national executive, they will tend to push for

Sequential Theory of Decentralization

15

more centralization of authority in the design of and bargaining over decentralization reforms. If, instead, the national legislators are accountable to subnational officials, they will press for further decentralization of power in designing these policies. This explanation successfully accounts for the levels of decentralization before and after the reforms studied. However, it cannot account for the degree of change in intergovernmental relations that they bring about. Argentina has a decentralized political party system, with national legislators mostly accountable to subnational authorities (Eaton 2002a; Jones et al. 2002). Nonetheless, Argentina is the country where the intergovernmental balance of power evolved the least. Mexico, on the other hand, has a centralized party system, but its intergovernmental balance of power changed considerably once decentralization measures were undertaken. Finally, it could also be argued that the degree of change in intergovernmental relations that decentralization brings about is dependent on the type of constitution and government within a country. Robert Dahl (1986) argues that because federal constitutions confer autonomy to subnational units, this should lead to a higher degree of devolution of power than in unitary countries. My cases show the opposite to be true. In Colombia, a unitary country, decentralization had the most significant impact on the evolution of the intergovernmental balance of power. In Argentina – a federal republic – decentralization had the least significant impact on the intergovernmental balance of power. As Maria EscobarLemmon (2001, 27) writes, “While state structure may explain the initial level of decentralization in a country, with federal cases being more decentralized, it does little to explain changes within a country over time.”

A Sequential Theory of Decentralization: The Main Argument in Brief Unlike the earlier works on decentralization, this book does not advance policy recommendations or take a normative stand toward these policies. Instead, focusing on the effects of decentralization on subnational politics, it challenges the assumption that decentralization always increases the power of governors and mayors vis-à-vis the national government, and in doing so it reevaluates the causes and consequences of the postdevelopmental decentralization movement. I contend that the main causes explaining the evolution of the intergovernmental balance of power – i.e., the relative distribution of economic resources, legal authority, and organization capacities among

16

Decentralization and the Revival of Subnational Politics

levels of governments – are endogenous to the process of decentralization. Whereas the causes that account for why decentralization begins depend on exogenous factors, as I explain in the forthcoming chapters, the extent and degree of the reforms – how much power the subnational governments gain at the end of the process compared with their situation at the beginning – is largely dependent on what type of decentralization is implemented first and on the sequence of reforms that follows. To develop my argument, I build on the recent literature on institutional evolution (see Mahoney and Thelen 2009; Pierson 2004; Streeck and Thelen 2005; Thelen 2004) and on the studies about the effects of policies on politics. As Pierson (1992, 1993, 1996) has conclusively shown, policies are not solely the result of politics and politicians’ preferences: Policies also create politics. Once adopted, policies have effects on future politics that, as time goes by, make it increasingly difficult to stray from the policy trajectory originally taken. One main reason for this is that policies create their own constituencies who defend the gained policy terrain and continue building on those reforms to maintain and advance the benefits derived from them. This study of the process of decentralization in Latin America shows that the early policies were consequential to the unfolding of later reforms and, in turn, to the outcome of interest. Chapters 3 through 6 show that decentralization policies in Latin America produced self-reinforcing effects such as the reproduction of power of the early winners, incrementalism in the pursuance of future policies, demonstration effects for subsequent policy adoption in comparable contexts, and coordination among policy beneficiaries. But early decentralization policies also produced reactive mechanisms, such as compensation effects, that sought to offset the impact of the earlier reforms. The book thus advances an account of path dependency that is not deterministic. Whereas the impact of early reforms is more significant than that of later ones in the process of political change, because reactive mechanisms can take place, the effects of the early policies are not deterministic.13 The book’s main argument is threefold: (a) that decentralization is a process encompassing administrative, fiscal, and political types of reforms that must be studied together and in their interactions; (b) that 13

Chapter 6, for example, shows that, in Mexico, at the intersection of two processes (decentralization and democratization), the agency of strategic actors (individual and collective) who took advantage of the opportunities offered by the larger political context made it possible to reverse the original decentralization path that the national executive had initiated.

Sequential Theory of Decentralization

17

the prevailing type of territorial interests (national or subnational) in each of the decentralizing coalitions accounts for the type of decentralization reform adopted; and (c) that the sequential order of different types of decentralization explains the resulting change in the intergovernmental balance of power. My first claim is that in studying the downward relocation of power, much is gained from a clear taxonomy of decentralization policies based on the type of authority devolved. I propose a definition of decentralization that distinguishes among administrative, fiscal, and political decentralization policies. Briefly defined (Chapter 2 provides more comprehensive definitions), administrative decentralization comprises the set of policies that transfer the dispensation of social services (education, health, housing, etc.) to subnational governments. If new fiscal resources are transferred to afford such services, administrative decentralization is funded; otherwise, it is unfunded. Fiscal decentralization policies are those designed to increase the revenues or fiscal authority of subnational governments. Lastly, political decentralization includes the constitutional or electoral reforms designed to devolve political authority to subnational actors and to create or activate spaces for the political representation of subnational polities. Unlike other definitions of decentralization, this one provides mutually exclusive and exhaustive categories that capture the whole array of decentralization policies, as I will show in Chapter 2. Unpacking the concept of decentralization in this way offers theoretical and methodological advantages. First, it reveals that, dependent on their design, some decentralization policies can actually decrease the autonomy of subnational officials. Second, it allows a distinction to be made between the interests of national and subnational executives toward different types of decentralization. Third, it differentiates among the causes that lead to varying types of decentralization. Finally, this framework makes it possible to analyze the sequential order in which decentralization policies unfold over time and how they each, in turn, affect the institutional layers of intergovernmental relations. The second part of my argument is that the prevailing territorial interests of the coalition pushing decentralization forward account for the type of policy reform adopted. Throughout the book, I identify the societal and political actors that form the decentralizing coalitions and, in a simplified form, classify these actors and the resulting coalitions according to their territorial (national or subnational) and partisan (ruling or opposition) interests. In doing so, I bring to the fore actors and interests that have been largely overlooked in analyses of the causes of decentralization, such

18

Decentralization and the Revival of Subnational Politics

as reformist civil society groups and associations of governors and mayors. As I explain in Chapter 2, if confronted with the need or opportunity to decentralize, the national executive prefers administrative decentralization to fiscal decentralization, and fiscal decentralization to political decentralization. In contrast, governors and mayors will generally want political decentralization first and foremost, fiscal decentralization next, and administrative decentralization last. According to these orders of preferences, which are derived from the literature and in-depth interviews with national- and subnational-level actors, if subnational interests prevail in the reform coalition, we should see political decentralization (or, as a second best option, fiscal decentralization) taking place. On the other hand, if national territorial interests predominate, administrative decentralization should result. In other words, the predominance of different types of territorial interests in the reform coalitions leads to the adoption of different types of decentralization reforms. Finally, the third part of the book’s main argument is that the sequence in which decentralization policies are adopted accounts for the variance in the degree of autonomy devolved to subnational officials. I argue that if administrative decentralization (A) takes place first, the national executive will enhance its bargaining power because it will be able to offload responsibilities onto the subnational governments and condition future negotiations over the allocation of resources. To finance the transition to this new administrative regime and its operational responsibilities, fiscal decentralization (F) is likely to occur next. But, empowered by the first round of administrative decentralization, the national executive will be able to set the parameters of fiscal decentralization. The subnational governments, eager for new resources in order to palliate the consequences of the previous administrative reform, will have to accept the terms set by the national executive. In this sequence of reforms, if political decentralization (P) were lastly to occur, it would not devolve a significant amount of autonomy to subnational governments because their institutional capacities and bargaining leverage would have been highly impaired by the previous rounds of reforms. Hence, the national executive would also prevail in setting the contents of political decentralization. This sequence of reforms, A → F → P, which I call the national dominance path, yields a low degree of change in the intergovernmental balance of power, as represented in the upper left quadrant of Table 1.2. At the other extreme, if political decentralization takes place first, the newfound political autonomy of subnational actors enhances their bargaining power in the subsequent rounds of negotiations over further

19

Sequential Theory of Decentralization

Table 1.2. Types of Decentralization Sequences and Expected Degree of Change in the Intergovernmental Balance of Power

Leading Territorial Actor

Causal Mechanisms

National (Degree of Change)

Subnational (Degree of Change)

Self-Reinforcing

Reactive

National Dominance Path A →F →P (Low) Subnational Dominance Path P→F→A (High)

Subnational Response Path A→P→F (Medium) National Response Path P→A→F (Low to Medium)

Notes: A: administrative decentralization; F: fiscal decentralization; P: political decentralization. Darker background indicates stronger preference by national-level actors.

types of decentralization. Politically stronger governors and mayors are likely to pressure for higher shares of subnational resources, which they generally prefer to the devolution of administrative responsibilities. Fiscal decentralization is thus likely to follow, and administrative decentralization is likely to occur last. This sequence of reforms, P → F → A, which I call the subnational dominance path (in the bottom left quadrant of Table 1.2), leads to a high degree of autonomy for governors and mayors.14 As can be appreciated in Table 1.2, the two sequences just described are characterized by the operation of self-reinforcing mechanisms, namely, the reproduction of power of the winners of the first round of reforms. However, the first decentralization policy could also trigger a reactive mechanism, such that the resulting overall sequence of reforms will no longer conform to the preferences of the actors who won in the first round of decentralization. I identify as the subnational response path those sequences of decentralization that start with an administrative decentralization reform and as such are pushed forward by the predominance of national interests, but in which a reactive mechanism 14

Although it is analytically conceivable that only one or two types of decentralization could occur, in reality, administrative, fiscal, and political decentralization are highly intertwined. For example, political decentralization is very likely to lead to demands for fiscal decentralization, which, in turn, is likely to lead to administrative decentralization. Most countries in which decentralization policies were implemented have adopted, over time, the three types of decentralization reforms.

20

Decentralization and the Revival of Subnational Politics

leads to the prevalence of subnational interests in the second round of reforms and thus to the adoption of a political decentralization measure. This is followed by fiscal decentralization, which completes the sequence A → P → F. As I explain in Chapter 2, this sequence leads to a medium degree of change in the autonomy of subnational officials. Finally, if subnational interests prevail in the first round of reforms but a reactive mechanism follows, a sequence emerges that starts with political decentralization, continues with administrative decentralization, and ends with fiscal decentralization, P → A → F. I call this sequence the national response path. Despite the political decentralization reform at its origins, the reversal produced by the national executive at the second stage means that this path produces low to medium changes in the intergovernmental balance of power. Chapter 2 elaborates on the reasons connecting sequences and outcomes. It also presents the paths that result from a tie between national and subnational interests in the first round of reforms and discusses the issues of incompleteness and contemporaneousness in the adoption of the reforms. For now, however, Table 1.2 presents the typology of the main sequences of decentralization, as just described, and the expected outcomes.

Methodological Considerations The Comparative Sequential Method Both to identify the decentralization policies and to analyze their effects on subnational politics, I use what I call the comparative sequential method. It constitutes a theoretically guided application of the method of process-tracing that uncovers and specifies the causal mechanisms that link the main events of the processes under study and compares the resulting sequences across cases to explain the sources of variance in the outcomes of interest. The method of process-tracing was originally proposed in the social sciences to incorporate historical narratives within highly abstract theories and explanations. As such, the method is not new and has been used in sociology and political science alike. However, the uses of the method in sociology and in political science reveal some important differences that are worth reviewing. Sociologist Ronald Aminzade (1993) provides one of the most succinct and illuminating definitions of process-tracing. According to Aminzade (1993, 108), the researcher has to provide “theoretically explicit narratives

Methodological Considerations

21

that carefully trace and compare the sequences of events constituting the process” of interest. Narratives, he writes (1993, 108), “allow us to capture the unfolding of social action over time in a manner sensitive to the order in which events occur. By making the theories that underpin our narratives more explicit, we avoid the danger of burying our explanatory principles in engaging stories. By comparing sequences, we can determine whether there are typical sequences across [cases] . . . and can explore the causes and consequences of different sequence patterns.” In their influential macrosociological study on the origins of democracy, Dietrich Rueschemeyer, Evelyn Huber Stephens and John D. Stephens (1992, 4) make a similar claim when they assert that “[c]ausal analysis is inherently sequence analysis” and advocate for the comparative historical method, which requires the study of fairly long time periods (1992, 34–45). My contention, however, is that over such long time periods, nonstructural causal mechanisms are harder to uncover and the resulting explanations are more likely to lose sight of the relevant actors. Moreover, in the comparative historical methods, sequential analysis becomes quasisynonymous with the timing of different processes or variables in relation to each other (whether universal suffrage came early or late in relation to industrialization, for example), rather than with the ordering of events within a process (such as events within the process of democratization). Hence, arguments that claim to be sequential are often narratives that connect independent, intervening, and dependent variables or processes (just as static methodologies would do), except that the independent and intervening phenomena are temporally antecedent to the outcome of interest. As such, these explanations do not analyze the interactions or feedback effects among the component events of a process. In political science, one of the earliest explicit definitions of processtracing was provided by Alexander George and Timothy McKeown (1985), who defined it as a method of within-case analysis to evaluate causal processes. According to George and McKeown (1985, 35), this method does not solely rely on the comparison of variations across variables in each case, but also “investigate[s] and explain[s] the decision process by which various initial conditions are translated into outcomes” (emphasis added). More concretely, the authors argue that “[t]he processtracing approach attempts to uncover what stimuli the actors attend to; the decision process that makes use of these stimuli to arrive at decisions; the actual behavior that then occurs; the effect of various institutional arrangements on attention, processing, and behavior; and the effect of other variables of interest on attention, processing, and behavior” (George

22

Decentralization and the Revival of Subnational Politics

and McKeown 1985, 35). Thus defined, the method of process-tracing is deeply rooted in the epistemological tradition of methodological individualism. It attempts to uncover the microfoundations of individual behavior that connect hypothesized causes and outcomes, but in doing so the method of process-tracing easily loses sight of collective actors. It is also limited to within-case analysis and difficult to apply in meaningful comparative ways. With regard to the privileged level of analysis, my comparative sequential method lies in between the macrosocial comparative historical method and the micro, individual-level, decision-process–oriented one. It is particularly well-suited to study processes that take from one to a few decades to develop. I call this period duration the mid-durée. In such periods, the identification of the key actors and causal mechanisms that link the different events or stages of the process under study is largely unequivocal. Policy processes, such as decentralization, are ideal objects of study to deploy this methodological approach. As Paul A. Sabatier (1993) notes in his advocacy coalition framework, the study of policy adoption, implementation, and evaluation calls for a temporal analysis of a decade or more. The comparative sequential method amalgamates the comparative approach of the historical method with the microfoundations of the decision-process–tracing method. Similarly to the analytic narratives approach of Robert Bates and his collaborators, it “seek[s] to understand the actors’ preferences, their perceptions, their evaluation of alternatives, the information they possess, the expectations they form, the strategies they adopt, and the constraints that limit their actions” (Bates et al. 1998, 11). However, unlike the analytic narratives project, my sequential method does not refer to the theory of games in extensive form. The comparative sequential method does not focus on the order of movements, or actions and reactions, of the relevant players. The sequences of interest are instead those formed by the main events or stages of a process, which may or may not coincide with all the relevant actors’ moves. Moreover, recognizing the importance of feedback loops in social processes (Büthe 2002; Pierson 1992, 2004), the sequential method analyzes the effects of previous reforms on later ones. It studies how the earlier reforms affect or constrain those that follow. Even if we assume that the actors’ preferences remain unchanged throughout the process of study, we must acknowledge that the earlier events of the process may change in fundamental ways the relevant contexts in which actors must make decisions as the remainder of the process unfolds. Each step or event

Methodological Considerations

23

along the process is thus required to be contextualized, if we are going to meaningfully interpret the options and actions of actors.15 Finally, the comparative sequential method aims to uncover the causal mechanisms that connect the main steps or events in the process of interest. As defined elsewhere (Falleti and Lynch 2009), causal mechanisms are relatively abstract concepts or patterns of action that explain how the different stages or events of a process are causally (or at the very least, plausibly) connected. A distinctive feature of causal mechanisms is their portability, the fact that they can travel from one process to another. Unlike intervening variables that are attributes of the cases or of the units of analysis, causal mechanisms explain how a hypothesized cause creates an outcome in a given context (for an extensive methodological discussion of causal mechanisms and their interaction with temporal contexts, see Falleti and Lynch 2009). Examples of these mechanisms in the literature are “learning,” “competition” (Pierson 2004, 40–1, 124–9), “institutional conversion,” and “institutional layering” (Thelen 2004, 35–7). In this book, I uncover mechanisms such as reproduction of power, policy ratchet effect, coordination, demonstration, compensation, and incrementalism. I apply this comparative sequential method to analyze the first complete cycle of decentralization policies (administrative, fiscal, and political) taking place after the demise of the developmental state. Each implemented decentralization policy constitutes an event of interest.16 Once the relevant decentralization events or episodes have been identified, I consider the preferences of national and subnational actors with respect to the types and contents of decentralization that are being proposed. Next, I study the main partisan and territorial interests of the social and political actors who propose and push forward each reform or event. Among the actors studied, at the national level, I focus on national executives (in my cases these are the presidents and their ministers), national legislators, and the national unions. At the subnational level, I focus on 15

16

In Chapter 2 I will elaborate on the relationship between actors’ preferences, choices, and context. I only take into account implemented policies because proposed but failed attempts to decentralize do not produce an impact on the intergovernmental balance of power. The failed attempts are part of the narrative of how the successfully implemented reforms came about, or they can also tell us who the losers are in the negotiations. As such, I do take them into consideration (see, in particular, the analyses of failed decentralization proposals in Chapters 3 and 5). However, unimplemented policies are not incorporated into the sequence of dated events for the simple reason that they did not materialize.

24

Decentralization and the Revival of Subnational Politics

governors, provincial and state ministers, political activists representing regional or local concerns, state and provincial representatives to constitutional conventions, and mayors. I also study coordinating institutions such as the Federal Education Council (Consejo Federal de Educación, CFE) in Argentina and the existent governors’ and mayors’ associations. Once I have specified the actors and coalitions that bargain over each reform, I assess who are the winners and losers in each round of negotiations and analyze the policy effects that previous rounds of decentralization have on later ones. Besides the temporally immediate policy effects of the reforms of the previous rounds, I also pay close attention to the temporally distant structural or institutional constraints that shape the contents of decentralization policies (such as those derived from the distinct historical evolutions of the educational systems of Argentina and Mexico). In sum, the methodological and theoretical approach undertaken in this book emphasizes the importance of medium-term and contextspecific processes and causal mechanisms. I do not place the emphasis on the “stickiness” of long-term institutional legacies (as some comparative historical explanations may do). Institutional legacies are taken into account largely as the constraints under which actors have to make choices concerning the types and contents of the decentralization reforms they want to advance. For example, I show that the historical evolution of the institutional educational systems in Argentina and Mexico led to different decisions by the national executive branches as to whether the administrative decentralization of schools would be funded. Neither do I focus on the short-term of electoral incentives. Although I do take them into account, electoral incentives are combined with territorial interests to understand the calculations and preferences of strategic actors. Thus, I analyze together the partisan and territorial interests of politicians and societal actors in order to understand their motivations toward different types and contents of policy reforms. Context and Periodization: The Decentralization Policies Studied What makes the twenty policies listed in Table 1.1 comparable or analytically equivalent? Why not push the identification of decentralization policies back or forward in time? What makes these decentralization episodes relevant, or how does one choose among all possible intergovernmental reforms? Periodization provides an answer to these questions and is fundamental to my argument. The main argument incorporates elements of

Methodological Considerations

25

path dependence precisely because the order and timing of events are so consequential. The choice of a starting point in a trajectory of events has implications for the identification of the causal mechanisms that link initial events to later ones. In addition, the sequential method that I employ relies heavily on the conceptualization and proper identification of the events of interest. Scholars differ in opinion as to the question of when a path-dependent process starts, identifying either critical junctures (Collier and Collier 1991) or contingent events (Mahoney 2000) as possible points of origin. I partially depart from those approaches. My claim is that the meanings and contents of decentralization policies and their interactions with the broader political and economic systems are largely determined by the type of nation-state they seek to reform. As a result, a new sequence of decentralization originates whenever a decentralization policy is implemented in the context of a new type of nation-state. Thus, I define the origin of the decentralization process by the nation-state context in which it takes place. Critical junctures and contingent events may or may not be present in those origins. Why is the nation-state context so important? It is important because it confers different meanings and goals on policies that, on the surface, may look alike. In Latin America, for example, decentralization policies existed prior to the late 1970s (see Eaton 2001, 2004; Montero and Samuels 2004, 14). However, different types of states gave those policies different meanings and goals. In the context of oligarchic states, decentralization reforms sought to balance power among regional elites as a means to consolidate the nation-state (Ansaldi 1992, 17). In the context of developmental states, decentralization policies sought to strengthen certain regions to make them more adequate for private investment (González 1990, 75). Finally, in the context of market-oriented or neoliberal states, decentralization policies largely sought to reduce the size of the central governments and devolve responsibilities to lower levels of government under the premise of improving fiscal and administrative efficiency and promoting popular participation. Of course, these were not the exclusive goals of decentralization reforms in each of these periods. Nonetheless, it is evident that in different historical periods the policies that transferred responsibilities, resources, or authority away from the centers were part of nation-state projects that had very different overarching political and economic objectives. For this reason, my claim is that when comparing different countries, the researcher should qualify the processes or sequences of decentralization by the type of nation-state

26

Decentralization and the Revival of Subnational Politics

in which they take place in order to assure the analytic equivalence of the compared decentralization policies and processes. This book focuses on the processes of decentralization that began with the transition from a “developmental” to a “public-goods” type of state (Block 1994). In Latin America, this was the transition from a desarrollista to a market-oriented or neoliberal type of state. During this period, decentralization policies were part of what became known as “second-generation” reforms, those enacted supposedly to level the playing field (Wood 1997) as market-economic reforms were taking place (Camdessus 1999). While it is quite challenging to pin down the exact date when the desarrollista state ended in a given country (Schneider 1999, 293), it is certainly possible to identify the first administration in each country that applied orthodox measures of economic adjustment and moved the state away from intervention in the economy. Hence, my periodization of postdevelopmental decentralization processes starts with the first decentralization policy successfully implemented by the first administration to make the transition from a developmental to a market-oriented economy and state. In most of Latin America, the transition from state interventionism to free-market economies was a response to the economic troubles unleashed by the debt crisis of the early 1980s (although not in Argentina and Chile, where the move to free-market economies preceded the foreign debt crisis). In the countries under consideration, the administrations that made such a transition were the military governments of Jorge R. Videla in Argentina (1976–1981) and João Figueiredo in Brazil (1979–1985), and the presidencies of Belisario Betancur in Colombia (1982–1986) and Miguel de la Madrid in Mexico (1982–1988). Granted, subsequent administrations applied both orthodox and heterodox economic policies, but the move away from developmentalism had already taken place (see Weyland 2002, 72, 77–81). In these administrations, therefore, the origins of the processes of postdevelopmental decentralization are found. Where does the narrative end? In this book, I analyze the first complete cycle of decentralization reforms taking place in the fiscal, administrative, and political arenas. In other words, my analysis ends when reforms in the fiscal, administrative, and political realms have all occurred. Although other decentralization or recentralization policies and episodes may have followed after the first cycle of postdevelopmental decentralization, my claim is that those subsequent policies are highly constrained by the environment of intergovernmental relations inherited from the first complete cycle of postdevelopmental reforms. After the first complete cycle of

Methodological Considerations

27

decentralization, if political actors want to introduce new intergovernmental reforms, even in the context of the same type of state, they must bargain within the constraints and possibilities generated by the highly consequential first cycle of decentralization policies. Selection of Country Cases This book constitutes a comparative study of four countries, which together account for 70% of the population of Latin America. As Peter Hall (2003, 391–2) argues, in order to unfold the process that connects causes and outcomes, comparisons of a small number of cases (or small-N comparisons) provide significant explanatory leverage. In this study, the comparison of four countries – Argentina, Brazil, Colombia, and Mexico – allows me to assess complex causal processes in a rich set of in-depth observations, namely, twenty cases of policy change taking place in the four countries. Within Latin America, several commonalities and differences (summarized in Table 1.3) make Argentina, Brazil, Colombia, and Mexico particularly suitable for comparison. First, because these are the largest countries in the region, it is safe to assume that relationships between levels of government and among subnational units have been historically contentious, and that issues of decentralization are politically relevant. Second, these four countries have similar structures of government, each with three tiers of government and subnational tiers of comparable size.17 Third, three major institutional differences among Argentina, Brazil, Colombia, and Mexico allow for controls to the main argument. With regard to the degree of autonomy of subnational officials prior to the enactment of the reforms, subnational authorities in Argentina and Brazil had high levels of autonomy prior to postdevelopmental decentralization, whereas the subnational officials of Mexico and Colombia had lower levels of autonomy vis-à-vis their central governments. In terms of their political party systems, while Argentina, Brazil, and Colombia have decentralized party systems (Archer 1995; Levitsky 2003; Samuels 2003), Mexico has a centralized one (Craig and Cornelius 1995). And with respect to their constitutional arrangements, while Argentina, Brazil, and 17

There is a wide range of variation in the number of municipalities among the studied countries: from just over 1,000 municipalities in Colombia to more than 5,500 municipalities in Brazil. Still, other Latin American countries present more variation, such as those that have historically had only two-tier governments (such as Chile , Bolivia, and Uruguay) or those that have had very weak intermediate levels (such as Ecuador and Perú).

28

Decentralization and the Revival of Subnational Politics

Table 1.3. Criteria for the Selection of Country Cases

Size

Member Units

Argentina

Mexico

Colombia

Brazil

Population (millions)

36

97

41

184

Square km (millions)

2.7

1.9

1.1

8.5

Intermediate (including national capitals)

24

32

32

27

Local

2,216

2,438

1,097

5,564

Initial Degree of Subnational Autonomy

High

Low–Medium

Low

High

Party System

Decentralized Centralized

Decentralized

Decentralized

Constitution

Federal

Federal

Unitary

Federal

Degree of Change in IBOP

Low

Medium

High

High

Sources: National statistics offices of each country, national constitutions, and for the party system variable: Archer (1995), Craig and Cornelius (1995), Levitsky (2003), and Samuels (2003).

Mexico are federal countries, Colombia is a unitary country. Hence, the four cases vary along these three important institutional variables. Finally, the four countries adopted similar postdevelopmental decentralization policies in the administrative, fiscal, and political realms, but the degree of change in the intergovernmental balance of power, the dependent variable of this study, varied widely from one country to another. Whereas Argentina experienced a low degree of change in the intergovernmental balance of power from the time before to the time after the decentralization reforms were implemented, Mexico experienced a medium degree of change, and both Colombia and Brazil experienced high degrees of change. These features, combined, provide me with an ideal set of cases with which to explore the reasons for the diverging impact of decentralization policies on the intergovernmental balance of power. The book is based on eighteen months of fieldwork research carried out in Argentina, Brazil, Mexico, and Colombia.18 The primary data 18

The fieldwork was carried out during the summer of 1998 (in Colombia), the spring of 1999 (in Mexico), the 2000–2001 academic year (in Argentina, Mexico, and Colombia), the summer of 2005 (in Brazil), and in October of 2005 (in Mexico).

Book Overview

29

analyzed include fiscal, educational, and electoral data; congressional and constitutional debates; legislation; and more than 150 in-depth interviews conducted with academics, politicians, and public officials from the national and subnational levels of government in the four countries (see the Appendix for the list of the interviewees).19 I have also relied on secondary sources, published in English, Spanish, and Portuguese, to analyze the policies of interest.

Book Overview The next chapter presents my sequential theory of decentralization, laying out its three main components: types of decentralization reforms, types of decentralization coalitions and their causal linkages to different types of decentralization, and the sequences of reforms and their effects on the intergovernmental balance of power. It also defines, conceptually and operationally, the main dependent variable of interest, the intergovernmental balance of power, and it analyzes its evolution in Argentina, Brazil, Colombia, and Mexico before and after the implementation of postdevelopmental decentralization policies. Chapter 3 traces the process of postdevelopmental decentralization in Argentina during the first cycle of reforms, from 1978 to 1994. It shows that a sequence of administrative, fiscal, and political reforms, unfolding in that order, did not yield a significant increase in the power of governors and mayors. Chapter 4 traces the process of decentralization in Colombia from 1982 to 1994. It shows that the first postdevelopmental decentralization cycle evolved from political to fiscal to administrative types of reforms and thus greatly empowered the subnational levels of governments, and municipalities in particular. Chapter 5 shows that Brazil’s initial conditions of intergovernmental relations were similar to those of Argentina. However, because Brazil followed a sequence of reforms similar to that of Colombia between 1980 and 1988, the end result was a significant devolution of fiscal, administrative, and political authority to subnational officials, even when viewed against the backdrop of Brazil’s initial conditions. Chapter 6 presents the postdevelopmental process of decentralization in Mexico, in which an exogenous democratization process intersected the sequence of decentralization and reversed the original path taken. The process of decentralization in Mexico started similarly 19

The durations of the in-depth interviews range from forty minutes to more than three hours. On average, the interviews lasted between one and one-and-a-half hours.

30

Decentralization and the Revival of Subnational Politics

to that in Argentina, with administrative decentralization reforms in 1983, but exogenous changes led to political decentralization and fiscal decentralization, in that order, occurring between 1983 and 1999. This sequence of reforms, as predicted by my theory, led to a middleground result in terms of the evolution of the intergovernmental balance of power. Finally, Chapter 7 summarizes the book’s main findings regarding the effects of decentralization on subnational politics and the role of territorial interests in the adoption of different types of decentralization policies. It also lists the main contributions the book makes to the literature on decentralization, intergovernmental relations, path dependence, and institutional evolution, and outlines research tasks for future studies of subnational politics and temporal analysis.

2 A Sequential Theory of Decentralization and the Intergovernmental Balance of Power

Decentralization is changing the way we study politics. In the field of comparative politics, a significant number of scholars have recently moved the foci of their analyses from the national to the state-level and local governments (e.g., Chavez 2004; Gibson and Calvo 2000; Grindle 2007; Remmer 2007; Snyder 2001; Wibbels 2005, Chapters 6 and 7), and from the horizontal relations among branches of government to the vertical relations among intergovernmental levels and between centers and peripheral regions (e.g., Amoretti and Bermeo 2004; Boone 2003; Diaz-Cayeros 2006; Eaton 2004; Gibson 2004; Suberu 2001; Treisman 1999). In the recent past, new or rediscovered types of political representations and aggregation of interests have emerged, which underline the importance of intergovernmental relations, subnational governments, and the associations that coordinate their territorial interests. The study of subnational politics and institutions and intergovernmental relations is no longer “limited to seeing the pirouettes of pettifogging bureaucrats fighting apparently abstract battles over local autonomy, federalism, and revenue sharing” (Tarrow 1978, 1). Instead, we understand intergovernmental and center-periphery relations to be crucial for a wide range of political and economic issues such as the processes of state-building, the negotiation of ethnic conflicts, the stability of governments, and the likelihood of successful adoption of macroeconomic reforms. Nonetheless, a large portion of the political science and decentralization literature still focuses on the incentives, interests, and actions that derive from the partisan or ideological affiliations of societal and political actors. Territorial interests and territorial politics have been largely 31

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A Sequential Theory of Decentralization

neglected – for recent notable exceptions see the works of Catherine Boone (2003) and Edward L. Gibson (forthcoming). By territorial politics, I do not mean the revival of the politics about territory or of the conflicts over disputed borders or territories.1 Instead, following Tarrow (1978, 1), I refer to the politics of “issues that are fought out across territory.” More concretely, I define territorial politics as the set of conflicting territorial interests among levels of government and geopolitical units, as represented by political and societal actors in a given conflict or bargaining process.2 As the wealth of empirical evidence presented in the following chapters shows, territorial politics is fought out horizontally, among the subnational geopolitical units, as well as vertically, among the different levels of government. By theoretically analyzing the relationship between decentralization policies and territorial politics, this chapter aims to fill in this important theoretical gap. The chapter is organized into two parts. The first part presents the three main components of my sequential theory of decentralization: (a) the types of decentralization and its recipients; (b) the territorial interests of bargaining actors and the decentralizing coalitions; and (c) the sequences of reforms and their hypothesized effects on the outcomes of interest. This theory is devised to account for the causes of the adoption of different kinds of decentralization policies and their effects on the intergovernmental balance of power, and will be applied to the empirical analysis in Chapters 3 through 6. The second part of this chapter provides a conceptual and operational definition of the intergovernmental balance of power variable and measures its evolution in Argentina, Brazil, Colombia, and Mexico from the late 1970s to the late 1990s. The degree of change in the intergovernmental balance of power experienced by each country is the main dependent variable of interest. 1

2

Although it has certainly been the case that in multinational countries decentralization has been linked, either as a cause or an effect, to confl icts over territory (see Brancati 2009), such territorial confl icts were also prevalent before the recent wave of decentralization reforms. Note that territorial interests are not the same as territorial loyalties. Individuals may have equal loyalties or identifications with two levels of government. But when confronted with a situation in which levels of government are in confl ict, my claim is that individuals will tend to align with one level or the other, particularly if these individuals are the negotiators or proponents of reforms that affect the distribution of responsibilities, resources, and authority among levels of government. Also note that although I am interested in the territorial interests of national- and subnational-level actors, the distinction between interests and loyalties also applies to supranational actors.

Types of Decentralization and Recipients

33

Types of Decentralization and Recipients By prioritizing different theories and methodological approaches, the literature on decentralization has divided the process of decentralization into its component parts. The public-policy literature, for example, concentrates on administrative or sectoral decentralization, such as the transfer of education and health services. There is a methodological preference for descriptive case studies that have nongeneralizable conclusions (e.g., Di Gropello and Cominetti 1998). In economics, the fiscal federalism and public choice literature have concentrated fairly narrowly on issues of fiscal decentralization as a means to achieve fiscal efficiency (Shah 1994). Economic policy recommendations are derived from axiomatic assumptions, but a disregard for the cultural, historical, and institutional variations present across spatial contexts renders many of these recommendations largely inadequate (for an excellent critique of the assumptions of the fiscal federalism theory, see Prud’homme 1995). In political science, both the political and fiscal types of decentralization, as well as their linkages, have been studied (Eaton 2004; Garman et al. 2001; Grindle 2000; O’Neill 2005). Nonetheless, little attention has been paid to administrative decentralization, despite the fact that administrative and fiscal decentralization are highly intertwined. Two important exceptions in the political science literature are the book written by Merilee Grindle (2004a), which includes cases of decentralization in education, and the book edited by Robert Kaufman and Joan Nelson (2004), which analyzes administrative decentralization in health and education. But even these studies do not analyze the interactions among different types of decentralization and the consequences of their varying timing and evolution. A few studies have proposed a multidimensional approach to decentralization that includes political, fiscal, and administrative aspects (see Manor 1999, 4–12; Montero and Samuels 2004, 8; Parker 1995; PenfoldBecerra 1999, 90–91; Schneider 2003). As Andrew Parker nicely puts it, “Like a soufflé that requires just the right combination of milk, eggs, and heat to rise, so a successful program of decentralization will need to include just the right combination of political, fiscal and institutional elements” (Parker 1995, 44). He also wisely notes that in order to evaluate the effects of decentralization, all those areas must be analyzed together (Parker 1995, 25). The problem is that the definition of what exactly constitutes an administrative, fiscal, or political type of decentralization varies from author to author. Some authors include in their definitions transfers to

34

A Sequential Theory of Decentralization

nonstate actors, such as privatization reforms (Cheema and Rondinelli 1983, 24–25; von Haldenwang 1991, 60–62). Others conflate the revenues and expenditures sides of decentralization, calling them either fiscal or functional decentralization (Montero and Samuels 2004; Willis et al. 1999), or exclusively utilize fiscal indicators to mean both fiscal and administrative decentralizations (Schneider 2003). Yet others include democratizing political and institutional reforms that go beyond the devolution of resources, responsibility, or authority to subnational governments and refer to them as either institutional or democratic decentralization (Manor 1999; Parker 1995), thus stretching the concept of decentralization to include democratization events. But conceptual clarity in the definition of decentralization and its component elements is crucially important for the identification of the relevant policies (or events) across space and time and for the application of the comparative sequential method presented in the previous chapter. I define decentralization as a process, as the set of policies, electoral reforms, or constitutional reforms that transfer responsibilities, resources, or authority from higher to lower levels of government.3 Defined as such, decentralization policies and reforms do not include transfers of authority, resources, or capacities to nonstate actors, such as in privatization reforms. According to my definition, the “donors” and the “recipients” of resources, responsibilities, or authority are the different levels of government. The downward transfer of authority can flow from the national to the subnational levels (like most of the decentralization policies analyzed in this book) or from the intermediate (i.e., states, provinces, or departments) to the local levels of government.4 Postdevelopmetnal decentralization reforms, moreover, may target intermediate governments exclusively, local governments exclusively, or both intermediate and local governments. Part of the negotiations over the contents of the decentralization reforms have to do with what level of government will be the recipient of the policy change, and this decision carries major political consequences.5 3

4

5

For previous defi nitions of decentralization as a process, see Agrawal (2001, 3); Garman et al. (2001, 206), O’Neill (1999, 27–29), Rondinelli and Nellis (1986, 5), and Treisman (2000, 837). In the 1960s and 1970s, Latin American countries had centralized national governments and economies, so most of the reforms pertaining to the fi rst cycle of postdevelopmental decentralization entailed transfers away from the national level of government. While transfers from the intermediate level of the states to the local level of municipalities are less common, they have taken place in Brazil and are becoming more frequent in Mexico. In Brazil, for example, after 1995, decentralization of education followed a flexible pattern. Different reforms, such as decentralization of schools’ luncheons, decentralization

Types of Decentralization and Recipients

35

Throughout the book, I also classify decentralization policies according to the type of authority devolved: administrative, fiscal, or political.6 Administrative decentralization comprises the set of policies that transfer the dispensation of social services such as education, health, social welfare, and housing to subnational governments. Most often these policies are enacted in national laws and occasionally in constitutional amendments. Administrative decentralization may entail the devolution of decision-making authority over the transferred services, but this is not a necessary condition.7 If subnational governments bear the costs of the administration and delivery of transferred services with their own pre-existing revenues, administrative decentralization is unfunded.8 If, instead, revenues are transferred from the center to meet the costs of the administration and the delivery of decentralized social services, administrative decentralization is funded. Note that in cases of funded decentralization, the downward transfer of resources intended to cover the costs of the newly transferred services leads, from an accounting perspective, to an increase in the subnational share of expenditures. One might be tempted to identify this change as a fiscal decentralization reform. However, because such an

6

7

8

of teachers’ training, and decentralization of primary education funding, targeted different combinations of states, municipalities, and school units. Such flexibility allowed the national ministry of education to build different political coalitions and ultimately succeed in passing all the educational reforms (Draibe 2004). Montero and Samuels (2004) propose a similar division of decentralization policies among political, fi scal, and administrative policy types. However, their defi nition of political decentralization is less inclusive than mine, as it considers only the popular election of subnational officials, and their defi nition of fiscal decentralization, which includes all forms of decentralization of expenditures, conflates aspects of what I call administrative decentralization. Cheema and Rondinelli (1983, 22) propose a defi nition of decentralization that distinguishes between deconcentration, delegation, and devolution according to the degree of authority devolved and the type of actors to which authority is transferred (central agencies, parastatal organizations, or subnational governments). I contend here that the degree of authority devolved and the actors to whom authority is devolved are aspects to be explained rather than built into the defi nition of decentralization. Unfunded administrative decentralization is similar to unfunded mandates in that they both establish obligations for subnational governments without the accompanying resources. However, unlike the unfunded mandates of legislation in the United States, in which a higher level of government establishes policy regulations that the lower levels of government must follow without providing for their new costs, unfunded administrative decentralization entails the downward transfer of existent public services and programs and their costs. In these cases, the higher level of government cuts its costs by off-loading responsibilities, which does not occur with unfunded mandates (for a discussion of unfunded mandates in the United States after the Reform Act of 1995, see Posner 1997).

36

A Sequential Theory of Decentralization

Table 2.1. Types of Decentralization and Expected Impact on the Autonomy of Governors and Mayors Type of Decentralization

Defi nition

Expected Impact on the Degree of Autonomy of Governors and Mayors

Administrative Decentralization

Set of policies that transfer the dispensation of social services such as education, health, social welfare, and housing to subnational governments. Set of policies designed to increase the revenues or fiscal authority of subnational governments. Set of electoral reforms or constitutional amendments designed to devolve political authority to subnational actors and to open new – or activate existing but dormant or ineffective – spaces for the representation of subnational polities.

+/–

Fiscal Decentralization Political Decentralization

+/–

+

increase in the share of expenditures is tied to newly transferred responsibilities, according to my definition, it must be classified as part of the administrative decentralization measure. Administrative decentralization can have either a positive or a negative impact on the autonomy of subnational executives, as depicted in the last column of Table 2.1. This impact will depend on the contents and institutional design of the policies. If administrative decentralization improves local and state bureaucracies, fosters training of local officials, or facilitates learning through the practice of delivering new responsibilities, it will increase the organizational capacities of subnational governments and will thus have a positive impact. However, if administrative decentralization takes place without the transfer of funds, such reform may decrease the autonomy of subnational officials. If subnational officials cannot refuse to provide the services, they will have to beg the national executive for more resources, which are likely to come with strings. Alternatively, and if they are constitutionally allowed, they may have to issue subnational debt to afford the delivery of the newly

Types of Decentralization and Recipients

37

transferred public services. But this will place them in a more precarious fiscal situation.9 By fiscal decentralization I refer to a set of policies designed to increase the revenues or fiscal authority of subnational governments. Fiscal decentralization policies can have varying institutional forms. In principle, three institutional forms of fiscal decentralization can be identified. First, an increase in the percentage of transfers from national to subnational governments that is not tied to administrative decentralization (or to newly transferred social services) constitutes a fiscal decentralization measure. In federal countries, such change to the distribution of revenue-sharing schemes among levels of government often requires a constitutional amendment. Second, the creation of new subnational taxes is another example of a fiscal decentralization reform in that it augments the amount of fiscal revenues collected at the subnational level. Finally, the delegation of tax authority that was previously in the hands of the national government constitutes a third form of fiscal decentralization in that it augments the fiscal authority of subnational governments. It is worth noting that, unlike other definitions that indistinctly, or in combination, take into account increases in the subnational shares of revenues and expenditures as indicators of fiscal decentralization (cf. Montero and Samuels 2004, 7; Schneider 2003, 36–37), I reserve the term fiscal decentralization for an increase in subnational revenues. An increase in subnational expenditures, on the other hand, could result from a funded administrative decentralization measure, as noted two paragraphs earlier. The analytic separation between the fiscal and the administrative aspects of decentralization (and the revenue and expenditure components of subnational finances, to which they are respectively tied) makes it easier to evaluate the consequences of decentralization processes where the transfer of expenditure responsibilities and the transfer of revenues do not take place contemporaneously.10 In fact, we can learn a great deal from the timing of these reforms. For example, a significant time lag between unfunded administrative decentralization and fiscal decentralization most likely indicates that the national government has the upper hand (as we see in the case of Argentina), whereas a significant delay 9

10

As shown in Chapter 3, Argentine governors were faced with both of these situations after the responsibility of providing primary and secondary education was transferred to them in 1978 and 1992, respectively, without the corresponding fiscal resources. Thus, seemingly contradictory outcomes such as “centralization via decentralization” (Wibbels 2004, 220–21) become intelligible if they are instead referred to as “unfunded administrative decentralization.”

38

A Sequential Theory of Decentralization

between fiscal and administrative decentralization could be an indicator of the predominance of subnational interests in the bargaining process. Just as in the case of administrative decentralization, fiscal decentralization can have either a positive or a negative impact on the degree of autonomy of the subnational levels (as depicted in Table 2.1). The result will depend largely on the institutional design of the fiscal decentralization policy implemented and the characteristics of the subnational units to which revenues are devolved. Higher levels of automatic transfers from the center invariably increase the autonomy of subnational officials because they benefit from higher levels of resources without being responsible for the costs – bureaucratic and political – of collecting those revenues.11 On the contrary, the delegation of taxing authority to subnational units (i.e., the third institutional form of fiscal decentralization mentioned previously) that lack the administrative capacity to collect new taxes can set serious constraints on local budgets and increase the dependence of local officials on transfers from the center. Prosperous subnational units prefer to collect their own taxes, but poor states and municipalities are negatively affected every time the collection of taxes is decentralized, and, as a consequence, the horizontal redistribution of money from rich to poor subnational units is cut down.12 Finally, political decentralization is the set of electoral reforms or constitutional amendments designed to devolve political authority to subnational actors and to open new – or activate existing but dormant or ineffective – spaces for the representation of subnational polities. Note that, unlike previous definitions of political decentralization, which tend to be limited to the popular election of subnational executives (e.g., Eaton 2006; Montero and Samuels 2004, 7; O’Neill 2005), this definition includes other measures that seek to strengthen the political autonomy of subnational polities. Examples of such measures are the creation of subnational legislative assemblies and the enactment of constitutional reforms that strengthen the political authority of states or municipalities. 11

12

For a different interpretation of the role of automatic national transfers to subnational units, particularly as they affect macroeconomic stability and budget constraints, see Rodden and Wibbels (2002) and Rodden (2006). This was the case regarding the transfer of the levying of taxes on new automobiles from the central government to the states in Mexico. After being transferred in the mid-1990s, this tax was returned to the national government a few years later due to the administrative and political incapacities of some states to levy the tax (Poder Ejecutivo Federal 1997, 8). In the meantime, states such as Chiapas saw their revenues diminish as a result of this fi scal decentralization reform (interview with Zenteno, 2001).

Types of Decentralization and Recipients

39

Political decentralization, by the definition provided, should almost invariably increase the autonomy of subnational officials (see Table 2.1).13 It is important to note that although political decentralization and democratization can be mutually reinforcing, the two processes need to be analytically distinguished. The return to free and fair elections at all levels of government following an authoritarian regime does not necessarily constitute a political decentralization measure. Such a change represents democratization, but not political decentralization, because in this case the reinstatement of the pre-authoritarian period electoral norms and rules would not entail the negotiation of a reform that specifically targets the subnational level.14 Similarly, if an electoral reform that is designed to augment political competition in the entire political system were to have the unintended consequence of increasing the power of subnational political actors, it can still not be considered a political decentralization measure because it was not planned, designed, or negotiated with the explicit goal of empowering subnational polities.15 To qualify as political decentralization, the reform in question must explicitly address the devolution of political authority to subnational polities. By unpacking decentralization in this way, we see that, depending on their institutional design, administrative and fiscal decentralization policies can actually decrease the power of subnational officials vis-à-vis the national executive. What are the determinants of different institutional designs? As I show in the following sections and chapters, while historical legacies and contextual conditions do play a role, the institutional designs of political, administrative, and fiscal decentralization policies are most highly dependent on the types of territorial interests that dominate in the first round of negotiations over decentralization reforms and the order in which these policies unfold. 13

14

15

The only case in which political decentralization could have a negative effect on the power of governors and mayors vis-à-vis the national executive is when there is a separation of powers at the subnational level (such as through the creation of subnational legislatures or municipal councils) that divides the subnational government. In such instances, the subnational political opposition could undermine the authority of governors and mayors in relation to the national executive. This was the case with the return to democratic elections for executives and legislators of all levels of government in 1983 in Argentina, at the end of the last military dictatorship, as I explain in Chapter 3. This was the case with some of the electoral reforms that have taken place in Mexico since 1977. They were intended to augment political competitiveness in the entire political system but had the unintended consequence of strengthening regional actors due to the geographically concentrated distribution of support for opposition parties (see Ochoa-Reza 2004).

40

A Sequential Theory of Decentralization

Bargaining Actors: Partisan and Territorial Interests Decentralizing political and societal actors have two main sources of loyalties: their partisan or ideological identity and their territorial identity. The political science literature on decentralization has largely focused on the partisan and electoral components of the incentives that move the process of decentralization forward but has overlooked the territorial aspect. O’Neill (2005), for example, focuses on the partisan incentives of national executives to decentralize, as discussed in the previous chapter. Similarly, although they focus on the role of legislators, Christopher Garman, Stephan Haggard, and Eliza Willis (2001) as well as David Samuels (2003, Chapter 8) argue that fiscal decentralization takes place when, due to electoral or political career incentives, national legislators are more accountable to subnational than to national politicians. Other authors move the focus of analysis to the bargaining situations between national and subnational politicians (Eaton 2004; Montero and Samuels 2004) but still focus on the “incentives [that] arise from electoral institutions, the internal structure of political parties, [or] . . . politicians’ strategic competition” (Montero and Samuels 2004, 20). But as Tarrow (1978) rightly pointed out three decades ago, every time politicians are elected in distinct geographic areas, they also represent territorial interests. By placing the emphasis on political competition and political party affiliation, decentralization studies have largely overlooked the territorial aspects of interests’ representation and bargaining. In the case of elected officials, even if party discipline is achieved, it is often the result of a lengthy and arduous process of negotiations in which provincial representatives have to solve the conflict between their partisan and territorial interests.16 Moreover, there are other societal and political actors, who are nonelected or have no interest in being elected, and who must also reconcile their territorial and partisan or ideological identities when it comes to issues and conflicts over the distribution of resources, responsibilities, or authority among levels of government. Hence, an important distinction must be made between the partisan and the territorial components of the bargaining actors’ interests concerning decentralization reforms. In this book, the partisan interests of decentralizing actors are defined, in a simplified way, by the political party to which they belong, or by their 16

This is made clear, for example, in my analysis in Chapter 3 of the negotiations over the decentralization of education in Argentina during the fi rst presidency of Carlos Menem (1989–1995).

Bargaining Actors: Partisan and Territorial Interests

41

identification (guided by their ideologies) with either the ruling party or the opposition groups. In general, partisan interests are oriented by electoral incentives or political parties’ ideologies and programs. Territorial interests, on the other hand, are defined by the level of government that the actors represent. In the cases under study (as well as in a vast number of countries around the world), three levels of government exist: the central, the intermediate, and the local levels. As specific examples of territorial interests, we have that the national executive, elected in a national district, cares about the country’s macroeconomic stability. Governors, on the other hand, are preoccupied with increasing the revenues of their jurisdictions, regardless of the macroeconomic consequences that such an increase could have for the country as a whole (Remmer and Wibbels 2000, 421–22). Similarly, mayors care about the policies that affect their localities, without much concern for the externalities of their policies in neighboring municipalities (an example would be the negative spillover effects of garbage and sewage treatments in large cities, which often affect neighboring municipalities). Territorial interests are also defined by the characteristics of the geopolitical territorial unit (rich or poor, revenue-producing or revenue-consuming, urban or rural, agricultural or industrial, extractive or service-based economies, etc.) that politicians and societal actors represent. A classic example is the different interests of legislators, governors, and mayors of rich and poor states with regard to the criteria for distributing national fiscal transfers among the subnational units. While the politicians who come from rich states prefer a formula that weighs more heavily the fiscal efforts of the subnational units in the collection of revenues, politicians from poor states defend the use of population or poverty criteria in determining the amount of money to be assigned to the subnational units. Another example would be the territorial interests of politicians from oil-producing provinces. They invariably demand provincial control over natural resources, while the representatives from non–oil-producing provinces prefer that those resources remain at the central level so that a portion of them is then redistributed among all the subnational units. Societal actors also have national or subnational interests depending on their affiliations, sources of power, and levels of operation or representation. For example, the leaders of the Mexican National Union of Education Workers (Sindicato Nacional de Trabajadores de la Education, SNTE) had clearly national territorial interests when negotiating the decentralization of education. In the negotiations with the federal government that led to the 1992 decentralization agreement, the union leaders

42

A Sequential Theory of Decentralization

were concerned that the decentralization of education could cause the union to break up into thirty-one state sections. When the SNTE leadership finally agreed to decentralize education, they made sure that teachers’ salaries would be negotiated at the national level, hence guaranteeing their survival as a national union (see Chapter 6 for a description of this process). The civic strikers in Colombia (see Chapter 4), on the other hand, represented the subnational interests of their municipalities, which were the sites of organization of the protests. Municipalities were the loci of civic strikers’ demands, which involved complaints about inadequate local services. The same is true of the movimento sanitário, a public health movement in Brazil (see Chapter 5). The sanitaristas defended the subnational interests of municipalities and pushed forward a process of decentralization of health from the central government to the municipal level. In a simplified and dichotomous layout of territorial and partisan interests, Table 2.2 lists societal and political actors that are most often found in decentralization coalitions. Among those actors are the national executive, governors, mayors, national and state legislators, city councilors, constitutional conventionalists, governors’ and mayors’ associations, unions, and civic movements. The table distinguishes between national and subnational interests along the territorial dimension, and between ruling and opposition interests along the partisan dimension. Thus, a classification of four types of decentralizing actors emerges: ruling-national, rulingsubnational, opposition-national, and opposition-subnational actors. In general, in the bargaining over specific decentralization policies, those actors whose territorial interests are national tend to oppose decentralization (or at least a high level of fiscal and political decentralization), whereas those whose territorial interests are subnational will favor decentralization, particularly in their fiscal and political variants. It is worth noting that in other types of policy reforms, such as privatization, flexibilization of labor, and welfare reforms, it might be difficult, if not impossible, to identify and classify a priori the interests of the societal and political actors involved in the bargaining process.17 In the case of decentralization policies, however, it is easier to identify the coalition of actors who are interested in further devolution of authority to subnational governments and those who would like to prevent it. National bureaucracies and national unions, for example, are generally opposed to 17

I thank Dietrich Rueschemeyer and Ato Kwamena Onoma for their comments regarding this issue.

Bargaining Actors: Partisan and Territorial Interests

43

Table 2.2. Bargaining Actors of Decentralization by Territorial and Partisan Interests Partisan Interests Ruling • •

National

•

•

• •

• •

• •

Subnational

Territorial Interests

•

•

•

• •

•

•

Opposition

National executive National cabinet Ruling legislators elected in a national district Ruling constitutional conventionalists elected in a national district Officialist national unions

•

Ruling or appointed governors Ruling or appointed governors’ cabinets Ruling or appointed mayors Ruling or appointed mayors’ cabinets Ruling state legislators Ruling city councilors Ruling associations of governors Ruling associations of mayors Ruling regional unions Officialist prodecentralization civic movements Ruling national legislators elected in provincial level districts Ruling constitutional conventionalists elected in provincial level districts

•

•

•

•

• • • • •

•

• •

•

•

Opposition legislators elected in a national district Opposition constitutional conventionalists elected in a national district Opposition national unions

Opposition governors Opposition governors’ cabinets Opposition mayors Opposition mayors’ cabinets Opposition state legislators Opposition city councilors Opposition associations of governors Opposition associations of mayors Opposition regional unions Opposition pro-decentralization civic movements Opposition national legislators elected in provincial level districts Opposition constitutional conventionalists elected in provincial level districts

Note: The ruling and opposition attributes of bargaining actors along the partisan interests variable are defined by the partisan affiliation of the national (not the subnational) executive. For example, if a state is controlled by a governor of the opposition, a ruling state legislator is a member of the national executive’s (not the governor’s) party or coalition.

44

A Sequential Theory of Decentralization

decentralization because these reforms threaten the bases of their power and, in some cases, their own existence. Governors and mayors, on the other hand, will almost invariably favor decentralization of political authority and of fiscal resources (particularly in the form of higher levels of automatic transfers). Their position toward administrative decentralization, as we see in the following section and in the empirical chapters, is not as straightforward and depends on whether the transfer of social services is funded.

Territorial Preferences of National Executives, Governors, and Mayors Although national executives, governors, and mayors are not the sole negotiators of decentralization, they are certainly one important subset of the bargaining actors. National executives, governors, and mayors can win or lose significant amounts of power depending on the types and contents of the decentralization policies adopted. In the next section, I return to the broader set of societal and political decentralizing actors and their coalitions. In this section, however, I spell out the preferences that national executives, governors, and mayors are likely to have when negotiating types and contents of decentralizing reforms, in the context of a postdevelopmental nation-state.18 Drawing from the literature on decentralization and from in-depth interviews carried out with national and subnational politicians and public officials (the list of which is included in the Appendix), I can specify the preferences of national and subnational executives with regard to the types of decentralization and the recipient levels of government. When faced with the need or opportunity to decentralize, my claim is that the national executive will prefer administrative decentralization (A) to fiscal decentralization (F), which in turn will be preferred to political decentralization (P), or A > F > P, as illustrated in Table 2.3. The rationale of this ordering is that the national government seeks to divest itself of expenditure responsibilities first and foremost. As Chistopher Garman, Stephan Haggard, and Eliza Willis (2001, 209) note: “[W]e would expect the president to be more inclined to transfer responsibilities than the resources to meet them.”19 If the center has to choose between 18

19

As noted in Chapter 1, the preferences of the national executives, governors, and mayors in other types of nation-states may be different than those specified here. In fact, the national government will always prefer to devolve administrative authority without carrying the fi scal costs. The limited fi nancing of the administrative

45

Territorial Preferences Table 2.3. Induced Preferences of Bargaining Actors Actor National Executive Governor Mayor

Type of Decentralization

Recipient

A>F>P P>F>A P>F>A

L > SL > S S > SL > L L > SL > S

Notes: A: administrative decentralization; F: fiscal decentralization; P: political decentralization; L: local level; S: state level; SL: state and local levels jointly.

surrendering fiscal or political authority, it will choose to give away fiscal authority and to retain political control. The political control of subnational officials, in particular the national executive’s power to appoint the subnational executives, could very likely serve to influence the expenditure decisions made by these officials, even if they were granted greater fiscal autonomy. A similar rationale helps to explain the reverse order of preferences for governors and mayors. Their preference, first and foremost, is political decentralization. For instance, if the national executive does not control the appointment and removal of governors and mayors, they can push forward the issues and concerns of their territorial units without fear of political retaliation from the center. Political decentralization confers on governors and mayors more freedom to rule in their territories and to present demands to the center. In fact, once they have secured a higher level of political authority, governors and mayors can push forward fiscal decentralization with a greater chance of success.20 This sequence of events arises often in practice. As Garman et al. (2001, 208) observed, the “growth in the political influence of subnational politicians is subsequently reflected in fiscal practice through greater decentralization.” In other words, political decentralization is likely to lead to fiscal decentralization. It is less obvious (and arguably less common) that fiscal decentralization would lead to political decentralization. In fact, if fiscal decentralization were to take place first, it is more likely that

20

decentralization policy and its operation, consequently, will always be preferred by the national executive. In the words of Francisco Barrio, governor of Chihuahua from 1992 to 1998, during the period of PRI hegemony, “. . . a big portion of the distribution of resources is still discretional. As such, the political capacity of the governor to negotiate continues to be fundamental [to extract more resources from the center]” (in a lecture given at CIDE, in Mexico City, April 30, 1999).

46

A Sequential Theory of Decentralization

administrative decentralization, which, as explained in the next paragraphs, is the least preferred type of decentralization for subnational actors, would follow. After fiscal decentralization, the national executive would likely push forward administrative decentralization to compensate for the prior decentralization of revenues. This is largely why governors and mayors prefer political decentralization to fiscal decentralization. If governors and mayors have to choose between fiscal and administrative decentralization, they will choose the transfer of revenues over responsibilities, particularly if the unions representing the public sectors to be decentralized are large and strong. In general, subnational officials prefer higher levels of automatic nonearmarked transfers to other forms of fiscal decentralization. This type of decentralization of revenues gives governors and mayors more autonomy to spend the newly transferred money as they wish, without incurring the bureaucratic or political cost of having to collect their own taxes.21 Administrative decentralization is, by far, the least preferred type of decentralization for subnational executives. Administrative decentralization entails a host of responsibilities for governors and mayors that are either not funded or, as subnational officials often claim, insufficiently funded.22 Moreover, the workers of the decentralized public social sectors (education, health) are organized in large and powerful unions (the Mexican teachers’ union, SNTE, is the largest union in Latin America).23 Governors and mayors are less inclined to negotiate with these actors than to receive higher levels of revenues (through fiscal decentralization) or political authority (through political decentralization). In sum, for

21

22

23

In the in-depth interviews, the subnational officials of the economically developed subunits expressed a desire for higher levels of subnational taxation autonomy (interview with Remes Lenicov, 2001, and interview with Luna de la Vega, 2001), but the representatives of less developed subunits recognized that while a demand for tax collection autonomy might be part of their public rhetoric, in reality they preferred to rely on transfers from the center (interview with Zenteno, 2001). As explained by an economist at the National Ministry of Economy in Argentina, “To the governors, the political costs of collecting more taxes is exceedingly high when compared to the resources it brings in” (interview with Laurnagaray, 1998). Rodrigo Escobar Navia, Minister of Education of Colombia (1983–1984), said that subnational officials considered education services “the hot potatoes that the central government wanted to get rid of” (interview with Escobar Navia, 2001). Miguel de la Madrid, former President of Mexico (1982–1988), said: “I noted that the governors were shy to accept new responsibilities. They would put it one way or another to me, but they were afraid that a massive delegation of responsibilities would cause them big problems, starting with the unions. The states felt weak to negotiate with the national unions” (interview with de la Madrid, 2001).

Decentralizing Coalitions and Territorial Interests

47

subnational officials, administrative decentralization is far less preferred than the other two forms of decentralization.24 Subnational executives prefer political autonomy, money, and responsibilities, in that order (or P > F > A). National and subnational executives also have different preferences with regard to the level of government that is targeted by the decentralization reforms. If confronted with the opportunity or need to decentralize, the national executive prefers to do it toward the local level (L), since mayors pose less of an electoral and financial threat than governors. When choosing between the two options of decentralizing toward the state level exclusively (S) or toward the state and local levels together (SL), the national executive prefers the latter scenario, in which governors are forced to share power with mayors. For the national executive, the “divide and rule” principle applies. The last option for the central government is to decentralize only toward the state level (S), because governors – particularly those of rich and big states – can pose a political as well as fiscal threat to the national executive’s power and her stability once in office. In sum, the order of preferences for the national executive with regard to the recipient level of government is L > SL > S (see Table 2.3). Governors seek to control resources and authority over the municipalities. They prefer decentralization toward the state level first (S) and both levels second (SL). They are reluctant to see mayors obtain political or fiscal autonomy if governors do not (L). Thus, with regard to the level of decentralization, governors’ order of preferences is S > SL > L. Conversely, mayors’ order of preferences with regard to the levels of decentralization is L > SL > S.25

Decentralizing Coalitions and Territorial Interests National executives, governors, and mayors need to build coalitions that make the policy reforms they want politically achievable, particularly in 24

25

It is worth noting, however, that if administrative decentralization is funded, subnational authorities will not oppose it outright and may indeed favor it. Funded administrative decentralization gives subnational authorities varying levels of discretion regarding the management of social services (and their payroll) in their territories. If administrative decentralization is unfunded, however, subnational authorities will most likely oppose it from the outset. Note than in the case of unfunded administrative decentralization, governors will not mind this reform taking place toward the local level and mayors will not care if such a reform were to occur toward the state level.

48

A Sequential Theory of Decentralization

contexts of moderate to high levels of political contestation.26 To what extent does it matter whether the decentralization bargaining actors represent national or subnational interests, or whether they are members of the opposition or ruling groups? I argue that it matters superlatively for the type of decentralization policy first adopted and for the contents and characteristics of the decentralization policies that will follow. In general, and as explained in the previous sections, bargaining actors with national territorial interests (top row of Table 2.2) tend to oppose decentralization whereas bargaining actors with subnational territorial interests (bottom row of Table 2.2) tend to favor decentralization. But what happens when partisan interests are also taken into account? If the national executive opposes decentralization, the partisan and territorial interests of subnational ruling actors will be in conflict. If party discipline is strong, subnational ruling actors will feel compelled to align with the chief executive, but doing so will carry the high cost of neglecting the territorial interests of their districts’ constituencies, who may favor decentralization. The territorial and partisan interests of national opposition actors are also often in conflict. Given their territorial interests, national opposition actors may seek an alliance with the national executive on issues of decentralization, but this will be despite their oppositional standing. Thus, if subnational opposition actors were to push forward a decentralizing agenda, both the subnational ruling and the national opposition actors would have to choose between their territorial and partisan interests. In fact, as I will show in the subsequent chapters, when negotiations over decentralization policies take place, the contents of the reforms are largely dependent on how the conflict between partisan and territorial interests of the bargaining actors is solved. Building on the classification of bargaining actors according to their territorial and partisan interests as proposed in Table 2.2, and assuming that at least two different types of actors are needed to build a politically successful decentralization coalition (which seems to be a reasonable assumption to make in the context of regimes with moderate to high levels of contestation and participation), we can distinguish six coalitions. As represented in Figure 2.1, these six coalitions are (1) a nationallevel coalition formed by national level political leaders of the ruling and opposition parties; (2) a subnational coalition formed by ruling and 26

In authoritarian or low contestation contexts, the national executive can impose its most preferred option on the subnational actors. This is what the Argentine military did when it decentralized all federal primary schools to the provinces in 1978 (see Chapter 3) and what Miguel de la Madrid did in Mexico in 1983 (see Chapter 6).

49

Decentralizing Coalitions and Territorial Interests Partisan Interests Ruling Party Territorial Interests

Opposition Parties

National-Level Coalition

Ruling Coalition

Mixed Coalitions

Opposition Coalition

National

Subnational Subnational Coalition

Figure 2.1. Decentralization Coalitions According to Territorial and Partisan Interests

opposition subnational actors; (3) a ruling coalition formed by national and subnational actors identified with the ruling party; (4) an opposition coalition formed by national and subnational actors identified with the opposition; and two mixed coalitions, (5) one formed by the national-ruling and subnational-opposition actors, which I call NR-SO (for national-ruling and subnational-opposition), and the other (6) formed by national-opposition and subnational-ruling political actors, which I call SR-NO (for subnational-ruling and national-opposition).27 I argue that the territorial interests that prevail in the first round of negotiations will determine the type and contents of the first decentralization policy adopted, which in turn will affect subsequent reforms and their effects on the evolution of the intergovernmental balance of power. The first set of hypotheses to be tested in the following chapters thus refers to the type of territorial interests that prevail in each coalition and the type of decentralization reform each coalition is likely to propose. Table 2.4 summarizes the hypotheses regarding decentralization 27

In reality, the actors forming a decentralizing coalition could come from more than two of the quadrants in Figure 2.1. In those cases, the two most prominent or active types of actors would have to be chosen to classify the corresponding decentralization coalition by these criteria.

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Table 2.4. Territorial Interests: Hypotheses Regarding the Causes of Decentralization Type of Coalition

Expected Prevailing Territorial Interests

Expected Type of Decentralization

National-level Coalition Subnational Coalition Ruling Coalition Opposition Coalition Mixed Coalition NR-SO Mixed Coalition SR-NO

National Subnational National Subnational Subnational N/A

A P or F A P or F P or F N/A

Notes: A: administrative decentralization; F: fiscal decentralization; P: political decentralization; N/A: not applicable.

coalitions, their prevailing territorial interests, and the type of decentralization most likely to result. My assumptions are that in decentralization coalitions where the territorial level of representation of the main coalition actors is the same (the horizontal coalitions of Figure 2.1), their territorial interests toward decentralization will prevail over their partisan interests.28 Thus, in a national-level coalition, the national territorial interests of the national ruling and opposition actors coincide and therefore prevail. Considering the territorial preferences of national-level actors toward types of decentralization, this type of coalition is likely to advance an administrative decentralization measure and unlikely to propose either political or fiscal decentralization. The opposite case is that of a subnational coalition, where the subnational territorial interests of subnational ruling and opposition actors coincide and hence prevail. This type of coalition will most surely propose a political or – if they cannot succeed with a political – a fiscal decentralization measure. It is unlikely that a subnational coalition will propose administrative decentralization. With regard to the decentralization coalitions in which the partisan standing of the main coalition actors is the same (these are the vertical coalitions of Figure 2.1), in a ruling coalition, one would expect the national-level actors to have the upper hand over their subnational co-partisans. This is because national ruling actors are likely to have more resources and less coordination problems than their subnational 28

One could think of political scenarios where this would not be the case, such as in contexts of high polarization. I would argue that in such contexts, however, the likelihood of actors from different parties to enter into a decentralization coalition is quite low.

Decentralizing Coalitions and Territorial Interests

51

counterparts. One would expect national territorial interests to dominate and, therefore, administrative decentralization to be a more likely outcome than either political or fiscal decentralization.29 On the contrary, in an opposition coalition, one would expect subnational territorial interests to dominate. This is because, for national opposition actors, decentralization policies (in particular fiscal and political decentralization) constitute an opportunity to undermine the power of national ruling officials. Thus, the national opposition will likely support their subnational counterparts in their demands for higher levels of political and fiscal decentralization. Opposition coalitions are thus likely to advance political or fiscal decentralization and unlikely to pursue administrative decentralization, which very often favors the national ruling actors by offloading responsibilities onto the subnational governments. Although, as I note in the concluding chapter, opposition conditions are common. In the case of mixed coalitions (the diagonal ones in Figure 2.1), if the national executive joins with subnational opposition actors, in an NR-SO (national-ruling and subnational-opposition) mixed coalition, he will most likely grant them what they wish – otherwise he would have chosen not to ally with them in the first place. In an NR-SO coalition, subnational territorial interests will prevail and either political or fiscal decentralization will be advanced. With regard to the remaining subnational-ruling and national-opposition mixed coalition, I would expect this type of coalition to be uncommon. If subnational ruling actors want more decentralization, I would expect them either to put pressure on their national co-partisans or to coalesce with their opposition counterparts. It is hard to conceive of political scenarios in which the subnational ruling actors would turn to the national-level opposition for pro-decentralization allies. Similarly, if the national opposition actors were to favor decentralization, they would seek alliance with their subnational co-partisans first, rather than with the subnational ruling groups. Hence, the predominant type of territorial interests and the decentralization advanced by this type of coalition remain unknown. A couple of final remarks on preferences, interests, coalitions, and their relations to context are warranted. It is important to highlight that the actors do not choose the context in which the reforms take place. 29

Nonetheless, due to the importance of territorial interests over matters of decentralization of government, even in a ruling coalition where national territorial interests (or party discipline) prevail, important concessions may have to be made to subnational ruling actors in order to pass an administrative decentralization reform. I show in Chapter 3 that this happened in the negotiations over the decentralization of secondary education in Argentina.

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A Sequential Theory of Decentralization

The empirical analysis of decentralization reforms in Argentina, Brazil, Colombia, and Mexico indicates that very often decentralization policies are designed, chosen, planned, and negotiated. In such cases, the bargaining actors’ strategic behavior as well as the prevailing territorial interests of the victorious coalition are key determinants of the type and content of the policies chosen. Other times, though, the particular context – or a host of political, economic, cultural, or ideological variables – has a heavy influence on determining the type of decentralization that can be implemented. Contextual conditions such as the type of political regime, the development of subnational administrative capacities, an increase or decrease in the collection of revenues, the political distribution of power produced by a midterm election, the concentration of power on a national union, or the gigantism of the national bureaucracy are all factors that, as we will see in the following chapters, affect the emergence of the first coalition of decentralization. As a consequence, they also affect the type and contents of the decentralization policy adopted. For instance, in a context of political legitimacy crisis, the Colombian President Belisario Betancur had to set in motion a program of political decentralization and coalesce with subnational actors in a mixed national ruling and subnational-opposition (NR-SO) coalition. In fact, contextual factors may render purely strategic behavior toward different types of decentralization unattainable, and the most that the bargaining actors can do is to negotiate over the specific contents of one type of reform or choose among two (rather than three) decentralization types.30 Similarly, the historical legacies and the long-term evolution of institutions also set constraints on the content of the policies that can be pursued. The different patterns of institutional evolution of the educational systems in Argentina and Mexico, for example, partially shaped some of the features of the decentralization of education in each country. The historical development of a state-level system of education in Argentina structurally allowed for an unfunded transfer of federal schools. On the other hand, the lack of a state-level system of education in Mexico (with the exception of a few states) meant that the transfer of schools had to be funded. As the historical institutionalism school puts it (Steinmo et al. 1992), strategic behavior takes place in historically defined contexts that constrain the set of options available to social actors. Thus, the unfunded administrative reform that was an option for the Argentine military in 1978 was not available to President de la Madrid in Mexico. 30

I thank Paul Pierson for his related comment.

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53

Not only are historical and contextual factors important in making some decentralization policies and contents easier or harder to pursue than others, my contention is that once the first type of decentralization has been realized, different future scenarios become more or less likely depending on that type of reform first implemented. In other words, once the first type of decentralization has happened, it defines the country’s intergovernmental relations context in which future types of decentralization occur. Of particular importance is whether a political or an administrative type of decentralization occurs first. In what follows, I elaborate on this interesting path-dependent feature of decentralization processes.

Sequences of Decentralization: Layers, Policy-Effect Mechanisms, and the Main Argument Developed Using Stephen Skowronek’s (1993, 9) terminology, we may conceive of intergovernmental relations as a layered structure of institutional action. In this structure, the fiscal, administrative, and political authority layers are distinguishable but highly interrelated, such that a change in one layer (a decentralization policy, for example) carries consequences for the other two. Rarely does a decentralization policy affect all three intergovernmental layers at the same time, although this is certainly possible. Bolivia’s Law of Popular Participation of 1994 is such an example. It was an overhauling decentralization reform that simultaneously affected the political, fiscal, and administrative layers of intergovernmental relations (see Grindle 2000, 94). More often, however, different types of decentralization are negotiated and enacted at different points in time. In Colombia, for example, the offices of the mayors were politically decentralized in 1986 and the offices of the governors were decentralized in 1991. Major fiscal decentralization changes were enacted in the 1991 constitutional reform, and administrative decentralization of education and health took place in 1993 and 1994. The timing of each of these reforms allows us to establish a sequence of decentralization and to uncover the self-reinforcing or reactive causal mechanisms that connect one policy to another. If the three types of decentralization defined above (administrative, fiscal, and political) take place, we can identify six sequences of decentralization according to the timing of the first decentralization policy enacted within each intergovernmental layer. The different stages of each sequence of decentralization are connected by policy feedback effects, which act as either self-reinforcing or reactive mechanisms. As Paul Pierson writes,

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A Sequential Theory of Decentralization

policy feedback effects are the ways in which previous policy choices influence present political processes, or, more generally, the ways in which policies produce politics (Pierson 1992, 1993, 1994, 1996). Before elaborating on each sequence, their connecting mechanisms, and their effects on the intergovernmental balance of power, two important observations are in order. First, it is worth noting that it is not theoretically necessary that all three types of decentralization take place. However, this is a common occurrence because the different types of decentralization are often interrelated. As we saw earlier, once political decentralization has taken place, fiscal decentralization is likely to follow due to the pressure exerted by the more autonomous subnational officials (Garman et al. 2001). Fiscal and administrative decentralization, moreover, are highly interrelated. They refer to the revenue and expenditure components of subnational finances, respectively, and therefore the occurrence of one is likely to lead to the occurrence of the other in order to balance national and subnational budgets. Second, it is worth noting that while in what follows I take into account the first policy to occur in each intergovernmental layer, posterior decentralization reforms within each layer are common and should not be overlooked. Political decentralization in Colombia, for example, evolved in two stages, the first in 1986 and the second in 1991. Administrative decentralization of education in Argentina also unfolded in two stages, the first one in 1978 and the second one in 1992. In both countries, in between each set of reforms, other types of decentralization took place. In order to build an analytic framework, I simplify the sequences of decentralization by only taking into account the timing of the first policy in each layer. The sequencing of the first decentralization policy in each layer is particularly important because it sets constraints on or illuminates what is feasible in the remainder of the sequence, and it allows us to establish a basic model for the impact of different sequences of decentralization on the intergovernmental balance of power. However, the empirical analyses in Chapters 3 through 6 analyze in-depth all the policies taking place in each layer and their effects both within and among layers. Thus, the empirical chapters present richer and more complex accounts of how the early policy reforms affected later ones and how, in doing so, they shaped the outcomes of interest. My general claim is that if subnational interests prevail in the first round of negotiations, political decentralization is likely to happen first and produce a policy ratchet effect: a group of supporters who will

Sequences of Decentralization

55

continue to push in the direction of further decentralization. According to Evelyne Huber and John Stephens (2001, 10) a policy ratchet effect operates when policy reforms create a “policy configuration” of supporters that makes it harder to shift away from those policies. A new “center of gravity” in the policy agenda is therefore defined by the innovations introduced in the early round of reforms. The formation of associations of governors and mayors, or similar instances of coordination among subnational politicians after the enactment of a political decentralization reform, is an example of such a policy ratchet effect. Lobbying through these associations, governors and mayors enhance their power and capacities for the next rounds of intergovernmental reforms. But even if this coordination mechanism is not in place, governors and mayors will find themselves, thanks to political decentralization, in a better position to advance their preferences in the second round of reforms because they enjoy greater political autonomy from the national executive at that stage. The national executive, moreover, may become more dependent on elected governors and mayors for the mobilization of votes in national elections. Thus, in the second round of decentralization, governors and mayors will most likely demand fiscal decentralization and influence the terms or contents of this second reform. Administrative decentralization, which is likely to follow fiscal decentralization to compensate for the previous decentralization of resources (Haggard 1998, 217), will be the last type of reform. But, empowered by political and fiscal authority, governors and mayors will request that administrative decentralization be funded, and this is likely to be conceded by the national authorities. Thus, administrative decentralization will not have a negative impact on the power of governors and mayors. The final outcome of this trajectory of decentralization (P→F→A), in which the preferences of subnational officials prevail, is likely to be a high degree of autonomy for governors and mayors with respect to the national executive (see the first line in Table 2.5). I show in Chapters 4 and 5 that Colombia and Brazil followed this path of reforms.31 31

It may seem odd that a funded administrative reform will follow fi scal decentralization measures, which are already designed to increase the fi scal autonomy of subnational officials. However, as I show in the empirical analyses of Colombia and Brazil, the empowerment of subnational officials through early political decentralization measures did yield this type of sequence. In the case of Colombia it implied, at least for a certain period of time, the duplication of spending at the national level, which required the transfer of resources to departments and municipalities through automatic fiscal transfers fi rst and through funded transfers of administrative services later.

56

A A P F F

→ → → → →

N N SN Tie Tie Self-reinf. Reactive Reactive Reactive Self-reinf.

Self-reinf. → → → → →

→

Type of Causal Mechanisms

F P A A P

F → → → → →

→

Expected Second Type of Dec.

P F F P A

A = = = = =

=

Third Type of Dec. (Residual)

Low Medium Low/Medium Low/Medium High

High

Expected Degree of Change in IBOP

Colombia and Brazil Argentina Mexico

Exemplary Cases

Notes: Darker background indicates stronger preference by national-level actors. A: administrative decentralization; F: fiscal decentralization; P: political decentralization. IBOP: intergovernmental balance of power. A “high” value in the degree of change in the intergovernmental balance of power corresponds to a higher degree of autonomy for governors and mayors, whereas a “low” value indicates that the degree of autonomy of subnational officials has remained practically unchanged.

P

→

Expected First Type of Dec.

SN

Dominant Territorial Interests in Dec. Coalition

Table 2.5. Sequences of Decentralization: Hypotheses Regarding the Consequences of Decentralization

Sequences of Decentralization

57

If, instead, national interests prevail at the beginning of the process, administrative decentralization is likely to occur first. In particular, if fiscal resources do not accompany the transfer of responsibilities, the national executive will strengthen its power vis-à-vis subnational officials who, unless they can increase their own revenues, will be more dependent on the subsequent transfers that they will demand from the center in future rounds of reforms. In such a scenario, a power reproduction mechanism (Stinchcombe 1968) would be at work.32 If the process of decentralization continues, the national executive will be able to control the timing, pace, and contents of the decentralization reforms to follow. The national executive will choose fiscal over political decentralization, because if she controls the subnational authorities politically, she can set restrictions on how the newly transferred revenues are to be spent. Governors and mayors, under the fiscal strain of the first round of administrative decentralization, would be in no position to reject the terms set by the center for the fiscal decentralization reform – unless exogenous circumstances were to change their relative power vis-à-vis the national executive. Following this trajectory, political decentralization, if it happens, would be the third type of reform, and as such it would not have a significant effect on the evolution of the intergovernmental balance of power. The outcome of this trajectory of reforms (A→F→P; see the second line in Table 2.5), in which the interests of the national executive prevail at the beginning of the process, is likely to be little or no change in the redistribution of power to the subnational authorities. In Chapter 3, I show that Argentina followed this path of reforms. It is also possible that exogenous changes could produce a reversal of the distribution of power between national and subnational executives once the process of decentralization has started. Reactive mechanisms (although less likely than self-reinforcing ones) could also ensue after the first decentralization policy. Both of these situations would lead to the alternative sequences P→A→F or A→P→F. In the A→P→F sequence, national interests would prevail at the beginning of the sequence, but exogenous factors (such as a process of democratization that undermines centralized power) or reactive mechanisms (such as active subnational opposition to an unfunded off-loading of responsibilities) would provide subnational executives with the possibility of pushing political decentralization forward in the second round. In this situation, subnational 32

According to Arthur Stinchcombe (1968, 177–78) power reproduction operates by securing successors of the same persuasion, promoting institutional changes to enhance power, and defending from encroachment by outsiders.

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actors (due to their newly acquired political power) would be in a better position to set the terms of fiscal decentralization. The overall outcome of this trajectory would be a shift in the balance of power in favor of subnational authorities, but one not as significant as in the first trajectory (P→F→A), described previously. In Chapter 6, I show that Mexico followed this path. In the P→A→F sequence, subnational interests prevail at the beginning of the sequence, triggering political decentralization. However, exogenous factors (such as a fiscal crisis that undermines subnational demands for fiscal decentralization) or the triggering of reactive mechanisms would lead to a prevalence of national interests in the second round and, thus, to administrative decentralization. The last stage (should it happen) is fiscal decentralization. This trajectory may be disastrous for subnational officials if administrative decentralization is unfunded. If they are granted political autonomy, and soon after that they receive unfunded responsibilities, their subnational constituencies will blame them for poor performance. Most likely, this trajectory will lead to a low degree of change in the balance of power. If administrative decentralization is instead funded, this trajectory may lead to a medium degree of change in the intergovernmental balance of power. Finally, we can also conceive of a tie between national and subnational interests at the outset of the reform process, such that no side is capable of achieving its most preferred outcome. In this situation, it is likely that bargaining actors will compromise in their second most preferred outcome: fiscal decentralization. If this happens, the way in which the sequence continues will depend on the effects of this reform on the relative power of national and subnational executives. If the national executive prevails, administrative decentralization should follow, with political decentralization happening last (F→A→P). This trajectory should lead to a medium to low change in the balance of power. I believe the crucial issue here is the time lag between the first and second rounds of reforms. If subnational officials receive money without strings, and they can apply it to strengthen their support base and popularity for a considerable amount of time before they receive new responsibilities, this trajectory may lead to a medium increase in the balance of power, even if political decentralization only takes place at the end of the trajectory. In contrast, if money and responsibilities are decentralized practically at the same time, this means that subnational officials are receiving new responsibilities without political autonomy. The impact of decentralization of funded responsibilities on the balance of power will then be highly dependent on

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59

how successful the subnational governments are in efficiently delivering the newly transferred services. Considering, however, that the subnational officials are probably more accountable to the national executive than to their local constituencies (recall that political decentralization does not take place until the end of this trajectory), administrative performance will likely be poor, and the result will be a low degree of change in the intergovernmental balance of power. Alternatively, if after fiscal decentralization subnational executives prevail, political decentralization should occur next, with administrative decentralization taking place last (F→P→A). This sequence should lead to a high change in the balance of power in favor of the subnational governments. In this type of trajectory, subnational governments gain fiscal capacities, then political autonomy, and lastly they receive administrative responsibilities. The first two moves in this sequence should allow subnational authorities to build strongholds of supporters (since they have the resources to do so) and to win elections. Once this happens, they will gain greater autonomy from the national executive and the final degree of change in the intergovernmental balance of power will be high (as shown in the bottom line of Table 2.5). The Domain of the Sequential Theory of Decentralization Although I will not test empirically the effects of the last three types of sequences presented in the previous section (and listed in the bottom three rows of Table 2.5), the theoretical framework developed here could be applied to decentralization processes in other countries and regions of the world. The assumptions so far have been that the three types of decentralization take place and that a sequence among them can be established. Moreover, I have only taken into account the first successfully implemented policy within each type of decentralization and the first cycle of decentralization, which ends once the three types of reforms have occurred. As mentioned earlier, however, decentralization processes can evolve differently in reality. Only one or two types of reforms may occur, the timing of policies could overlap, and successive reforms within each layer could affect those that follow. Some of these complexities are revealed in the analysis of the country cases in the following chapters. Nevertheless, as long as at least two types of devolution of authority in two implementation moments can be identified, the proposed sequential theory can be modified accordingly and applied to cases and sequences

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that follow different patterns. The domain of this theory is, therefore, those countries that have at least two levels of government (even if the subnational level is not politically autonomous from the central level) and have seen at least two types of decentralization reforms occur at different points in time.

The Intergovernmental Balance of Power A Conceptual Definition Now, having outlined the sequential theory of decentralization, we can focus on the main outcome or dependent variable of interest. What do I mean by subnational autonomy? What is the intergovernmental balance of power and how can it be measured? What are the changes in this variable that are of the greatest interest to me? Power is an elusive and complex concept, but it is reasonable to contend that intergovernmental power derives from fixed and contextual resources that can be grouped into three categories: economic resources, legal authority, and organizational capacities.33 First, economic resources are needed to pursue a desired course of action. Natural, industrial, human, and fiscal resources increase the ability of subnational units to design new social policies or to change existing ones. Economic resources can also be used to buy favors and votes. In general, control over economic resources increases the political capital and the choices available to public officials. Second, legal authority derives from political institutions, such as the constitution, the legal system, the political party system, and the electoral rules. Authority sets the legal limits that the power derived from economic resources aims to reach. At the same time, different types and levels of authority can lead to the accumulation or diminution of economic resources. For example, whether governors and mayors are elected or appointed has important consequences for their degree of autonomy from higher levels of government and is determined by the country’s legal framework. Third, organizational capacities are the institutional arrangements that facilitate certain courses of action. They foster coordination and the 33

To defi ne power conceptually, I draw primarily from the structuralist and behavioralist approaches, in particular from the works of Bachrach and Baratz (1962, 1963), Dahl (1961, 1968), Goldman (1986), and Lukes (1977, 1986).

The Intergovernmental Balance of Power

61

rapid flow of information, such that collective action may be more easily attained. As Kathryn Stoner-Weiss argues in the case of post-Soviet Russia, “Among the most important signs of increased regional power was the establishment of regional political and economic associations” (Stoner-Weiss 1997, 84). Subnational associations increase the organizational capacities of subnational governments in that they facilitate coordination and increase the bargaining power of subnational officials, who can thus negotiate with the upper levels of government as a collective group. Overrepresentation of state units in Congress may also facilitate the pursuance of subnational interests at the national level, as explained in the next section. In sum, economic resources enhance the capacity of political actors to pursue their desired courses of action, legal authority sets the institutional limit that economic resources can reach, and organizational capacities facilitate the coordination and flow of information at each level of government. An Operational Definition Because this book is concerned with the effects of decentralization on the evolution of balance of power, in operationalizing this concept I focus precisely on those dimensions of intergovernmental power susceptible to change due to the implementation of decentralization policies. Building on the works of Alfred Stepan (2004) and David Samuels and Scott Mainwaring (2004), the intergovernmental balance of power is operationalized in six dimensions. Two dimensions measure economic resources, two measure legal authority, and two measure organizational capacities. The two dimensions that measure economic resources – the subnational share of revenues (SSR) and the subnational share of expenditures (SSE) – are widely used in the decentralization literature. The SSR measures the percentage of public money collected by state and local governments. The SSE measures the percentage of public money allocated by subnational governments.34 34

I do not make a distinction as to whether part of those subnational expenditures are earmarked. In my view, subnational governments gain power through earmarked as well as nonearmarked transfers. Many earmarked transfers, particularly if they are not tied to public employees’ salaries, are hard for the central governments to monitor, and governors and mayors end up having a high degree of discretion in deciding how to spend that money.

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The dimensions that measure legal authority are policy-making authority (PMA) and the type of appointment of subnational officials (ASO). PMA measures the degree of autonomy of subnational officials to design, evaluate, and decide issues concerning a specific policy area. I have chosen to measure this variable in the educational sector. Several reasons justify the selection of education over other policy sectors. First, in Argentina, Colombia, and Mexico, education was the first public sector to be decentralized, thus influencing the pace and characteristics of decentralization in other sectors.35 Second, education is the largest public sector in all the countries under consideration, in terms of both fiscal and human resources. The transfer of education, therefore, carries significant fiscal and administrative consequences for states and municipalities. Finally, the education sector often has large and strong unions. This makes the decentralization of education politically crucial for national and subnational executives who have to negotiate with teachers’ unions. Within this dimension I consider six indicators of policy-making authority: authority over the curricula; responsibility for training teachers; responsibility for the evaluation of the educational system; management of schools; authority over hiring, firing, and relocating teachers; and authority over salaries. I record whether these are national (N), subnational (S), or concurrent (C) responsibilities. The other legal authority variable, ASO, records whether governors and mayors are elected or appointed. In cases where elections are held but they are noncompetitive and the appointment of subnational executives is largely controlled from above, I assign an intermediate category (appointed/elected). The two final variables measure the institutional and organizational capacities that facilitate the advancement of subnational interests. The first one is the territorial representation of interests in the national legislatures (TRI). The second one is the number of subnational associations (NSA). Stepan (2004) has called attention to the constraining effect that 35

The situation was different in Brazil. As I explain in Chapter 5, the delivery of health care services was formally decentralized as a consequence of the constitutional reform of 1988, before the decentralization of educational services (mostly from states to municipalities) took place in 1996. However, the funds required for the delivery of health services at the local level and the legislation necessary to regulate and implement the 1988 constitutional reform unfolded throughout the 1990s and 2000s contemporaneously with the decentralization of education. For this reason, I do not see a methodological problem in measuring the distribution of policy authority in the education sector in Brazil and comparing it to the other three cases in order to assess the evolution of the intergovernmental balance of power in that country.

The Intergovernmental Balance of Power

63

territorially organized minorities can have on the policy and political orientations of the majority. According to his observations, one of the mechanisms by which territorially concentrated minorities can set constraints on the majority of the electorate is through overrepresentation in the territorial chamber of the national legislature; in many countries this is the Senate. Moreover, electoral and constitutional reforms that set limits on the number of deputies that subnational units can have in the Lower House have also led to the overrepresentation of underpopulated subunits in the Lower Houses (Gibson et al. 2004). Thus, through overrepresentation in the Senate and in the Deputies’ chamber, subnational units can set constraints on the policy preferences of the center. In countries with higher levels of overrepresentation of subnational units, with all else being equal, the governors (at least a group of them) will have more leverage to get legislation passed – or halted – in Congress. The territorial representation of interests (TRI) variable thus reports the average degree of overrepresentation of the subnational units in both the Lower and Upper Chambers of Congress.36 If overrepresentation of subnational units is high, it indicates that a small group of states may easily form a coalition in Congress to pass or block legislation. Hence, the higher the overrepresentation of subnational interests in the national legislature, the higher will be the autonomy of a particular group of subnational officials. The coefficients reported in this variable indirectly (because they are averaged for all the territorial units) describe the degree of deviation from the principle “one citizen, one vote.” A coefficient value of one indicates proportionality between the share of seats each state has and their share of the population. If the overrepresentation coefficient is higher than one, it means that in some subnational units the “cost” of electing a deputy or a senator is significantly lower than in other units. When this happens, we are in the presence of what Stepan (2000) calls demos-constraining polities. These are countries (Stepan refers mostly to federations) in which territorial-based minorities can override the will of the majority based on the asymmetric powers institutionally or constitutionally conferred on them. If some member states are highly overrepresented in the House or the Senate, for instance, their deputies or senators will have an easier time advancing the territorial interests of 36

The coefficients of overrepresentation in the Chambers of Deputy and in the Senate are calculated as the national average of the percentage of seats each state has in the chamber divided by its share of the national population. If the coefficient is greater that one, it indicates overrepresentation; whereas if the coefficient is smaller than one, it reports underrepresentation. For a similar measure see Snyder and Samuels (2004).

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A Sequential Theory of Decentralization

their subnational units and constituencies. In these types of polities, legislators are less pressed to obey the interests of the national parties or the country’s political majority. Finally, the last dimension of organizational capacities records the number of subnational associations (NSA) of governors and mayors that existed in each country prior to and after decentralization. Historically, these associations have been formed when their members can act or place demands into the political agenda without fear of retaliation from higher levels of government. Moreover, if associations of governors and mayors exist, coordination of their interests and actions is significantly easier to achieve. They also gain power and visibility in their negotiations with the national officials. As Stoner-Weiss (1997) says, the presence of these associations – and I would add even more so their creation during the process of reforms – is a strong indication of the increased levels of autonomy of subnational officials. If decentralization reforms always increased the power of subnational officials, we would observe a positive change in all of these five dimensions. If, however, it is possible for decentralization not to increase the power of subnational officials, we would expect some of these indicators to decrease in value or to remain unchanged despite the implementation of decentralization reforms. The Evolution of the Intergovernmental Balance of Power in Argentina, Brazil, Colombia, and Mexico Starting in the late 1970s and early 1980s, Argentina, Brazil, Colombia, and Mexico embarked on decentralization reforms. These reforms followed the move away from state intervention in the economy, characteristic of the developmental period. In this section, I compare the situation of the intergovernmental balance of power before and after postdevelopmental decentralization policies were implemented in each country. The main objective is to appreciate how much change decentralization policies brought about for the intergovernmental relations of each country. The relevant information is summarized in Table 2.6. The last two rows of Table 2.6 average the ranking positions of each country along the six dimensions of intergovernmental balance of power before and after decentralization (second to last row) and according to the relative change experienced by the end of the period compared to their initial situations (last row). Along each dimension of intergovernmental balance of power, the ranking scores vary from 1 (assigned to the

C C C S

0 0 0 0.5

C C C C

Policymaking Authority (PMA)c Curricula Teachers’ training Evaluation School managment

3 21% 1

4

41% (1999)

34% (1978)

–8% 1

Change

Compared SSE level SSE changeb SSE ch. rank.

1

3

Compared SSR level SSR changea SSR ch. rank. Subnat. Share of Expenditures (SSE)

19% (1999)

After Dec.

21% (1983)

Prior Dec.

Argentina

Subnat. Share of Revenues (SSR)

Variable

C C C C

3

32% (1980)

4

25% (1980)

Prior Dec.

S S S S

4

44% (1995)

4

33% (1995)

After Dec.

Brazil

0.5 0.5 0.5 0.5

38% 2

29% 2

Change

N N N S

2

28% (1978)

2

18% (1980)

Prior Dec.

N C C S

2

40% (1995)

3

28% (1995)

After Dec.

Colombia

0 0.5 0.5 0

43% 3

56% 3

Change

N N N C

1

18% (1978)

1

9% (1982)

Prior Dec.

N C N S

1

0 0.5 0 0.5

61% 4

122% 4

Change

(continued)

29% (1999)

2

21% (1997)

After Dec.

Mexico

Table 2.6. Evolution of Intergovernmental Balance of Power in Argentina, Brazil, Colombia, and Mexico, 1978–1999

Compared ASO level ASO change ASO ch. rank.

1.5

2.5

E E (1996) 2 3.5

1 1

Appointment of Subnat. Officials (ASO)d Governors Mayors

A A (1978)

1.5 1

3

3.5

0.5 0.5

Change

Compared PMA level PMA change PMA ch. rank.

S S (1994)

After Dec.

C C (1978)

Prior Dec.

Argentina

Hire, fire, relocation Salary

Variable

Table 2.6. (continued)

3

A A/E (1982)

3.5

C C (1982)

Prior Dec.

Change

3 4

2.5 1.5 2

E 1 E 0.5 (1994)

4

S 0.5 S 0.5 (1995)

After Dec.

Brazil

1.5

A A (1982)

2

N N (1982)

Prior Dec.

2.5

E E (1991)

2

S C (1994)

After Dec.

Colombia

2 3.5

1 1

2.5 2.5

1 0.5

Change

4

A/E A/E (1982)

1

N N (1978)

Prior Dec.

2.5

E E (1994)

1

S C (1994)

After Dec.

Mexico

1 1

0.5 0.5

2.5 2.5

1 0.5

Change

Average Ranking of Absolute Degree of Autonomy

Compared NSA level NSA change NSA ch. rank.

3.0

2

0 0

2.3

1.5

0 1 1 1.5

0 1

–0.09 0.25

Change

Number of Subnat. Associations (NSA) Of Governors Of Mayors

3

1.85 3.40 (1995)

After Dec.

0.16 2

4

1.94 3.15 (1983)

Prior Dec.

Argentina

Compared TRI level TRI changee TRI ch. rank.

Territorial Rep. of Interests (TRI) Overrep. Deputies Overrep. Senate

Variable After Dec.

Change

3.4

4

0 1

3

3.6

3

0 3

4

2 3

0 2

1.69 4

1.51 1.92 0.41 2.66 3.94 1.28 (1962/78) (1995)

Prior Dec.

Brazil

1.8

2

0 0

1

1.17 1.25 (1979)

Prior Dec.

2.2

1.5

0 1

2

2.73 1.00 (1994)

After Dec.

Colombia

1 1.5

0 1

1.31 3

1.56 –0.25

Change

1.8

2

0 0

2

1.00 1.96 (1997)

Prior Dec.

1.9

4

1 4

1

5 4

1 4

0 1

0 0

Change

(continued)

1.00 1.96 (1997)

After Dec.

Mexico

Prior Dec.

After Dec.

Argentina

1.66

Change

Prior Dec.

After Dec.

Brazil

2.83

Change

Prior Dec.

After Dec.

Colombia

2.75

Change

Prior Dec.

After Dec.

Mexico

2.75

Change

Notes: Bold numbers rank the countries by absolute degree of autonomy, from 1: less autonomy to 4: most autonomy. Average rankings of absolute level of autonomy of each country (compared to the other three) are presented in the second to last row. Bold, italic numbers rank the countries by degree of change in each dimension of intergovernmental balance of power, from 1, corresponding to the country that experienced the least change, to 4, which corresponds to the country that changed the most. The average degree of change of intergovernmental balance of power in each country (as compared to the rest) is presented in the last row. a SSR change = (SSR after – SSR prior)/SSR prior b SSE change = (SSE after – SSE prior)/SSE prior c PMA: N: National, C: Concurrent, S: Subnational. PMA change value is 0 if level of authority did not change; 1, if authority moved from N to S; and 0.5, if it moved from N to C or from C to S. d ASO: E: Elected, A: Appointed, A/E: only formally elected or with appointment of some offices. ASO change: value is 0 if type of appointment did not change; 1, if it changed from A to E; and 0.5, if it changed from A/E to E, or from A to A/E e TRI change values result from subtracting the value of TRI prior from TRI after. Sources: SSR: Argentina: 1983 data from Artana et al. (1995, 79) and 1999 data from the Ministry of Economy and Production, Argentina (both figures include taxes on labor); Brazil, Samuels (2003, 161); Mexico, Willis, Garman, and Haggard (1999, 13) and IMF (1985, 2001); Colombia: Dillinger and Webb (1998). SSE: for Argentina: IMF (1985, 2001); Mexico: IMF (1985, 2001); Brazil: Samuels (2003); Colombia: IMF (1985) and Dillinger and Webb (1998, 21). PMA: data collected from secondary sources and education laws. ASO: data collected from secondary sources and national constitutions. TRI: for Argentina: National Constitution and INDEC (1997); Mexico: Lujambio (2000, 35, 73–76), and INEGI (1995); Brazil: data provided by David Samuels; Colombia: Registraduría Nacional del Estado Civil (various years). NSA: secondary sources and interviews.

Average Ranking of Change in Intergovernmental Balance of Power

Variable

Table 2.6. (continued)

The Intergovernmental Balance of Power

69

country with the lowest level of subnational autonomy) to 4 (assigned to the country with the highest level of subnational autonomy). If two countries share the same position along a given dimension, a .5 score is assigned. A quick glance at the penultimate row of Table 2.6 shows that before decentralization, subnational governments in Argentina and Brazil had the highest degrees of autonomy (average ranking scores of absolute degree of autonomy of 3 and 3.4, respectively), whereas those of Colombia and Mexico had the lowest (both with 1.8 scores). This corresponds to what we know about how intergovernmental relations and federalism have historically evolved (see, for example, Gibson and Calvo 2000; Gibson and Falleti 2004; Samuels 2003). The puzzle is that after the implementation of decentralization reforms, the subnational governments of Brazil enjoyed a higher relative degree of autonomy (average ranking of 3.6) as expected, but those of Argentina did not (average ranking of 2.3). In fact, the intergovernmental makeup of Argentina at the end of the period was similar to that of Colombia (a 2.2 score), a unitary country that as such would be presumed to be more centralized. This reality is also reflected in the last row of Table 2.6. The average rankings of change in the intergovernmental balance of power report that Brazil was the country that changed the most in favor of the subnational governments (average ranking of change of 2.83), followed by Colombia and Mexico (both with average ranking scores of 2.75), and lastly by Argentina (which with an average ranking of 1.66 was the country whose intergovernmental structure changed the least). Now, analyzing the evolution of intergovernmental relations in each country along each dimension, we find that the subnational share of revenues (SSR) decreased in Argentina and increased in the other three countries, while the subnational share of expenditures (SSE) increased in all four countries. At the beginning of the period, Argentina and Brazil had the highest absolute levels of fiscal decentralization, both in terms of revenues and expenditures, followed by Colombia and Mexico in that order. By the end of the period, in the late 1990s, a different pattern emerged. Brazil continued to be fiscally the most decentralized, but Colombia was second. Relative to the initial conditions, Mexico was the country whose fiscal structure changed the most, followed by Colombia and Brazil. Argentina changed the least, and even experienced a negative change in SSR. As a result, the governors and mayors of Brazil, Colombia, and Mexico now manage significantly more economic resources than they used to prior to decentralization, but the governors and mayors of Argentina do not.

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Regarding policy-making authority (PMA) in education, at the beginning of the period, Argentina and Brazil had the greatest devolution of responsibilities to subnational governments. This was largely due to their federal constitutions, which rendered the states responsible for educational services. Mexico and Colombia had the least devolution of responsibilities. By the end of the period, Brazil experienced a greater degree of devolution of authority than Argentina. Whereas in 1982 the Brazilian states and the federal government shared responsibilities along all of the educational indicators considered (Draibe 2004, 387; Tavares de Almeida 1995, 20, 27), by the mid-1990s governors, mayors, and school directors had higher levels of autonomy in designing the curricula, setting the school calendar, staffing the schools, and determining the teachers’ salaries and career promotions (Burki et al. 1999, 71; Draibe 2004, 379–80). In Argentina, decentralization of federal primary and secondary schools took place in 1978 and 1992, but the distribution of formal authority between the levels of government was not altered by these off-loading measures. Instead, that change came about only when a new federal education law was passed in 1993 and some educational issues became the sole domain of the provinces (Corrales 2004). Mexico and Colombia followed Brazil in the degree of change in PMA. In Mexico, all issues of public education management were in the hands of the federal government in 1978 (with the sole exception of the management of school buildings). In 1992, after the signing of a decentralization agreement, authority over the curricula and evaluation of the system remained at the federal level, but all other issues were decided on by the subnational level or jointly by both levels of government. Similarly, in Colombia, prior to decentralization, all responsibilities rested with the national government with the exception of the maintenance of schools. But after the decentralization of education in 1992 and 1993, all educational issues became matters of state authority (with the sole exception of the design of the curricula, which remained in the hands of the central government). Therefore, while the decentralization of education was implemented in the four countries, the degree of autonomy that it granted to subnational officials varied in each case, with Brazil experiencing the most change, followed by Mexico, Colombia, and finally Argentina. At the inception of the process of decentralization, all governors were directly or indirectly appointed by the president. In Argentina and Brazil, this was because both countries were under military rule when the process of postdevelopmental decentralization got under way. Upon taking power in 1976, the Argentine military removed all the elected governors

The Intergovernmental Balance of Power

71

and replaced them with military officers. In Brazil, from 1967 to 1982, the governors were indirectly elected by the state assemblies among three candidates previously pre-approved by the military president. In Colombia, since the unitary Constitution of 1886 governors had been appointed by the president. And in Mexico, although the governors were formally elected, the political hegemony of the Revolutionary Institutional Party (Partido Revolucionario Institucional, PRI) meant that elections were not competitive, and that the president had a large say in the selection of the candidates to the governorships (see Table 2.6 for a tabular representation of this information). At the mayoral level, prior to decentralization, the situation was similar to the state level. In Argentina, the military removed the mayors and replaced them with military personnel, police officers, and civilians sympathetic to the military cause. In Brazil, instead, because the military regime maintained a certain degree of legislative and electoral political continuity, most of the mayors were elected. The only places in which mayors were appointed were in Brasilia, the state capitals, the cities of national security importance, and the so-called estâncias hidrominerais – cities with springwater. In Colombia, the mayors were appointed by the governors. In Mexico, similar to the appointment of governors, the mayors were only formally – but not effectively – elected by the citizenry. By the end of the period under consideration, the four countries had popularly elected governors and mayors. In Brazil, Colombia, and Mexico, the return to the popular election of subnational executives was due to political decentralization measures. In Argentina, instead, the return to the popular election of governors and mayors in 1983 was part of the transition to democracy. It was part of a democratization process that affected all levels of government at the same time and was not the product of a decentralization reform that specifically targeted the subnational levels. Still, given their initial conditions regarding the appointment of subnational officials (ASO), Argentina and Colombia were the countries that changed the most, followed by Brazil and Mexico. Moving onto the organizational capacity measures, the Lower and Upper Chambers of Argentina and Brazil are the ones that both prior to (when there was congressional activity) and after decentralization had the highest levels of overrepresentation of subnational units. But whereas the territorial representation of interests (TRI) makeup of the Argentine Congress practically did not change during the period under consideration, in Brazil, overrepresentation of some subnational units increased significantly during this period. This was due to the granting of statehood to

72

A Sequential Theory of Decentralization

national territories with low population densities and the creation of two new states (Mato Grosso do Sul and Tocantins), which were also sparsely populated. These states received the same amount of seats in the Senate as the other states and a minimum number of deputies, both of which augmented the overrepresentation coefficients. In Colombia, as a consequence of the changes introduced in the 1991 Constitution and the allocation of seats to seven previously unrepresented departments, overrepresentation of subnational units in the Lower Chamber more than doubled. The Senate, whose seats were distributed among 23 departments according to population prior to 1991, was transformed after the constitutional reform into a proportionally representative chamber of 100 members chosen from a single national district. As a result, in Colombia, the Lower Chamber, rather than the Senate, became the chamber for the representation of subnational territorial interests. Finally, in Mexico, where there is a moderate degree of overrepresentation in the Senate (not very high considering it is a federal country) and proportional representation in the Deputies Chamber, the degree of overrepresentation did not change. Hence, in terms of degree of change in TRI, Brazil experienced the most change, followed in decreasing order by Colombia, Argentina, and Mexico, as can be appreciated in Table 2.6. Regarding the existence of associations of governors and mayors, the differences among the countries are notorious. Although Argentina is a federal country, it has never had an association of governors. The Federal Council of Investments (Consejo Federal de Inversiones, CFI) was created in the 1970s. It is an independent institution that serves as a consultancy think tank to the provinces and is largely funded through provincial contributions. However, it is not an association of governors. Meetings among subnational authorities take place at the CFI whenever pressing national issues call for them, but there are no regularly scheduled meetings of all the governors, nor does the CFI attempt to coordinate the interests of all the provinces. At the municipal level there is one association, the Argentine Federation of Municipalities (Federación Argentina de Municipios, FAM). It was created in 1997, when then President Carlos Menem sought to coalesce with the municipal leaders of his Justicialist Party (Partido Justicialista, PJ) to work toward a constitutional reform that would allow him to run for a third consecutive term in 1999. Menem also declared 1998 “the year of the municipalities” and created the Federal Institute of Municipal Issues (the Instituto Federal de Asuntos Municipales, IFAM), which later became the Secretariat for Municipal Issues, within the Ministry of the Interior. Menem could not gather enough political support to reform the constitution and the FAM

The Intergovernmental Balance of Power

73

remained institutionally weak, particularly when compared to its betterorganized and more autonomous counterparts of Colombia, Brazil, and Mexico, all of which were created by mayors.37 Contrary to Argentina, Brazil and Mexico have a vibrant municipal associational life. As I explain in Chapter 5, Brazil had one municipal association prior to decentralization – the Brazilian Association of Municipalities (Associação Brasileira de Municípios, ABM) – and since then two more have been created. The National Confederation of Municipalities (Confederação Nacional de Municípios, CNM) represents primarily the interests of small and medium-size municipalities, and the National Front of Mayors (Frente Nacional de Prefeitos, FNP) represents the mayors of the state capitals. Although there are three municipal associations in Brazil, there is extensive cooperation among them (particularly the CNM and the FNP, which in 2005 shared their central offices in Brasilia). In Mexico, since the inception of decentralization, three municipal associations were created. The first one, the Association of Mexican Municipalities (Asociación de Municipios de México A.C., AMMAC), was created in 1994 by a group of opposition mayors from the National Action Party (Partido Acción Nacional, PAN). The AMMAC was instrumental in advancing fiscal decentralization in the mid-1990s. Two other mayors’ associations were created in 1997: the Association of Local Authorities of Mexico (Asociación de Autoridades Locales de México AALMAC), linked to the Democratic Revolutionary Party (Partido Revolucionario Democrático, PRD), and the National Federation of Mexican Municipalities (Federación Nacional de Municipios de México, FENAMM), associated with the PRI. Although during the 1990s there had not been significant cooperation among the three associations, in 2005 they formed the umbrella organization National Conference of Mexican Municipalities (Conferencia Nacional de Municipios de México, CONAMM), partially emulating the formation in 2002 of the National Conference of Governors (Conferencia Nacional de Gobernadores, CONAGO) that grouped the governors of all parties, as explained in Chapter 6. Through coordination of their actions in these institutions, governors and mayors solve major differences and gain strength in their bargaining with the national authorities. 37

A top-rank official of the FAM said that the “association is worth nothing. It does not exist,” when asked about its activities, bargaing leverage, and organizational potential (conversation with author in Buenos Aires, July 31, 2009).

74

A Sequential Theory of Decentralization

In Colombia, the first directly elected cohort of mayors formed the Colombian Federation of Municipalities (Federación Colombiana de Municipios, FCM) in 1988. The association has been active in advancing political and fiscal decentralization in Colombia and providing technical support to municipalities. In sum, if we focus on the overall change in the intergovernmental balance of power that occurred after decentralization policies were implemented, we find that at one extreme Brazil and Colombia saw their subnational shares of revenues and expenditures increase, their governors and mayors gain significant authority in the administration of public education, their presidents lose the authority to appoint subnational officials, the territorial overrepresentation of subnational units in their Congresses augment significantly, and active associations of mayors emerge. Mexico also experienced an important degree of change regarding its initial intergovernmental situation, even if the overall level of autonomy of its subnational officials remains lower than in Brazil or Colombia. At the other extreme, Argentina saw virtually no change in the intergovernmental balance of power. The share of subnational revenues decreased while the share of subnational expenditures increased, augmenting the fiscal vertical imbalance in subnational accounts. Administrative decentralization did not confer new capacities to subnational executives, and political decentralization, while beneficial to the city of Buenos Aires, did not have an impact on the rest of the provinces or municipalities. Governors still do not coordinate their actions in an independent association, and although the FAM was created in 1997, the same could be said of mayors. Applying the theory developed in the first part of this chapter, Chapter 3 explains why this happened in Argentina.

Conclusion This chapter advances a definition of decentralization that distinguishes among administrative, fiscal, and political decentralization. This definition allows for a distinction to be made between decentralization processes that increase the power of subnational officials and those that – contrary to expectation – do not. Furthermore, unlike previous studies that have, for the most part, treated these categories separately, I propose a theoretical framework for understanding how the transfer of authority in one area reinforces or halts decentralization reforms in other areas. This chapter has outlined a theory of the adoption of different types of decentralization and of their interactions as the process of reforms evolves over

Conclusion

75

time. It has also assessed the likely impact of different sequences of decentralization on the intergovernmental balance of power. Drawing on recent works on path dependence and institutional change, I have argued that the conditions under which the first decentralization policy is implemented, and the timing and order of subsequent reforms, dictate the evolution of the intergovernmental balance of power. Previous studies have successfully accounted for varying degrees of fiscal decentralization at one point in time (e.g., Garman et al. 2001) but fall short of explaining the effects of decentralization policies on the evolution of intergovernmental relations. In this chapter, I have put forward the book’s main argument and have laid the comparative groundwork by measuring the absolute levels of autonomy of subnational governments before and after decentralization reforms were implemented in Argentina, Brazil, Colombia, and Mexico, and the degree of change experienced in each country. The next chapters test the argument empirically by showing how the unfolding of different sequences of decentralization reforms systematically led to different degrees of change in the autonomy for governors and mayors.

3 Argentina The National Dominance Path to Decentralization

Achicar el Estado es agrandar la Nación.1

In the late 1970s, the Argentine military regime (1976–1983) initiated a program of postdevelopmental decentralization. It was part of a larger project of “national reorganization” and guided by the notion that “to shrink the State is to aggrandize the Nation.” As in Brazil, postdevelopmental decentralization began in the context of a military regime. But unlike Brazil, where the decentralization of government was advanced by the political opposition and tightly linked to societal demands for democratization, in Argentina, the decentralization of government was single-handedly imposed by the military as a means of off-loading central government responsibilities onto the provinces. Thus, the first reform to be implemented was the unfunded decentralization of primary education in 1978. The process of postdevelopmental decentralization continued during the democratic period beginning in 1983. Among other decentralizing (and recentralizing) policies, fiscal and political decentralization took place in 1988 and 1994, respectively. However, despite the enactment of these policies, the intergovernmental balance of power remained practically intact. At the end of the twentieth century, Argentina’s intergovernmental fiscal and political institutions were essentially the same as before the military intervened in 1976 (Burki et al. 1999, 11). Why, despite the implementation of decentralization policies in the administrative, fiscal, 1

“To shrink the State is to aggrandize the Nation” was one of the slogans used by the last Argentine military dictatorship.

76

Argentina

77

and political arenas, did the institutions that regulate intergovernmental relations remain largely intact in Argentina? Prior to the military regime and despite a large concentration of resources in the City and Province of Buenos Aires, Argentina had been one of the most decentralized countries of Latin America. Owing to its federal system of government, the Argentine provinces had their own constitutions (some of which predated the national constitution of 1853), levied certain taxes, shared a significant amount of revenues with the national government, and developed provincial systems in education and health (see Table 2.6, Chapter 2).2 Hence, it could be argued that the relatively high level of initial subnational autonomy was an impediment to any further devolution of power toward the subnational officials. As I argue in Chapter 5, however, the case of Brazil poses an interesting counterexample to this institutional argument. Brazil started the process of postdevelopmental decentralization with an intergovernmental institutional make-up similar to that of Argentina, but by the end of the first cycle of postdevelopmental decentralization, significantly more power had been devolved to the governors and, in particular, to the mayors of Brazil. Other scholars have explained Argentina’s shifting balance between central and provincial powers as a function of conjunctural variables such as the unified government. Willis et al. (1999, 25), for example, write “The Argentine case . . . indicates that bargaining between levels of government is further mediated by whether or not the president enjoys a legislative majority. Presidential influence over decentralization wanes with a unified opposition and is conversely magnified when the chief of state can act as the de facto party leader of the majority party in the legislative branch.” But my contention is that, when analyzed as a process, the policy effects of the early decentralization reforms may play equally to the hand of politically strong or weak presidents. In the empirical analysis that follows, I show that in a situation of divided government President Raúl Alfonsín was able to control the timing of fiscal decentralization reforms to his own advantage. This is to say, even in times of divided government, the legacies of the early decentralization reforms may strengthen the bargaining position of the national executive. Alternatively, in situations of 2

The local level of municipalities, on the other hand, has been historically weak in Argentina. It was not until after the 2001 economic crisis that mayors and municipalities started to assume a more active role in the delivery of social services and in the management of government programs.

78

Argentina

unified government, the national executive may not have as much influence over the path of decentralization as expected. For example, during the first administration of President Carlos Menem, the policy effects of the early decentralization reforms made bargaining with the ruling governors a precondition for the congressional approval of the official party bills. Thus, even in situations of unified government, national politicians must address the territorial interests of their subnational co-partisans over issues of decentralization. The evidence presented in this and the following empirical chapters allows me to assert that the degree of change that decentralization policies bring about to the intergovernmental balance of power is dependent on factors that are endogenous to the process of decentralization. The type of territorial interests that sets in motion the decentralization process and the types and contents of the early decentralization reforms are two key determinants of the resulting balance of power among levels of government. As this chapter shows, the process of decentralization of government in Argentina was initiated from above and guided by territorial national interests. Consequently, it began with an unfunded administrative decentralization reform that set high constraints on the provinces and on the governors’ capacity to bargain over subsequent decentralization policies. The national government was able to keep the upper hand in the negotiations over decentralization for the remainder of the first cycle of reforms (well beyond the period in which the process started and even after the democratic transition of 1983). Since 1978, a series of self-reinforcing mechanisms (incrementalism, demonstration effect, and reproduction of power of the national executive) caused the strengthening of the bargaining position of the national government and, as a result, decentralization did not bring about the devolution of power that is the expected outcome of these policies.

Origins, Sequence, and Coalitions of Postdevelopmental Decentralization in Argentina The military government of Jorge Videla (1976–1981) was the first administration to move Argentina away from developmentalism and toward an open-market economy (Eaton 2004, 125; Martínez de Hoz 1981; Weyland 2002, 72, 77). His government abandoned industrialization and developmentalism and adopted an export-oriented model based on agricultural products. During that administration the first postdevelopmental decentralization reform took place in 1978. It consisted of the

Postdevelopmental Decentralization in Argentina

79

transfer of all public primary schools that were under federal jurisdiction to the provinces. The transfer of responsibilities was unilaterally imposed from above and was not accompanied by revenues. The second type of decentralization that took place in Argentina was fiscal decentralization. In 1988, the territorial interests of the governors coincided, surpassing their partisan interests and leading to the formation of a subnational coalition. Governors wanted more revenues to afford the responsibilities decentralized in 1978, but because the first round of administrative decentralization had made the provinces more dependent on transfers from the central government, it took the governors four years of negotiations (1984 through 1987) with the national executive and a change in the partisan composition of the governorships (after the 1987 midterm elections) to achieve their common goal. Nevertheless, the national executive would soon regain the upper hand in the negotiations with the governors. In 1992 another unfunded administrative decentralization, this time of secondary schools, took place, and shortly thereafter a fiscal pact was signed that recentralized fiscal revenues. In both of these instances, the reforms were supported, after intense negotiations, by a ruling coalition formed by the national executive and the governors of the official party. Finally, political decentralization took place during the constitutional reform of 1994, when the mayoral office of the City of Buenos Aires became an elective post. It is worth noting that whereas the periodic popular and direct elections of governors, mayors (other than the City of Buenos Aires’ mayor), provincial legislators, and city councilors had taken place since the end of the military dictatorship in 1983, those elections do not constitute cases of political decentralization – at least by the definition provided in Chapter 2. Because the reinstallation of popular elections in 1983 was done at all levels of government (national and subnational) at the same time, the cycle of popular elections that began that year was not designed to explicitly target the subnational governments or subnational polities (as required by my definition of political decentralization). Instead, the reinstallation of popular elections in 1983 was part of the transition to democracy, which reinstated the electoral rules existent prior to the inception of the military dictatorship in 1976. In other words, the elections that were held since 1983 were democratization events, not political decentralization events.3 3

For further conceptual distinctions between democratization and political decentralization, please refer to Chapter 2.

80

Argentina Partisan Interests Ruling Party

Opposition Parties

Territorial Interests

National

Nat. Executive Adm. Dec. (T1) Dec. Primary Schools, 1978 National Coalition Political Decentralization (T4) Constitutional Reform, 1994

Subnational

Ruling Coalition Administrative Decentralization (T3) Dec. Secondary Schools, 1992

Subnational Coalition Fiscal Decentralization (T2) Changes to Revenue-Sharing Law, 1988

Figure 3.1. Decentralization Coalitions, Policies, and Timing in Argentina, 1978–1994

The 1994 political reform, instead, made the mayor of the City of Buenos Aires, who until then had been appointed by the president, an elected official. This measure was designed to explicitly target a subnational polity. Yet, the political decentralization of 1994 was the last decentralization policy of the first cycle of postdevelopmental decentralization, and as such it was practically a “residual” policy. The timing and contents of this political decentralization measure were controlled by the president. As will be shown in this chapter, because the previous rounds of administrative and fiscal decentralization and the accompanying backlash of fiscal recentralization had increased the power of the national executive, political decentralization only occurred when the president traded it as a bargaining chip for his reelection. Political decentralization in Argentina was the result of an agreement between the president and the national leader of the major opposition party at the time, the Radical Party (Unión Cívica Radical, UCR). That is to say, contrary to the expectations laid out in Chapter 2, it was a national-level coalition that brought about political decentralization.

The First Layer: Administrative Decentralization

81

And because national interests prevailed in that coalition, the territorial demands of subnational actors over other constitutional reforms that were debated in the constitutional convention were systematically defeated. Figure 3.1 graphically depicts the composition of the postdevelopmental decentralization coalitions just mentioned, and Table 3.1 summarizes the main contents, bargaining actors, prevailing territorial interests, and main beneficiaries of the first cycle of postdevelopmental decentralization reforms in Argentina.

The First Layer: Administrative Decentralization Decentralization of Primary Education On June 5 1978, as images of the city of Buenos Aires were broadcast to the world during the soccer World Cup, the national military junta passed two decree-laws (Decree-Law 21,809 and Decree-Law 21,810) transferring all pre-schools and primary schools that belonged to the National Council of Education to the provinces, the Municipality of Buenos Aires, and the national territory of Tierra del Fuego.4 More than 6,500 primary schools, 64,000 teaching and administrative appointments, and almost 900,000 students (about one-third of the total system of primary public education) were transferred to the provinces (Ministerio de Cultura y Educación 1980b, Vol. 2, 224).5 The decree-laws had a retroactive effect 4

5

The territory of Tierra del Fuego gained provincial status in 1992 and the Municipality of Buenos Aires became an autonomous government in the constitutional reform of 1994. In the remainder of this chapter, unless otherwise noted, I refer to both of them as provinces. The exact numbers of transferred schools, personnel, and students vary among sources. I follow the data presented in the 1978 national budget, which reports the transfer of 6,564 primary schools, 64,619 teaching and administrative appointments, and 897,400 students to the provinces. A 1980 report commissioned by the Ministry of Education says that the total number of transferred personnel was 44,050 people (number also cited in Filmus 1998 and Kisilevsky 1990). But when reporting data from the national teachers’ health insurance provider, the same document says that the total number of agents transferred to the provinces was 62,572 people (Ministerio de Cultura y Educación 1980b, Vol.1, p. 130, 148). During interviews with the author, Ministry of Education officials said the discrepancies were due to the fact that the national government did not know how many schools and personnel were under its jurisdiction at the time. In fact, the transfer was so poorly designed that in 1990 there was still an office in the national Ministry of Education in charge of dealing with issues that the transfer had not taken into account, such as problems with teachers’ pensions and benefits, relocations, and judicial and administrative processes (interview with Aguerrondo 2000; interview with Sarabia 2000).

82

A

F

A

P

1978

1988

1991–1992

1994

Constitutional Reform

Law 24,049

Law 23,548

Decree-Laws 21,809 and 21,810

Dec. Policy

Transfer of all preschools and primary schools belonging to the National Council of Education to the provinces New revenue-sharing agreement between the national government and provinces Transfer of secondary schools to the provinces Popular election of the mayor of the City of Buenos Aires

Policy Description

National President and national opposition

Subnational

Governors of the opposition and ruling parties

National

National

National executive

National executive

Dominating Territorial Interests

Main Actors Advancing Reform

National government City of Buenos Aires (and president)

Provinces

National government

Main Territorial Beneficiaries

Note: The Fiscal Pact of 1992, which is analyzed in this chapter, is not included in this table because it constituted a recentralization reform.

Type of Dec.

Year

Table 3.1. First Cycle of Postdevelopmental Decentralization in Argentina, 1978–1994

The First Layer: Administrative Decentralization

83

to January 1, 1978. From that day on, all national education employees (teachers, administrators, and maintenance and supervision personnel) became part of the provincial administrations. Also, the provinces became solely responsible for the expenditures involved in the provision of public preschool and primary education. The reform was unfunded because no revenues or fiscal capacities were transferred, and yet the reform had a cost of 207 billion pesos (Ministerio de Cultura y Educación 1980b, Vol. 2, 224) – equivalent to 20% of the total national transfer of revenues to the provinces (FIEL 1993, 148). National interests prevailed in this first round of decentralization. In the context of an authoritarian regime, the national executive branch was able to impose on the provinces its most preferred outcome: unfunded administrative decentralization. It did so unilaterally, without building a coalition. The central government was interested in administrative decentralization as a way to cut the size of the federal bureaucracy and the national deficit, in the spirit of their neoliberal program of government (Filmus 1998, 68; Novick de Senén González 1995, 138). The military also saw the provinces as enclaves of conservatism, in which future rightwing political parties could develop (Harris 1983, 194). Although the governors were appointed representatives of the central government (many of them military officers themselves), the governors did express their opposition to the national executive’s plan. The governor of Salta wrote to the Minister of Interior: “By no means is the provincial treasury in a situation to afford the total costs of the services to be transferred” (cited in Kisilevsky 1990, 20). The governors of Catamarca and La Pampa expressed similar concerns. The Federal Council of Education (Consejo Federal de Educación, CFE) also met to discuss the transfer of primary schools.6 In 1977, the CFE crafted an alternative proposal in the province of Misiones, requesting that the transfer of schools be gradual and funded through an increase in automatic transfers to the provinces (Ministerio de Cultura y Educación 1980b, Vol. 1, pp. 38–9, and Vol. 2, 211–12). But the national executive disregarded the CFE proposal and implemented the transfer of schools in a single act to all the provinces simultaneously and without an increase in the automatic transfers.7 6

7

Created in 1972, the CFE was presided over by the national minister of education and formed by all the provincial ministers of education. Its main purpose was to coordinate the actions of the federal government and the provinces on educational issues. A special fund (named Program 050) was created to assist the provinces with fewer resources (Ministerio de Cultura y Educación 1980b, Vol.1, p. 44). However, this fund was transitory, the national government had discretionary power over its distribution,

84

Argentina

How was an unfunded administrative decentralization of this magnitude (remember that it did entail one-third of the total system of public education) fiscally and politically feasible? Why did not the provinces return the schools to the national government once there was a transition to a democratic regime in 1983? Both short-term and long-term reasons help to explain the viability of the unfunded administrative decentralization measure. First, an increase in provincial revenues – which rose from 0.88% in 1976 to 1.56% of the GDP in 1977 (Kisilevsky 1998, 55) – established a favorable conjunctural fiscal environment to transfer expenditures without revenues. As a report by the Ministry of Education said, At the end of 1977, the national minister of economy [José Martínez de Hoz] considered that there had been an increase in provincial revenues; therefore, he decided to initiate a policy of transfer of social services, including education. (Ministerio de Cultura y Educación 1980b, Vol. 1, 151)

The report also stated: [T]he minister of economy . . . demonstrated with data, charts, and graphics that the increase in revenues of the national treasury. . . would facilitate the provinces to afford the expenditures generated by the transfers. (Ministerio de Cultura y Educación 1980b, Vol.2, 226)

Interestingly, fourteen years later and in the context of a democratic regime, Minister of Economy Domingo Cavallo would use the same justification and methods to persuade the governors to accept another unfunded administrative decentralization reform: the transfer of the secondary schools. The second reason that helps to explain the feasibility of the unfunded administrative decentralization in 1978 (and why the schools were not returned to the national government when this could have been politically feasible, in 1983) resides in the long-term evolution of the Argentine public education system. This institutional evolution also accounts for why the military national executive chose to decentralize education to the provinces, instead of doing it toward the municipalities, which, according to the theory advanced in Chapter 2, should have been the national executive’s preferred level of government to pass down responsibilities. and the transfers were later discounted from the revenues that the provinces shared with the national level. It was not actually a program to fund the transfer of schools, but rather a system of temporary advance payments that were later discounted from the provincial budgets.

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85

Institutional Evolution of the Primary Education System Since the early days of the Argentine Republic there were conflicts between national and provincial governments over the distribution of responsibilities and resources in education. In 1810, following independence from Spain, the provinces had 46 of the total 54 schools that existed in the Argentine territory. By 1850, national schools (130 in total) had outgrown the provincial schools (75 in total). Nonetheless, given the federalist spirit of the 1853 Constitution, primary education was declared a responsibility of the provinces (Article 5). From 1860 to 1880, through a series of subvention laws, the federal government transferred resources to the provinces to pay for school buildings, furniture, books, and teachers’ salaries. The subvention laws were equally criticized by the advocates and the critics of federalism. The advocates of federalism considered the subvention laws instances of federal intervention in the provinces. The critics of federalism did not like the subvention laws either because they distrusted the provinces’ management of the transferred resources. Simultaneous to the passing of the subvention laws, the national government expanded its presence throughout the territory. The number of national schools increased from 317 in 1860 to 1,134 in 1880, whereas provincial schools grew at a slower pace, passing from 276 to 421 establishments during the same period, as shown in Figure 3.2. The nationalization of the educational system reached its peak in 1884, when Congress passed Law 1,420 that established universal, free, and mandatory education and created the National Council of Education. This law led to the further involvement of the national executive in the educational system (Bravo 1985). As can be appreciated in Figure 3.2, the percentage of federal schools as a proportion of the total peaked at the end of the nineteenth century. In 1905, the “Láinez” law (Law 4,874), named after Senator Manuel Láinez, who introduced the bill, ended the subsidies system and allowed the federal government to build national schools in the provinces, as long as the governors made a formal request to the federation for the construction of schools in their jurisdictions.8

8

This formal request by the provinces notwithstanding, the Láinez law has been criticized as the end of federalism in education (interview with Llach 2001; interview with Salonia 2000; interview with Van Gelderen 2001). In the congressional debate of the bill in 1905 a national deputy eloquently stated this sentiment: “not a single province that has its school system well established, that has respect, esteem, and trust for its educational authorities, can delegate the precious capacity of managing primary education [to the national government] without consenting to the interference of

86

1840

1830

1820

Federal Schools

1890

1880

1870 Provincial Schools

1900 Year

1940

1930

1920

1910

Municipal Schools

1980

1970

1960

Private Schools

1990

1950

1860

1850

1810

1800

Percentage

Figure 3.2. Evolution of Primary Schools by Level of Government in Argentina, 1810–1994 Sources: Years 1810 to 1905: Consejo Nacional de Educación (1938); 1913 to 1960: Ministerio de Educación y Justicia (1964b); 1965 to 1970: Ministerio de Cultura y Educación (1973); 1975: Ministerio de Cultura y Educación (nd); 1980: Ministerio de Cultura y Educación (1980a); 1987: Dirección Nacional de Información (1989); and 1994: Ministerio de Cultura y Educación de la Nación (1996).

0

10

20

30

40

50

60

70

80

90

100

2000

The First Layer: Administrative Decentralization

87

In fact, at about the same time that the Láinez law was passed and possibly as a reaction to it, the provinces increased their role in education, and by the 1920s they were responsible for roughly the same amount of schools (and teachers and students) as the national government. As Figure 3.2 shows, between the 1920s and 1978, responsibility for public primary schools in Argentina was almost equally distributed between the provinces and the national government. Unlike in Mexico and Colombia, where the national government was responsible for basic education until decentralization took place in 1992 and 1993, Argentina, like Brazil, had developed throughout the twentieth century a large subnational educational system. But whereas in Brazil the municipalities had been largely responsible for primary education (as explained in Chapter 5), in Argentina, education was in the hands of the governors. A wholesale unfunded transfer to the municipalities was not feasible at the time. Certainly, there were disparities among the provinces regarding the percentage of schools under their own jurisdiction. Before the transfer, the province of La Rioja administered 80% of the schools in its territory; whereas the province of Chubut was responsible for less than 20% of the primary schools. On average, however, the Argentine provinces managed more than 50% of the public primary-education system. Thus, in 1970, eight years before the transfer, the 22 provinces were responsible for 12,498 of the 23,673 public primary schools (Ministerio de Cultura y Educación 1973). Argentine municipal governments, meanwhile, had practically no role in education, as can be appreciated from Figure 3.3.9 Thus, when the military government authoritatively decided to transfer responsibility for the primary schools in 1978, it had to decentralize to the provincial level, particularly if the reform was going to be unfunded and if existing provincial institutional capacities were to be used. The institutional evolution of the Argentine educational system also explains why the governors were able to cope with a poorly designed, unfunded transfer of schools. The provincial administrations had already built institutional capacities to manage primary education, and despite a few school closings, these capacities were able to handle the new responsibilities. Prior to 1978, governors financed, hired, fired, and relocated

9

foreign authorities” (Deputy Carbó, September 29 1905, cited in Rivarola and Danadi 1961, 70). Municipal primary schools accounted for only 91 of the primary school establishments in 1970 (Ministerio de Cultura y Educación 1973).

88

Argentina 100% 90% 80%

Schools

70% 60% 50% 40% 30% 20% 10% La Rioja La Pampa Buenos Aires Entre Rios Rio Negro Santa Fe Córdoba Mendoza Santa Cruz Jujuy Corrientes San Juan San Luis Tucumán Formosa Santiago Salta Misiones Chaco Catamarca Neuquén Chubut Tierra del Fuego Capital Federal Average

0%

Province

Provincial

National

Municipal

Private

Figure 3.3. Primary Schools by Level of Government in Argentina, 1970 Source: Ministerio de Cultura y Educación (1973).

teachers in their districts. Governors also built and repaired schools. Despite the disastrous fiscal effects that the unfunded decentralization of primary education had for the provincial coffers, the governors did not seek to reverse the transfer of primary education when the country returned to democracy in 1983. Policy Effects of Unfunded Administrative Decentralization The unfunded administrative decentralization reform of 1978 had three main policy effects on the ongoing process of decentralization and on intergovernmental relations. Within the administrative layer of intergovernmental relations, unfunded administrative decentralization produced a demonstration effect because of its success. It provided an example of how and when to implement a similar decentralization policy, one that future policymakers could adopt in the advent of a fiscal context parallel to that one of 1977. Second, it contributed to the incrementalism toward further decentralization of responsibilities in the educational sector. In 1992, when secondary-level education was decentralized to the

The First Layer: Administrative Decentralization

89

provinces, it was easier for the national government to justify this measure and for the subnational governments to accept it as the next step in a process of provincialization of the educational system. Unfunded administrative decentralization also had policy effects on the fiscal and political layers of intergovernmental relations. Because it lead to the reproduction of the power of the national executive, the president was able to determine the timing and the contents of the subsequent fiscal and political decentralization policies. Decentralization of Secondary Education The Demonstration Effect of 1978 on 1992 At the end of 1991, Congress passed a law that transferred all national secondary and adult schools to the provinces.10 More than 2,000 national schools, 72,000 teachers, and 700,000 students were incorporated into the provincial systems of education. The estimated financial cost of the transferred services was 1.2 billion pesos per year, the equivalent of almost 10% of the total provincial expenditures and 15% of the total national transfers.11 The law established that the costs of the transfer would be paid by the provinces, but whenever the revenues collected in a given month were under the average of the April–December 1991 period, the national government would transfer the 1.2 billion or the difference required to match that amount (Articles 14 and 15 of Law 24,049). Since the return to democracy in 1983, the decentralization of education, while opposed by the teachers’ unions, had gained some degree of societal and political support. The National Education Congress of 1988 had unanimously recommended decentralization of the educational system.12 One year before, a report of the ruling UCR party had made the same recommendation (Novick de Senén González 1995, 123) and the 10

11

12

This was Law 24,049 of December 6, 1991. The law also transferred the supervision of private schools, two food programs, and the few hospitals that remained under national jurisdiction in the Provinces of Buenos Aires and Entre Rios and the City of Buenos Aires. The 1.2 billion pesos consisted of 890 million for the transferred schools, 200 million for the food programs, and 120 for the hospitals (Law 24,049, Appendix). In 1991, the total provincial expenditures were almost 14 billion pesos, while the automatic transfers from the center represented 8.5 billion pesos (data from the Ministry of Economy). Between 1991 and 1999, one Argentine peso was the equivalent of about one U.S. dollar. It is worth noting that only 300 people attended the National Education Congress and it was largely controlled by religious educational institutions. Their recommendations therefore were not representative of the views of the educational community at large.

90

Argentina

party platforms of the three largest political parties in the 1989 presidential elections included the decentralization of education among their proposals. Soon after Carlos Menem (1989–1995 and 1995–1999) took power, the Federal Council of Culture and Education (Consejo Federal de Cultura y Educación, CFCE) advanced a proposal to decentralize education (10th Ordinary Assembly of the CFCE, December 7 of 1989).13 The proposal called for a gradual and funded transfer of schools. It was presented to Congress in February of 1990. In this proposal, authored by Secretary of Education Luis A. Barry, the transfer of schools was only one step in the process leading to the decentralization of education, whose main objective was to improve the quality of education (see Barry 2005, 33–60; Barry nd; Salonia 1996). But the proposal was shelved at the congressional Education Committee and never reached the floor. Recalling a meeting with senators and officials from the Ministry of Economy, Luis A. Barry said that the proposal had entered an “eternal freeze” because the Ministry of Economy was unwilling to discuss the issue most critical to the provinces: the financing of the schools (Barry 2005, 65–6; nd, 36). Lack of fiscal resources to guarantee a funded decentralization and the distrust of the provincial governments toward the national government deadlocked the bargaining over decentralization of education. At the end of 1991, six months after the economic stabilization plan that had lowered inflation and increased the national collection of taxes, Minister of Economy Domingo Cavallo sent the 1992 budget to Congress. The budget projected that, due to the increase in tax collection, the automatic transfers to the provinces would increase by at least 1.5 billion pesos in 1992. Like Martínez de Hoz in 1977, Cavallo saw in the increase of the collection of revenue-sharable taxes a favorable fiscal context in which to transfer expenditures without new revenues. The budget bill thus included a line for the transfer of secondary schools to the provinces. Legislators were puzzled by this unexpected addition to the budget, especially because the decentralization of secondary schools had not been previously discussed in Congress, not even among the members of the 13

The CFCE was formed in 1979 from the merger of the Federal Council of Education (CFE) and the Council of Culture. As its CFE predecessor, the CFCE is presided over by the national minister of education and constituted by all the provincial ministers of education. The CFCE exists to this day and has been an important player in the negotiation and design of education reforms since the Federal Law of Education was passed in 1993 (Falleti 2001).

The First Layer: Administrative Decentralization

91

official party. Susana Decibe, Justicialist Party (Partido Justicialista, PJ) national deputy at the time and later minister of education (1996–1999), remembered the incident in the following terms: I was in Congress at the time. After reading about the transfer of schools in the budget proposal, I went to the president of the education committee and told him “Look, they have transferred the schools!” This is how we were informed about it. (Interview with Decibe, 2001)

But soon it became obvious that, unlike the transfer of primary schools – which could be imposed from above by the military – the transfer of secondary schools during a democratic regime would require a political coalition for its support. Making a funding concession, the national executive was able to forge a ruling coalition to advance administrative decentralization in 1992. But even in a situation of unified government, the territorial interests of the subnational members of the coalition had to be addressed. Subnational Territorial Interests in a Ruling Coalition Unlike the teachers’ unions in Mexico and Colombia that had a prominent role in the negotiations over the decentralization of education, the teachers’ unions in Argentina were rapidly neutralized (Murillo 1999). Congress did not play an important role in the negotiations either. The bill was presented in the Senate by an officialist party senator (Olijela del Valle Rivas, PJ, Tucumán) and a senator from a provincial party (José A. Romero Feris, Autonomist Liberal Party, Partido Autonomista Liberal, PAL, Corrientes). Regardless of their partisan affiliations, the senators voiced their concerns about how to finance the transfer. But when the time arrived to vote for the bill, the senators honored a previous agreement reached between the national executive and the governors.14 Once approved in the Senate, the bill passed to the Chamber of Deputies. There, the law was debated together with the 1992 budget and both laws were voted on in the same session, showing how entangled both bills were. Only twenty-five deputies were present for the debate 14

Opposition Senator Margarita Malharro de Torres (UCR, Mendoza) said, “I am raising my hand [to vote in favor of the bill] because I have a pre-established agreement but it feels as heavy as lead, it hurts me” (Cámara de Senadores de la Nación, Diario de Sesiones, November 28, 1991, 4541). Another opposition senator said, “Since it was evident that this law was going to be approved, we worked to improve it as much as we could” (Adolfo Gass, UCR, in Cámara de Senadores de la Nación, Diario de Sesiones, November 28, 1991, 4537).

92

Argentina

over the transfer of schools’ bill, and they conveyed the same fatalistic attitude toward their role in the decision-making process that senators had expressed before. Deputy Federico Clérici (from the right-wing party Union of the Democratic Center, Unión del Centro Democrático, UCEDE) said: . . . the fact is that we have arrived too late to the discussion of this issue. . . it has already been discussed by the national executive, the governors, the senators. . . . We received a text that surely when the time to vote comes. . . it will be approved exactly as we have received it. . . . Nothing that we will discuss tonight is going to make any difference. (Cámara de Senadores de la Nación, Diario de Sesiones, November 28, 1991, 4541)

Indeed, when the time came to vote on the bill in the Chamber of Deputies, 167 deputies were present. One hundred and fifty-six voted in favor of the bill, only eight voted against it, and two abstained. As the senators and deputies recognized during the discussion of the bill, Congress merely acted as a rubber stamp. It would be a mistake, however, to conclude that the decentralization reform was simply imposed by a strong president in a situation of unified government. In fact, the role of Congress in this negotiation does not help to understand how the reform came about. Even in a situation of unified government, President Menem and his cabinet had to gain the governors’ approval to achieve the decentralization of secondary schools. An in-depth study of the bargaining process over this policy reveals that closed-door intergovernmental negotiations taking place during the last trimester of 1991 were more important than the role of Congress. In fact, the governors’ support of the reform was a precondition for the Congress members’ approval of the bill. Although there is no official record of what happened in the closeddoor negotiations leading to the decentralization law, through the various bill proposals, the congressional debates, and in-depth interviews with key informants, it is possible to reconstruct the positions of the key players in the negotiations. At the national level, the Ministries of Economy and Education had different views on how to proceed with decentralization (Barry 2005). The Ministry of Education, led by Antonio Salonia, wanted a gradual and funded transfer, aimed to improve the quality of education in the provinces (as expressed in the decentralization bill crafted by Barry at the end of 1989), and it wanted a decentralization law discussed separately from the 1992 budget bill. The Ministry of Economy, instead, wanted the decentralization of education for economic reasons – to cut national

The First Layer: Administrative Decentralization

93

expenses – and wanted this reform to be included in the 1992 budget. Minister of Economy Cavallo said publicly that the transfer of secondary education would save the national government 890 million dollars per year (La Nación, December 7, 1991, p.14). The outrage of some Congress members (interview with Decibe, 2001), added to the governors’ distrust over the financing of the reform (interview with Salonia, 2000), helped the Ministry of Education to reach a compromise within the national cabinet. It was agreed that a special law (separate from the budget bill) would be passed to transfer the schools. At that point, negotiations started with the governors. At the time of these negotiations, the PJ ruled in fourteen of the twenty-three provinces. However, the national government had to negotiate with opposition and officialist governors alike. Both opposition and officialist governors acted as representatives of subnational interests and requested that the transfer of schools be funded. The governors had learned from the fiscal consequences of the 1978 decentralization reform and distrusted the national government.15 The PJ governor of Mendoza, José Octavio Bordón, for example, presented an alternative funding proposal. In Bordón‘s proposal, the transfer of secondary schools had to be accompanied by an increase in the direct transfer of revenues to the provinces. He said: We agreed with a democratic and ordered transfer of secondary schools. The primary level had been transferred in an authoritarian fashion by a military government, without sufficient resources. For us, the transfer was positive if it was properly done. (Interview with Bordón, 2001)

Minister of Economy Domingo Cavallo’s position was, instead, that the provinces should be able to afford the transfer of schools with their own revenues since the absolute amount of collected taxes – and therefore the automatic transfers to the provinces through revenue sharing – had increased steadily since April of 1991 and would continue to increase in 1992, as it happened.16 Cavallo wanted to persuade the governors that, 15

16

As Antonio Salonia, the minister of education at the time, wrote: “. . . not all the governors were equally inclined to accept overnight the transfer of schools. There were doubts and distrust, particularly due to the antecedents of the abrupt transfers made in the near past – literally imposed by the central government – and due to the consequences those transfers had had on provincial resources” (Salonia 1996, 41, emphasis in the original). While in 1990 the absolute amount of automatic transfers to the provinces (net coparticipation) was 4.8 billion pesos, in 1991 it was 6.9 billion pesos, and in 1992 it was 8.8 billion pesos (Subsecretaría de Relaciones Fiscales y Económicas con las Provincias 1994, 15).

Argentina

III

1991 I

III

1990 I

III

1989 I

III

1988 I

III

10,000 9,000 8,000 7,000 6,000 5,000 4,000 3,000 2,000 1,000 0

1987 I

Millions of pesos

94

Trimesters Total Income

Total Expenditures

Federal Coparticip.

Figure 3.4. National Income, Expenditures, and Revenue Sharing in Argentina, 1987–1991 Source: Barry, Luis Antonio (according to the original document provided to the author). A similar chart was published in Barry (2005, 222).

since the enactment of the convertibility law, the total public income was growing at a faster pace than the expenditures, and that this trend would continue. He showed the governors a chart (reproduced in Figure 3.4) containing the evolution of national revenues, expenditures, and revenuesharing from 1987 to 1991. Then, according to a Ministry of Education official who was at one of these meetings, the following happened: [PJ governor of San Luis, Adolfo] Rodríguez Saá said, “Ok Mingo, all your charts are great. We have had five or six months of stability and high revenues; however, who guarantees me that next year it will be like this?” Then there was a big discussion and Cavallo said, “I guarantee it.” Then the governors replied, “If you are convinced, then write it down in a guarantee clause.” (Interview with Ministry of Education official, 2001)17

It is very likely that this is how the financial guarantee clause (Article 15 of Law 24,049) came about and how some governors agreed to the transfer. The debates in the Senate indicate that the PJ representatives from the small northern provinces were the first ones to side with the national executive on the transfer of secondary schools issue. After several meetings, all the governors, with the exception of the governor of Córdoba, Eduardo Angeloz, agreed to the transfer (interview with Angeloz, 2000). 17

The official interviewed requested that his name be kept anonymous.

The First Layer: Administrative Decentralization

95

With this compromise, the governors did not achieve their most preferred outcome, as they would have to finance the transfer of the new services with the absolute rise in their own revenues. Nevertheless, they won the guarantee that in every month when the collection of revenues was below a certain average (that of the April–December 1991 period) the national government would supplement the difference. Cavallo did not get his most preferred outcome either, which would have been a transfer with no financial guarantees, as in 1978. However, it took the national executive only eight months to further cut the automatic transfers to the provinces in the Fiscal Pact of 1992. Incrementalism in the Expansion of Responsibilities without Revenues After the bill was sanctioned, bilateral agreements were signed with each governor to establish the exact date when the provincial administration would take over responsibility of the former national schools. The agreements also touched on issues such as teachers’ health insurance, pensions, and wages; the restoration and maintenance of school buildings; the financing of private schools; and the authority to grant degrees and certificates. The agreements represented the governors’ ratification of their support toward the decentralization of secondary education. The order in which they were signed is very telling. The first agreement was signed by the governor of La Rioja (President Menem’s native province) in January of 1992. The next four governors to sign were also Peronist, a reflection of the fact that there was a ruling coalition at work. Radical governors did not sign until October and December of 1992 (see Table 3.2). And even though the last two governors to sign, Néstor Kirchner and Eduardo Duhalde, were PJ governors, they were from internal factions opposed to Menem. In the case of the Province of Buenos Aires, there were important financial implications with the transfer as well. On one hand, 30% of all the transferred schools belonged to this province. On the other hand, because the salary scales of former national and provincial teachers had to be equal, the government of the Province of Buenos Aires had to raise the wages of provincial teachers, whose salaries (unlike the case of the rest of the provinces) were lower than those of former national teachers (interview with Feijoo, December 4, 2000). But if there was a ruling coalition at work, why did all the governors, including those of the opposition, accept the transfer of secondary

96

Signed on

16-Jan-92 15-Feb-92 19-Feb-92 28-Feb-92 3-Mar-92 10-Jul-92 21-Aug-92 3-Sept-92 19-Oct-92 27-Oct-92 29-Oct-92 29-Oct-92 12-Nov-92 1-Dec-92 14-Dec-92 16-Dec-92 18-Dec-92 21-Dec-92

Province

La Rioja San Juan MCBA Mendoza San Luis Neuquén Misiones Chaco Jujuy Rio Negro Chubut La Pampa Tucumán Córdoba T. del Fuego Santiago Entre Ríos Catamarca

Arnaudo Escobar Grosso Gabrielli Rod. Saá Sobisch Puerta Tauguinas Domínguez Massaccesi Maestro Baladrón (V) Ortega Angeloz Estabillo Mujica Moine Castillo

Governor

PJ PJ PJ PJ PJ Pcial. PJ Pcial. PJ UCR UCR PJ PJ UCR Pcial. PJ PJ UCR

Party

1-Mar-92 1-Mar-92 1-Jul-92 1-Jul-92 1-Apr-92 1-Aug-92 1-Jan-93 1-Jan-93 1-Jan-93 1-Dec-92 1-Jan-93 1-Jan-93 1-Dec-92 1-Jan-93 1-Jan-93 1-Jan-93 1-Jan-93 1-Jan-93

Date Tran.

48 62 294 122 33 38 42 26 49 25 46 35 66 187 21 46 117 38

13 26 685 70 16 6 39 34 13 26 12 32 98 271 5 26 76 11

Pub. Sch. Priv. Sch.

61 88 979 192 49 44 81 60 62 51 58 67 164 458 26 72 193 49

Total

1.27 1.84 20.46 4.01 1.02 0.92 1.69 1.25 1.30 1.07 1.21 1.40 3.43 9.57 0.54 1.50 4.03 1.02

% of Total Transf. Schools

Table 3.2. Bilateral Agreements for the Transfer of Secondary Schools in Argentina, 1992–1993

5.2

2.0

Side Payments (in million of pesos)

97

29-Dec-92 30-Dec-92 30-Dec-92 25-Jan-93 16-Mar-93 30-Dec-93

Santa Fe Corrientes Formosa Salta Santa Cruz Buenos Aires

Reutemann Bello (I) Insfran (V) Ulloa Kirchner Duhalde

Governor

PJ PJ PJ Pcial. PJ PJ

Party

1-Feb-93 1-Jan-93 1-Jan-93 1-Mar-93 1-May-93 1-Jan-94

Date Tran.

2,191

139 66 28 61 18 584 2,594

193 25 12 37 7 861

Pub. Sch. Priv. Sch.

4,785

332 91 40 98 25 1,445

Total

100.00

6.94 1.90 0.84 2.05 0.52 30.20

% of Total Transf. Schools

141,600.0

90,900.0

30.0 9.5 4.0

Side Payments (in million of pesos)

Note: V: Vicegobernor; I: Federal Interventor. Side payments are the amounts that were included in the bilateral agreements, reported in millions of Argentine pesos, when one Argentine peso equaled one U.S. dollar. Source: Author’s elaboration based on the bilateral agreements with each province, Convenios con las 24 Jurisdicciones, Ministerio de Educación, República Argentina.

Total

Signed on

Province

Table 3.2. (Continued)

98

Argentina

schools? As in the case of primary education, the historical evolution of secondary-level education in Argentina is important in order to understand the position taken by the governors in the negotiations with the national executive. Institutional Evolution of the Secondary Education System In the early 1960s, federal secondary schools amounted to 26.5% of the total and only 8.7% were provincial (the remaining 64.7% were private schools). But by 1975, there were the same number of federal and provincial secondary schools: 27.6% at each level of government (fewer than 1% were municipal, and the remaining 44% were private schools). The provincialization of the secondary schools started much later than at the primary level, but by 1992 the provinces with 31.2% of the schools were administering a larger portion of the sector than the federal level that had 26.2% of the schools, as can be seen in Figure 3.5.18 Moreover, while the national secondary schools were administered de jure by the national government until 1992, de facto a process of decentralization was already under way. As governor of Mendoza José Octavio Bordón said: . . . the truth is that a de facto transfer [of national schools] was already taking place, without recognition in the distribution of revenues. In practice, . . . every time there was a problem in a national school, [people] came to the provincial government to ask for a solution. (Interview with Bordón, 2001)

National officials also recognized this situation. Secretary of Education Barry said: There were [national] schools that for 10 years had not had any supervision. They were managed by phone [from Buenos Aires] or . . . by mail. The link was formal, epistolary, but not efficient. (Barry nd, 34)

Or, as a Ministry of Economy official put it, “Only in their plates were the schools national” (interview with Pezoa, 2001). Under these conditions, the governors were more inclined to a transfer of schools. Unlike the 1978 decentralization, in 1992 the governors obtained from the central government the guarantee that if the collection of revenues 18

It is worth noting that the same is not true of teachers and students. In 1988 there were slightly more teachers and students at the national level (39% of the teachers and 44% of the students belonged to the national level) than at the subnational levels (with 35% of the teachers and 28% of the total number of students).

99

0

10

20

30

40

50

60

70

80

90

1930

1925

1920

1915

Federal Schools

1955

1950

1945

1940 Provincial Schools

Year

1975

1970

1965

Municipal Schools

1990

1985

Private Schools

1995

1980

1960

1935

1910

Figure 3.5. Evolution of Secondary Schools by Level of Government in Argentina, 1915–1994 Sources: Years 1915 to 1963: Ministerio de Educación y Justicia (1964a); 1975: Ministerio de Cultura y Educación (nd); 1980 to 1988: Ministerio de Cultura y Educación and Organización de los Estados Americanos (1993); 1992: Ministerio de Cultura y Educación (1993); 1994: Ministerio de Cultura y Educación de la Nación (1996).

Percentage

100

2000

100

Argentina

was extraordinarily low, the federal government would help to pay for the decentralized resources. But there is no agreement among the actors implicated in the negotiations as to whether the guarantee has actually been used. Analyzing the public finance data, it is very difficult to distinguish the origins (provincial, national, or both) of the 1.2 to 1.3 billion pesos assigned every year to finance former national secondary schools, food programs, and hospitals.19 In my interviews, the debate over funding followed territorial interests’ lines. National representatives argue that the national government has transferred resources (interview with Baldrich, 2001; interviews with Barry 2000; interview with España 2001; interview with Salonia 2000; interview with Sarabia, 2000; and interview with Seijas, 2000), whereas provincial representatives argue that the secondary schools were decentralized without resources (interview with Angeloz, 2000; interview with Bordón, 2001; and interview with Garnero, 2001). Only one of the national officials interviewed recognizes that the decentralization of schools was not accompanied by a decentralization of revenues: The increase of revenues took place prior to the transfer. . . . When the social services were transferred there was a big debate because they were transferred without revenues. . . . On that occasion, I believe the timing was bad. The [right] moment to transfer the services was before, at the peak of revenues collection. Instead, when the provinces took over the social services there were not enough resources to finance them. (Interview with Makón, 2001)

Governmental secondary sources indicate that the financing guarantee clause has never been used. Two documents, one written by the National Ministry of Interior and the other by the Federal Council of Investment (Consejo Federal de Inversiones, CFI), state that the funds to finance the secondary schools (between 1.2 and 1.3 billion pesos) are discounted from provincial revenues, prior to the distribution of revenues among all the provinces (Consejo Federal de Inversiones 2000; Zapata nd). Also, when Cavallo stated that the transfer of secondary education would save the national government 890 million dollars per year, he was recognizing that the provinces would finance the transfer. In conclusion, a variety of evidence suggests that the decentralization of secondary education in Argentina was, as Eaton (1998, 6) claims, “not 19

The data provided by the Ministry of Economy are classified in such a way that it is practically impossible to reconstruct the total amount of taxes collected at the national level that are part of the revenue-sharing system, and to compare that amount with the average of the 1991 April–December period.

The Second Layer: Fiscal Decentralization

101

a means of reforming and improving education but rather to solve the fiscal problems of the federal government.” In light of these goals, it is not surprising that administrative decentralization would not increase the power or autonomy of the provinces with respect to the national executive.

The Second Layer: Fiscal Decentralization The administrative decentralization of 1978 had disastrous fiscal consequences for the provinces. The allocation of provincial resources for education increased from 14% in 1977 to almost 20% in 1982 (International Monetary Fund 1985) at the same time that the automatic transfers to the provinces decreased from 48.5% to 29% of all shared revenues (FIEL 1993, 151). As former Minister of Education Antonio Salonia said: It was argued that in order to achieve balance in the national budget it was necessary to transfer the educational services to the provinces. The alleged balance of the national budget was made at the expense of unbalancing the budgets of the twenty four provinces. (Interview with Salonia, 2000)

Fourteen percent of the public primary schools (about 3,300 schools) closed down between 1975 and 1980 (Ministerio de Cultura y Educación 1980a, nd), and governors were forced to beg for discretionary transfers from the national executive to avoid further closures. Interestingly, however, with the transition to democracy in 1983 the newly elected governors did not return the transferred schools to the national government. They did not push for a political decentralization measure in the form of a constitutional reform, either – as I explain in the next section. Instead, they demanded a higher level of revenues to handle their education responsibilities – in other words, they demanded fiscal decentralization. On January 7, 1988, ten years after the unfunded transfer of primary schools, Congress passed a new tax revenue-sharing law, Law 23,548, by which the provinces were granted 57.66% and the national government 42.34% of all revenue-shared taxes. This law constituted a fiscal decentralization reform for two reasons. On the one hand, it augmented the governors’ revenues, giving them the highest proportion of nationally collected revenues since the revenue-sharing system was created in 1935. On the other hand, the law curtailed almost completely the discretionary power of the national executive with regard to transfers to subnational units. The national executive would be entitled to allocate only 1% of the

102

Argentina

shared revenues in a discretional manner. By all accounts this law was a governors’ victory that came about when the party of the president lost the majority in Congress and when all the governors, in a subnational coalition, pushed forward the reform. However, because the prior round of unfunded administrative decentralization had the effect of reproducing the power of the national executive, the president controlled the timing and to a large extent the contents of the fiscal decentralization reform. Reproduction of National Executive Power: Timing and Contents of Fiscal Decentralization The Constitution of 1853 established a clear division between the taxation authority of the national government and the provinces. The national government had exclusive rights over export and import duties, while the provinces were responsible for internal taxes (Articles 4 and 104). But Congress was granted the authority to create direct taxes throughout the territory “whenever the defense, common safety, or general welfare of the state would require it” (Article 67, 2). Hence, it did not take long until an economic crisis led to concurrent internal taxation by the national and provincial governments at the end of the nineteenth century. The provinces agreed to eliminate taxes similar to those collected by the national level in exchange for a portion of the unified taxes. The revenue-sharing system, or coparticipation (coparticipación) as it is called in Argentina, between the national government and the provinces was thus born in 1935 (Law 12,139). Since its creation, the revenue-sharing system has undergone multiple modifications that have changed its base as well as the proportion of automatic transfers received by the provinces (see DiazCayeros 2006, 186–207; Eaton 2001; Pírez 1986; Saiegh and Tommasi 1998). Prior to 1978, the last modification to the revenue-sharing system had been in 1973 (Law 20,221), which increased the proportion of automatic transfers to the provinces from 41% to 48.5% and broadened the set of taxes in the shared pool (Eaton 2001, 27).20 After the dictatorship, when President Raúl Alfonsín (1983–1989) came into power, negotiations were started to modify the 1973 coparticipation law that was going to expire at the end of 1984.21 The PJ governors met on several occasions to define a common strategy to negotiate 20

21

Because this reform did not take place in the context of a neoliberal state, it is not part of the sequence of decentralization reforms analyzed in this chapter. For an analysis of that fi scal decentralization reform, see Eaton (2004, 133–34). On the negotiations that took place between 1984 and 1987, I closely follow the narrative of events presented by Pedro Pírez (1986, 63–77).

The Second Layer: Fiscal Decentralization

103

with the president. The governors of the eastern provinces crafted the “Corrientes Declaration,” in which they denounced the centralism of Buenos Aires and proposed several measures to strengthen provincial finances and federalism. Finally, all the governors met and two proposals for the new revenue-sharing system were discussed. The first proposal was that 65% of the revenue-shared taxes would go to the provinces, 3% to a regional development fund, and 32% to the national government. The second proposal was that 56.66% of the total revenue-shared taxes would be distributed automatically among the provinces, plus 3% for the regional development fund. The national government would be entitled to the remaining 40.34%. Both proposals established objective criteria to distribute the money among the provinces. The provincial ministers agreed on the second proposal, which represented an increase of 8.16% in the proportion of automatic transfers to the provinces with respect to the 1973 level. The governors argued that this increase in revenues would compensate for the decentralization of services imposed by the military, and presented the proposal to the national executive in mid-1984. The national executive’s position was to keep the distribution of taxes established in 1973, or at most increase the provincial share to 51%. However, between 1983 and 1987, the national executive and the governors could not reach an agreement about the distribution of shared revenues. Tensions grew between the twelve PJ governors and the national executive. Carlos Menem, PJ governor of La Rioja at the time, proposed that the interior provinces rebel against the national government and cut the supply of energy to the City of Buenos Aires, where the federal government was seated (Pírez 1986, 68). The seven UCR governors publicly acknowledged that their coffers were in a very poor situation but either adopted an intermediate position or sided with the national government. UCR governor of the Province of Buenos Aires, Alejandro Armendariz, proposed that the provinces receive 52% to 53% of the revenue-shared taxes (Pírez 1986, 71). The distribution of power between the opposition and the ruling party (the opposition PJ party had the majority of the seats in the Senate and the majority of the governorships, while the ruling party had the majority of the seats in the Chamber of Deputies and the presidency) led to a deadlock in the negotiations and put a hold on the treatment of the coparticipation law in Congress until after the 1987 midterm elections. Meanwhile, the transfers of revenues to the provinces were done in bilateral agreements with a large proportion of discretionary funds (named the National Treasury Subsidies, Aportes del Tesoro Nacional),

104

Argentina

amounting to 59% of the total transfers in 1985 and 54% in 1986 (Ministerio de Economía 1989, 177–79). Thus, from 1984 to 1987, Alfonsín gained bargaining power vis-à-vis the governors by using the fiscal transfers to the provinces – which they desperately needed after unfunded administrative decentralization – in exchange for political support (mainly in the Senate). While this helped the national executive to align the governors of the opposition, it also had the effect of alienating the ruling party governors, who saw their coffers depleted as more money was being channeled toward PJ provinces. Thus, by the end of 1987, PJ and radical governors alike advocated for a new coparticipation law. Only after the 1987 midterm elections, when the ruling party lost its majority in the House (passing from 51% to 46% of the seats) and five governorships (Buenos Aires, Chubut, Entre Ríos, Mendoza, and Misiones) to the PJ, did President Alfonsín agree to the governors’ demand for the redistribution of revenue-shared taxes.22 And while the reform was a victory for the governors, it was also instrumental to the president and his party. By that point, mounting economic problems and adverse midterm electoral results had made it clear that the ruling party would not retain the presidency after 1989. If the PJ were to win the 1989 presidential election, the new coparticipation law would guarantee resources to UCR governors. The provincial fiscal recovery caused by the 1988 coparticipation law, however, did not last long. Soon after the law was passed, a hyperinflation crisis affected the Argentine economy. High inflation led to increased printing of currency and produced what in Argentina was known as the “inflation tax” – a sizable amount of resources that the center did not share with the provinces. As a provincial finance official put it, “When [José Luis] Machinea was in the Central Bank [from 1986 to 1989], we told him in a meeting that we would give him all the coparticipation revenues if he gave us the money that was being printed. Collection of revenues was not important at the time” (interview with Garcia, 2000). To make the financial situation of the provinces even worse, when macroeconomic stability was achieved a few years later, the national executive (now in the hands of the PJ) was able to push forward the second round of unfunded administrative decentralization and a fiscal pact that recentralized shared-revenues. 22

After the 1987 gubernatorial elections, the distribution of governorships for the period 1987–1991 was the following: 16 PJ governors, 3 UCR governors, and 3 Provincial Parties governors.

The Second Layer: Fiscal Decentralization

105

Reproduction of National Executive Power: Recentralization of Revenues On August 12, 1992, President Menem, Minister of Economy Cavallo, Minister of Interior José Luis Manzano, Secretary General of the Presidency Eduardo Bauzá, and all the governors (with the exception of the governor of Corrientes, the one province that was under federal intervention) signed a Federal Fiscal Pact. They agreed to divert 15% of the taxes that belonged to the revenue-sharing system toward the national pensions system, plus $44 million to finance provincial fiscal deficits. The pact also guaranteed a minimum floor (piso mínimo) of $725 million in monthly coparticipation transfers (Article 3) and transferred the administration of some minor earmarked funds to the provinces.23 Ten days after the pact was signed, the law was passed in both chambers of Congress (Law 24,130). Although two out of the six stated goals in the letter of the pact related to the strengthening of federalism and the process of decentralization, ironically, the pact had the effect of centralizing revenues. Because of the pact, the total percentage of revenue-sharing taxes received by the provinces dropped from 57.7% to 49%. And although the guaranteed minimum floor was increased to $740 million as of 1994 (Decree 1807/93) and to $850 million in 1998 (Eaton 2005, 102), between 1993 and 1999, the provinces lost 9.3 billion pesos (equivalent to the same amount in U.S. dollars) to the central government, even after considering the compensation for the guaranteed minimum of monthly transfers.24 If another compensation is also taken into account (the fund for fiscal unbalances), the provinces still lost 5.5 billion pesos in transfers to the central government between 1993 and 1999, as can be seen in Table 3.3.25 23

24

25

These were the National Housing Fund (Fondo Nacional de la Vivienda, FONAVI), the Federal Council of Water and Sanitation (Consejo Federal de Agua Potable y Saneamiento, COFAPyS), the Fund for Electric Development (Fondo de Desarrollo Eléctrico del Interior, FEDEI), and the Roads Fund (Fondo Vial). Eaton (2005) considers that the minimum floor evolved to become a straitjacket for the national government in the late 1990s, contributing to the fall of President De la Rúa in 2001. While the minimum floor guarantee might have created unintended consequences for the national executive when the Argentine economy (and the collection of taxes) slowed down after 1995, the analysis of the distribution of resources between levels of governments shows that the provinces would have received even higher amounts of transfers (at least until 1999) if the 1988 coparticipation law had not been modified. It is worth noting that in 1993 a Fiscal Pact was signed between the federal government and the governors, as a result of which eleven provinces transferred their pension systems to the federal government. Because those pension systems had deficits, it has

106

8,148.7 8,862.7 8,092.0 8,872.5 10,062.3 10,709.8 10,400.9

65,149.2

1993 1994 1995 1996 1997 1998 1999

Total

2,173.0

680.6 246.3 845.5 396.2 4.3 0 0

Monthly Guarantee (Col 2)

3,820.2

538.9 543.6 543.8 545.1 549.6 549.6 549.6

Fund Fiscal Unb (Col 3)

76,657.1

9,588.3 10,428.3 9,521.6 10,439.8 11,839.5 12,601.4 12,237.9

Cop Pre – Fiscal Pact (Col 4)

–9,334.4

785.8 1,319.2 584.0 1,171.0 1,772.8 1,891.4 1,836.9

Difference Col 4 – (1 + 2)

–5,514.2

219.9 775.6 40.2 625.9 1,223.2 1,341.8 1,287.3

Difference Col 4 – (1 + 2 + 3)

Note: Data are in millions of Argentine pesos, when one Argentine peso equaled one U.S. dollar. Sources: Author’s elaboration based on data from Boletín Fiscal, Cuarto Trimestre, various years, Ministerio de Economía y Obras y Servicios Públicos, Secretaria de Hacienda, for the period 1993 to 1997; and Consejo Federal de Inversiones (2000) and Centro de Estrategias Regionales (1999–2000), for the years 1998 and 1999.

Cop Post– Fiscal Pact (Col 1)

Year

Table 3.3. Effects of the 1992 Fiscal Pact on Provincial Budgets in Argentina, 1993–1999

The Second Layer: Fiscal Decentralization

107

Scholars have explained the move from fiscal decentralization to recentralization as a function of divided government or partisan harmony. A divided government during the Alfonsín administration would have led to fiscal decentralization, while a unified government after 1989 would have led to recentralization (Eaton 2001, 23; 2002b; Willis et al. 1999, 25). According to this explanation, the mechanism that links divided government with policy outcomes is the accountability of Congress members toward either national or subnational executives. This explanation, however, does not account for the acquiescence of governors. As had happened with the law that decentralized secondary schools, the Fiscal Pact of 1992 was first negotiated with the governors. Only after an agreement with the governors had been reached was the bill sent to Congress. The problem is that in Argentina governors are not bound by the same set of electoral and political incentives as legislators are. In Argentina, governors are popularly elected for four-year periods (Calvo and Micozzi 2005) while presidents were elected for six-year periods between 1983 and 1995. This means that governors could not ride on presidential coattails in 1987 or in 1991, the two years when major fiscal reforms took place.26 Moreover, if we consider that the nominations for governors in Argentina are largely dependent on the provincial branches of the political parties (Jones 1998; Jones and Palanza 1999; Levitsky 2003), the incentives to comply with the national executive on territorial policies should be lower than the incentives to advance the territorial interests of the province. Finally, it is worth reminding ourselves that governors are accountable to (and, unlike national legislators, often held accountable by) their provincial constituencies. For all these reasons, I would expect that the interests of the subnational unit should prevail over those of the center on issues of fiscal decentralization. And, if so, the governors’ compliance to the preferences of the central government – when it occurs – requires an explanation, even if it happens under unified governments. Like the law to transfer secondary schools, the Fiscal Pact of 1992 was negotiated between the national executive and the governors before the

26

been estimated that between 1994 and 1998 those provinces saved 4.5 billion pesos as a result of the transfer (Ortega 1999, Anexo: Cajas Provinciales, 3). With this measure, provinces with high pension system deficits (such as San Juan, Santiago del Estero, and the City of Buenos Aires) may have compensated the negative fi scal impact of the 1992 Fiscal Pact. The problem is that for those provinces that did not transfer the pension systems, the 1992 pact still meant a net cut in their revenues. In those years there were gubernatorial elections, but presidential elections would not take place until 1989 and 1995.

108

Argentina

bill reached Congress. The bargaining leverage of the national executive was strong because of the prior unfunded administrative decentralization policies. The national executive team (Cavallo, Manzano, and Bauzá) had succeeded in passing the decentralization of secondary schools by granting a financing clause guarantee, as explained previously. The same type of clause was used in the Fiscal Pact of 1992. Governors accepted the pact because a minimum level of transfers was guaranteed to them. Given the prior off-loading of responsibilities without resources or new taxing capacities, governors preferred the security of a guaranteed minimum of monthly transfers to the uncertainty of an additional 15% in the base of revenue-shared taxes. Moreover, the 44 million pesos fund that was discretionally distributed among governors and the transfers of other minor funds acted as incentives to get the governors to sign the pact (Eaton 1998). The sequencing of administrative and fiscal decentralization in Argentina has led to more responsibilities with fewer resources for the provinces. According to data from the Ministry of Economy, throughout the 1990s the percentage of nationally collected taxes that were transferred to the provinces under the coparticipation regime decreased from 42% of the total provincial expenditures in 1991 to 32% in 1999 (with the lowest percentage of 27% in 1995). The percentage of provincially collected taxes, instead, increased slightly throughout those years from 28% of the total provincial expenditures in 1991 to 33% in 1999, as shown in Figure 3.6.27, 28 The greater collection efforts (of at least some of the provinces) were not sufficient, however. With more expenditure 27

28

To say that on average the provinces collected more revenues during the 1990s runs counter to many interpretations of the fiscal behavior of the provinces during that period advanced by the international fi nancial institutions and also in academia (e.g., Remmer and Wibbels 2000). Hence, it is worth mentioning that the fi scal data used here, covering the 1991–1999 period, were compiled by the Undersecretary of Fiscal and Economic Relations with the Provinces (Subsecretaría de Relaciones Fiscales y Económicas con las Provincias) of the Ministry of Economy and Public Works and Services (Ministerio de Economía y Obras y Servicios Públicos) and are consistent with data on provincial revenues collected by the Secretary for Assistance with Economic Reform in the Provinces (Secretaría de Asistencia para la Reforma Económica de la Provincias) of the Ministry of Interior (Ministerio del Interior). The data are available upon request from the author. The analysis of provincial budgets by regions shows different patterns with regard to the significance of provincial versus national sources. In the center region, for example, nearly 50% of the expenditures are funded by provincial taxes, while in the northwestern provinces less than 10% of the expenditures come from their own revenues. Still the overall tendency of the 1990s has been toward a decrease of national sources in the provincial budgets, which tends to be accompanied by higher amounts of debt.

109

The Third Layer: Political Decentralization 60.00

Percentage

50.00 40.00 30.00 20.00 10.00 2000

1999

1998

1997

1996

1995

1994

1993

1992

1991

1990

0.00

Year Provincial Taxes as % Total Exp Coparticipation as % Total Exp

National Taxes as % Total Exp Debt Financing as % Current Income

Figure 3.6. Share of National and Provincial Resources in Provincial Budgets in Argentina, 1991–1999 Source: Subsecretaría de Relaciones Fiscales y Económicas con las Provincias, Ministerio de Economia y Obras y Servicios Públicos, República Argentina.

responsibilities, lower transfer amounts, and without new taxing capacities, governors resorted to issuing bonds and borrowing from national and international lenders and (whether justifiably or not) have been held largely responsible for the events leading to the economic meltdown of the early 2000s.

The Third Layer: Political Decentralization In postdevelopmental Argentina, political decentralization (the set of constitutional amendments and electoral reforms designed to devolve electoral and political capacities to subnational polities) occurred in the constitutional reform of 1994. The new Constitution established the direct election of the mayor of the City of Buenos Aires, previously appointed by the president. Other constitutional reforms also aimed at strengthening federalism and provincial capacities, such as giving the system of revenue-sharing constitutional status, and granting the provinces the capacity to create economic regions and to enter international treaties. The new Constitution also established that Congress had the exclusive authority to declare federal interventions, previously a president’s prerogative (Negretto 1998). Unlike the cases of Colombia and Brazil, in which subnational interests played an important role in the coalitions that pushed forward political

110

Argentina

decentralization measures, Argentina’s constitutional reform resulted from a negotiation between the national leaders of the two major political parties. It was a national-level type of coalition that brought about political decentralization. In fact, political decentralization was the by-product of other reforms that were being pursued at the time, among which the most important was the reelection of the president. Although, as discussed in the next section, a project to reform the Constitution had been in the political agenda since 1983, the constitutional reform materialized only once President Menem advocated for one so he could run in the 1995 presidential elections for a second consecutive term. Alfonsín, national leader of the UCR, agreed to the reelection clause in exchange for a series of political reforms, among which was to grant autonomy to the City of Buenos Aires, until then a political bastion of the UCR. The absence of subnational actors and territorial interests in the negotiations that led to the constitutional reform limited the redistribution of power among the levels of government that resulted from this reform. The main political changes introduced in the new Constitution sought to balance the distribution of power between the ruling and the opposition parties that negotiated the reform, rather than increasing the power of subnational governments. The direct election of the mayor of the City of Buenos Aires had a decentralizing effect, and benefited the opposition. But other reforms, such as the direct election of senators and the third senator for the first minority party, curtailed the power of the governors. Prior to 1994, senators were indirectly elected by the provincial legislatures and governors had a large influence over their nomination. After the constitutional reform, the citizens of each province voted directly for their senators, who as a result have become more independent from the governors. Moreover, the 1994 constitutional reform declared that the third senator goes to the first minority. Since 1997, governors are faced with at least one senator from a different party, whose partisan interests may prevail over the territorial interests of the governors. More importantly, if we shift the focus of the analysis from the reforms successfully enacted to the reforms that did not materialize, we can grasp the unrealized potential of fiscal and political decentralization measures that were not achieved in the Constitutional Convention of 1994. At the convention, provincial representatives voiced their interests to change the system of revenue-sharing such that more resources would be channeled to the provinces. They also requested higher degrees of municipal autonomy and a broader definition of the natural resources under provincial

The Third Layer: Political Decentralization

111

jurisdiction. But given the origins of the constitutional reform (a pact of national leaders), and the previous path of administrative and fiscal reforms that empowered the national executive, the territorial interests of the conventionalists were surpassed by the pressures of the national executive. Thus, partisan interests prevailed at the moment of voting on the contents of the new constitution. A Failed Attempt at Political Decentralization At the end of the military regime, during the electoral campaign of 1983, at least six political parties, including the two main parties, the UCR and the PJ, advocated for a constitutional reform (Leiva and Abásalo 2000). The common concern was to strengthen political institutions and to avoid future disruptions to democratic rule. Several proposals to reform the constitution were introduced in Congress in the first two years of the democratic transition. At the end of 1985, President Alfonsín ordered the creation of a council to study the matter. The council, composed of public and academic figures representing different political sectors, elaborated two reports addressing the need to reform the constitution.29 The main objective of the council’s recommendation for a constitutional reform was to attenuate Argentina’s “hyper-presidentialism,” seen as a source of political instability and deterioration of the rule of law (Nino 1996). The council’s proposal included the creation of a mixed presidential system (with a prime minister), the strengthening of federalism, the relocation of the federal capital city from the City of Buenos Aires to the southern cities of Viedma and Carmen de Patagones, the decentralization of the state, municipal autonomy, provincial control over natural resources, and limits on the president’s authority to intervene in the affairs of the provinces (Consejo para la Consolidación de la Democracia 1986). The council’s proposal was highly decentralizing, from both political and fiscal perspectives. Had it been implemented, it would have granted mayors constitutional autonomy and the governors would have had total control over natural resources (including oil) and more autonomy from the national executive in situations leading to federal interventions. Had this reform materialized, its political effects 29

The two reports were published as Consejo para la Consolidación de la Democracia, Reforma de la Constitución: Dictamen Preliminar, Buenos Aires: Eudeba, 1986; and Reforma de la Constitución: Segundo Dictamen, Buenos Aires: Eudeba, 1987.

112

Argentina

would have likely been similar to those of Brazil’s 1988 Constitution (on such effects, see, among others, Stepan 2000 and Chapter 5 in this book). Interestingly, the debate over the constitutional reform in Argentina became structured along partisan, rather than territorial, interests (Botana and Mustapic 1991; Smulovitz 1987). The PJ was split in its support of the constitutional reform. On the one hand, the PJ leadership agreed that there was a need to reform the Constitution, citing Juan D. Perón’s efforts in this direction in 1974 (Grindle 2000, 167). Some of the proposed reforms, such as the creation of economic regions, had also been on the PJ political agenda for a long time.30 On the other hand, PJ politicians from the small provinces – particularly those who intended to run in the forthcoming presidential race – were against changing the presidentialist structure (Negretto 2001, 138). When the PJ won the 1987 midterm election and the UCR lost its majority in the Lower Chamber, the proposal to reform the Constitution was shelved. In a context of high political competition, the partisan interests of subnational politicians prevailed over their territorial interests and a subnational coalition to pursue political decentralization did not materialize. Interestingly, however, due to the negative fiscal effects of the first round of unfunded administrative decentralization in 1978, such a coalition did materialize to pursue fiscal decentralization in 1988, as explained previously. The Origins of the 1994 Constitutional Reform At the beginning of 1992 and after having stabilized the economy, Menem publicly declared his intention to run for the presidency in 1995. The 1853 Constitution forbade the reelection of the president in consecutive terms, so a constitutional reform was needed if Menem was going to run for president again. Menem publicly stated that the economic stability achieved since 1991 was dependent on his staying in power. Eduardo Duhalde, the PJ governor of the Province of Buenos Aires and a potential candidate to the presidency in 1995, initially opposed Menem’s attempt to reform the Constitution to run for reelection. The UCR leaders were also initially opposed. 30

See, for example, the series of lectures and public discourses given between 1970 and 1984 by Justicialist lawyer and former president of the Federal Council of Investments (CFI) Alberto González Arzac (González Arzac 1984).

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At the peak of his popularity, Menem threatened to call a plebiscite on the constitutional reform. In the meantime, the law to reform the Constitution passed in the Senate (where, with the support of provincial parties’ senators, it was possible to gather the necessary two-thirds of the votes) and Menem was trying to advance a new interpretation on the rules required to pass the law in the Lower Chamber.31 By the end of 1993, Menem had managed to discipline the members of his party. At this point, former President and National Leader of the UCR Raúl Alfonsín negotiated with Menem an agreement of basic constitutional reforms, which became known as the Olivos Pact (Pacto de Olivos).32 In this pact, Alfonsín agreed to the presidential reelection in exchange for the autonomy of the City of Buenos Aires, the creation of a chief of cabinet, the introduction of a third senator per province for the first minority party, the direct election of senators (who were previously elected by the provincial legislatures), and the elimination of the electoral college.33 After the signing of the Olivos Pact, both chambers of Congress passed the law calling for a constitutional convention (Law 24,309) in December of 1993. The law stated the necessity to partially reform the Constitution, establishing explicitly the articles and issues subject to reform. There were two types of issues. First, there were those issues included in the so-called core of basic agreements (núcleo de coincidencias básicas), on which the PJ and the UCR had already concurred. Constitutional conventionalists would vote either in favor or against these issues in tandem but could not modify them or vote for them on a case-by-case basis.34 31

32

33

34

According to the Constitution, two-thirds of the votes in both chambers are needed to approve a law on a constitutional reform. However, Menem managed to change the interpretation of the basic law, and it was argued that only two-thirds of the votes of the deputies and senators actually present at the congressional session were needed to approve a constitutional reform law. For an excellent account of the negotiations among Menem, his party, and the UCR leading to the constitutional reform, see Negretto (2001). The name of the pact was due to the fact that it was signed at the president’s country house, located in the northern Buenos Aires’ suburb of Olivos. Interpretations of why Alfonsín signed the pact with Menem differ. Acuña (1995) maintains that the two leaders played a “chicken game” in which Alfonsín would have been better off without playing. Both Negretto (2001) and Grindle (2000) propose instead that it was likely that the constitutional reform would have passed even without the UCR’s support. According to them, Alfonsín’s strategy of guaranteeing other reforms in exchange for the presidential reelection was indeed optimal given the circumstances. In Colombia, President César Gaviria tried to place similar constraints on the constitutional convention of 1991, but a Supreme Court ruling prevented it.

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Among these changes were attenuating the presidential system; reducing the presidential term to four years, allowing for immediate reelection for one consecutive period; the direct election of the president (i.e., the elimination of the electoral college); the direct election of the mayor of Buenos Aires; and the reform of the city’s statute. The core of basic agreements also included changes in the judiciary to make it more independent from the executive branch. Second, there were issues that were not part of the core of basic agreements, and hence they were open to debate in the constitutional convention. Changes to the federal system and municipal autonomy were in this second category. Nonetheless, as we see in the next section, few changes were introduced in the 1994 Constitution regarding these issues due to the pressures exercised by the president. The Constitutional Convention: Territorial versus Partisan Interests On April 10, 1994, the provinces and the City of Buenos Aires elected their constitutional conventionalists. The number of conventionalists per province equaled their total number of Congress members. The PJ had 38% of the conventionalists and the UCR 20%. Together they had an absolute majority of votes in the convention (211 conventionalists out of 305). The center-left coalition Big Front (Frente Grande, FG) was the third force with 12.5% of the conventionalists, and the right-wing party Dignity and Independence Movement (Movimiento de Dignidad e Independencia, MODIN) was the fourth with 9% of seats in the convention (Negretto 2001, 155). The constitutional assembly met for three months in the cities of Santa Fe and Paraná. The assembly was organized in eleven committees, two of which focused on changes to the intergovernmental structure. These were the Committee on Federal Competencies (Comisión de Competencia Federal) and the Committee on the Federal Regime, its Economies, and Municipal Autonomy (Comisión de Régimen Federal, sus Economías y Autonomía Municipal).35 Among the conventionalists there were eight governors, all of whom actively participated.36 These two committees 35

36

The other nine committees were transcription (redacción); core agreements; new rights and guarantees; systems of control; democratic participation; integration and international treaties; petitions, powers, and rules; economy and administration; and congressional works (República Argentina 1994, 1240). Among the eight governors who were at the constitutional convention, four of them belonged to the PJ (Eduardo Duhalde of the Province of Buenos Aires province, Rubén Marín of La Pampa, Mario Moine of Entre Ríos, and Juan Carlos Romero of

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were responsible for drafting proposals to change Articles 67, 68, 106, and 107 of the Constitution. Those articles referred to the authority of Congress regarding public finances (including its authority over the revenue-sharing system, public debt, and the central bank) and the promotion of economic development and education (Article 67); municipal autonomy, the creation of economic regions, and the authority of the provinces to sign international treaties (amendments to Article 106); the role of the provinces with regard to social security and the promotion of education, the sciences, and culture (amendment to Article 107); and, finally, a transitory clause (No. 6) regarding the issue of revenue-sharing that established that Congress had to approve a new coparticipation law by the end of 1996. The debates during the convention over these issues are illustrative of the conflict between territorial and partisan interests. While for the most part, honoring the Olivos Pact, the PJ and UCR conventionalists voted along partisan lines, some of their members as well as conventionalists from other political parties explicitly voiced their territorial interests. For example, regardless of their partisan affiliation, conventionalists from the Province of Buenos Aires advocated for a clause that would allow them to retain a fund specifically created for that province in 1992.37 Conventionalists from other provinces, instead, opposed the idea of making any explicit reference to this fund in the transitory clause on coparticipation. The analysis of the debates also shows that despite the partisan divisions at the time of the final vote (PJ and UCR conventionalists voted together for the most part, and conventionalists of other parties either voted against the majority’s proposal or did not vote), all constitutional conventionalists agreed on two main problems in intergovernmental relations in Argentina. First, there was a fundamental agreement concerning their diagnosis about the federal system: they invariably criticized its centralized development. In his opening remarks, PJ conventionalist and governor of La Pampa Rubén Marín talked about the top-heaviness

37

Salta). Three governors were from the UCR (Eduardo C. Angeloz of Córdoba, Carlos Maestro of Chubut, Horacio Massaccesi of Río Negro), and one was a Provincial Party governor (Raúl Rolando Romero Feris from the Autonomist Liberal Party, Partido Autonomista Liberal, of Corrientes). The Fund for the Historic Reparation of the Greater Buenos Aires (Fondo de Reparación Histórica del Conurbano Bonaerense) was created in 1992 (by Law 24,073). It gave the Province of Buenos Aires 10% of the tax on profits (Impuesto a las Ganancias) for the development of the poor neighborhoods of the Greater Buenos Aires area.

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of the Argentine government. UCR conventionalist and governor of Río Negro Horacio Massaccessi said: Argentina’s history is an example of deformation and permanent concentration. We have progressed towards a centralism that has erased all the ideologies. The differences among the major political parties have also been surpassed by the centralism-federalism option. (Convención Nacional Constituyente 1994, 3415)

The second problem on which all conventionalists agreed was that administrative decentralization had not been accompanied by fiscal decentralization. Conventionalists from all political parties (with the exception of the right-wing UCEDE) lamented the poor situation of the provincial coffers after the transfer of social services and requested higher levels of transfers from the national government. PJ conventionalist Cristina Fernández de Kirchner of Santa Cruz said: When the national government was responsible for health and educational services, it received approximately 46% of revenue-shared taxes. After the transfer of these services to the provinces the national government has retained 54%. . . . No wonders there are unviable provinces when the national government is federalizing the expenditures and centralizing the resources! (Convención Nacional Constituyente 1994, 3257)

FG conventionalist and education specialist Adriana Puigross expressed the same opinion: Soon the provinces realized that they were responsible for schools that had been national for many decades. . . . It was a transfer without sufficient resources, without guarantees. The leftovers of the educational system were transferred to the provinces, along with teachers’ hunger-wages, a destroyed curriculum, an emptied educational system. In sum, the remaining pieces of what once was the national educational system. (Convención Nacional Constituyente 1994, 3225)

Another educator, national teachers’ union leader, and FG conventionalist from the Province of Buenos Aires, Mary Sánchez García, criticized the centralization of resources that followed the administrative decentralization of secondary schools: If the provinces have to finance practically all social services, how is it possible that they have to accept fiscal pacts that reduce the amount distributed to them via revenue-sharing? (Convención Nacional Constituyente 1994, 3193)

Beyond these two common agreements, seven proposals came out of the two committees on the federal system. The majority proposal was supported by the PJ and UCR conventionalists, but agreeing on this proposal was not simple. The conflict between territorial and partisan

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interests was manifest. Marín (PJ, La Pampa) said during the presentation of the majority’s proposal: Every time we . . . considered the immediate context, the disagreements were broader, disagreements that not only existed with the opposition, but also among the members of our own political party. There were disagreements between the central government and the provinces; different interpretations between the governors of the so-called big provinces and the governors of the small provinces; and also different criteria of all the provinces against the position of the province of Buenos Aires. (Convención Nacional Constituyente 1994, 3173)

In the end, the national-level agreement between Menem and Alfonsín prevailed and the contents of the majority’s proposal to reform federalism were very close to those stated in the law that called for the constitutional convention, which had been crafted by the national leadership of the PJ and UCR (Law 24,309 of December 1993). However, a counterfactual analysis of the failed proposals presented at the debate suggests that if subnational actors had pushed forward the process of constitutional reform, or if the path of decentralization had been different (empowering subnational actors earlier in the process, as was the case in Colombia and Brazil, and to a lesser degree in Mexico), the changes made to the new Constitution with regard to intergovernmental relations and federalism would very likely have been more radical. The new Constitution could have incorporated some of the failed territorial interest proposals that were advanced in the convention but were opposed and killed by the national executive. Two of the failed proposals presented only partial and minor modifications to the majority’s proposal. The other four were minority proposals presented by a faction of the PJ and three other political parties, which differed substantially from the majority’s proposal on one or more issues. The center to left-wing Frente Grande (FG) conventionalists crafted a proposal in which they asked for at least 60% of the system of revenuesharing to be transferred to the provinces and the City of Buenos Aires when the new coparticipation law was passed by Congress (at the end of 1996). Initially some members of the PJ supported this clause, but as the national executive started to exercise pressure on the conventionalists not to include any “economic clauses” in the Constitution, when the time to vote on this clause came around, 130 conventionalists voted in favor and 36 voted against the majority’s proposal, which did not change the existing distribution of resources among the levels of government (Convención Nacional Constituyente 1994, 3891).

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Conventionalist Cristina Fernández de Kirchner (PJ, Santa Cruz), who would become president of Argentina in 2007, presented the second minority proposal. This proposal differed greatly from the majority proposal with regard to the definition of natural resources. The majority proposal, in the reform to Article 106 bis, reads: “It corresponds to the provinces the control of their natural resources.” In Kirchner’s proposal the definition of natural resources under provincial jurisdiction was much broader, explicitly stating that the provinces had control over their “territories, land, underground, inter-provincial rivers, sea, shores, rivers’ beds, continental platform, air space, and all other natural resources, renewable and non-renewable” (Convención Nacional Constituyente 1994, 3165). Had this proposal been approved, the national government would have lost authority on the use and exploitation of many resources to which it is currently entitled. It is not surprising that a conventionalist from the southern province of Santa Cruz, rich in ocean-based resources and fossil fuels, crafted this proposal. The conventionalists of the Democratic Progressive Party (Partido Democrático Progresista, PDP) drafted the third minority proposal. With regard to natural resources, this proposal was closer to Kirchner’s than to the majority’s proposal. The main novelty of the PDP’s proposal was to ask that export taxes (that since 1853 belonged solely to the national level) become part of the revenue-sharing system. The same as the coparticipation clause proposed by the FG, this proposal was not even discussed at the time of voting on the corresponding article (Article 67). As a sign of protest, PDP and FG conventionalists left the room without voting. Conventionalists of MODIN crafted the fourth minority proposal, which emphasized the issue of municipal autonomy. MODIN, a party that had grown considerably at the local level and was managing several municipalities in the Greater Buenos Aires area, would have benefited from greater autonomy for the municipalities. Provincial representatives, however, were not interested in signing a constitutional reform that could surpass the letter of their provincial constitutions with regard to municipal autonomy, so this proposal did not pass. Had any of these four minority proposals been approved, provinces and municipalities would have gained more power. But thanks to the prior sequence of decentralization reforms, the national executive had the bargaining power to limit the choices of constitutional conventionalists with regard to federalism and decentralization issues. On repeated occasions, conventionalists protested against the declarations that members of the national executive (particularly Menem and Cavallo) were making to the media and the pressures they were placing on PJ conventionalists

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to avoid making changes to the coparticipation system. The majority proposal was approved without almost any modifications. The contents of the political decentralization reforms were for the most part defined from above, as had previously been the case with the administrative decentralization reforms and the fiscal pacts.

Conclusion In the context of an authoritarian regime, national interests prevailed in the first movement toward postdevelopmental decentralization in Argentina. The military junta was able to impose administrative decentralization without resources in 1978. This reform had several policy effects. First, the national executive reproduced its power dominance over subnational executives. During the military period, not only did the transfer of revenues to the provinces not increase, but in fact they were cut by 44% (Eaton 2001, 22). With the transition to democracy in 1983, the transfer of revenues to the provinces increased. However, these were discretionary transfers, negotiated in bilateral agreements in which President Alfonsín was able to amass the political support he needed in Congress. Fiscal decentralization thus did not take place until the balance between the president and the governors changed after the 1987 midterm election. Only when the governors were able to form a subnational coalition did fiscal decentralization materialize. The president could no longer withhold the reform. The two first stages of decentralization were, therefore, administrative, followed by fiscal decentralization. But fiscal decentralization was short-lived. Soon afterward, President Menem off-loaded more responsibilities to the provinces and cut the automatic transfer of revenues to the provinces. Further unfunded administrative decentralization and recentralization of revenues would not have been possible had decentralization created a group of followers at the beginning of the process, as happened in Colombia, for example. President Menem also controlled the timing and contents of political decentralization. This last reform came about only when Menem was forced to use the autonomy of the City of Buenos Aires as a bargaining chip for his reelection, but all other decentralizing proposals presented at the constitutional convention of 1994 were successfully aborted by the pressures of the national executive branch. The second policy effect of the first round of unfunded administrative decentralization was a demonstration effect. The national government learned that in a context of increasing collection of revenues it was feasible

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to decentralize expenditures without revenues. Cavallo used this knowledge in 1992. Finally, the prior expansion of administrative capacities led to incrementalism in the reform process, which meant that governors were amenable to accept further decentralization of services in 1992. As a result of the predominance of national interests and the sequence of decentralization, postdevelopmental decentralization did not change the balance of power among national and subnational officials in Argentina. This does not mean that subnational governments are powerless in Argentina. On the contrary, compared to other Latin American countries, subnational officials, governors in particular, have had a high degree of autonomy prior to and after postdevelopmental decentralization (see Table 2.6, Chapter 2). What this chapter shows, however, is that postdevelopmental decentralization (except the autonomy granted to the City of Buenos Aires) has not produced the expected devolution of power to subnational officials. Administrative, fiscal, and political decentralization reforms unfolded from the late 1970s to the mid-1990s, but they did not alter the existing intergovernmental balance of power. As Argentina moved closer to the colossal economic crisis and financial meltdown of December of 2001, international financial institutions and scholars of Argentine federalism emphasized the opportunistic and fiscally irresponsible behavior of the governors vis-à-vis the national executive. The comparative analysis of the sequence of postdevelopmental decentralization proposes a complementary (if not alternative) view of the evolution of the balance of power among national and subnational officials. It shows that after the military dictatorship decentralized expenditures without revenues, the national executive, even under a weak presidential administration such as that of Alfonsín, had the upper hand in deciding the distribution of resources, responsibilities, and authority among levels of government. A nationally led process of decentralization did not create a group of supporters who could benefit from expanding the transfer of responsibilities, resources, and authority to subnational governments. It did not lead to the institutionalization of subnational coordination either, since at least during the first cycle of postdevelopmental decentralization no associations of governors or mayors were created.38 Instead, decentralization 38

As noted in Chapter 2, the Argentine association of mayors (FAM) was not created until 1997. Furthermore, it was the national executive who engineered the creation of the FAM as a way of garnering political support from Peronist mayors for its attempt to reform the constitution (for a second time) so he could be re-elected to a third term in office in 1999.

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reforms in Argentina were negotiated piecemeal whenever the national government placed those reforms on the political agenda. The governors tried to get the most they could in each reform. But even when some concessions were made by the national executive, governors never got their most preferred options. The defeat of all the minority proposals regarding federalism in the 1994 Constitutional Convention (including the one presented by the ruling party Conventionalist Cristina Kirchner) is yet another example of the predominance of the national territorial interests over subnational interests on issues of decentralization and intergovernmental relations in Argentina. As Erik Wibbels (2005, 159) writes, “To the extent that the central government is withholding ever larger shares of provincial tax shares for reasons ranging from debt service to urban development, the autonomy and hence accountability of provincial governments to provincial citizens is being compromised. Despite the prevalence of democratic elections at the provincial level, devolution of the nature conducted in Argentina has vastly limited the expected benefits of decentralization.” In fact, the process of decentralization played to the hand of the central government in Argentina. Unlike what happened in Colombia or Brazil, where, as we see in the next two chapters, the early rounds of decentralization set the stage for a net gain of power at the subnational level, in Argentina such a gain was not achieved because the early reforms were initiated by the national executive and because self-reinforcing effects led to the predominance of national interests throughout the process.

4 Colombia The Subnational Dominance Path to Decentralization in a Unitary Country

In terms of its political regime, Colombia is one of the most stable countries in Latin America. Unlike its neighbors, Colombia has not experienced military rule. The two main parties, the Liberal Party and the Conservative Party, have alternated in power for more than a century, and with the exception of La Violencia (1949–1958) period, Colombian presidents have fulfilled their four-year terms almost without interruption. However, because guerrilla groups, drug lords, and paramilitary groups dispute the state’s control over extensive parts of the national territory, Colombia does not even meet the minimalist Weberian definition of a state as “a human community that (successfully) claims the monopoly of the legitimate use of physical force within a given territory” (Weber 1946 [1919], 78). Both geography and politics have contributed to make Colombia one of the least integrated countries in Latin America. Geographically, three parallel mountain ranges run along the territory from southwest to north and divide the country into three distinctive regions: East, West, and the Caribbean Coast. This topography makes land transportation and communications extremely difficult and has led to a distinctive pattern of urban development in the countryside where each city (such as Medellín, Cali, and Barranquilla) is practically a self-contained enclave. Politically, Colombia’s history since the breakdown of the Great Colombia Confederation in 1831 (which encompassed the territories of what is today Colombia, Venezuela, Ecuador, and Panama) has been punctuated by civil wars (1840–1842, 1854, 1859–1863, 1899–1903, 1948–1958, and from circa 1966 until the present).

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123

Ironically, in the mid-1980s, the decentralization of government was pursued as a means of solving the problem of political and territorial national integration. The politicians defending decentralization claimed that the reforms would help to bring the country together. Liberal Party leader Jaime Castro, a strong advocate of the decentralization of government toward the municipalities, even argued that decentralization could bring about peace to the war-torn country. As he wrote, “decentralization constitutes one of the keys to war and peace, because it creates the democratic space that must exist in order to incorporate armed rebels who wish to participate in regional and local public life” (Castro 1998, 13). This chapter explores the origins of the process of postdevelopmental decentralization in Colombia; explains how it unfolded in its political, fiscal, and administrative spheres; and accounts for the results it bore for the balance of power among the national government, the departments (which are the intermediate territorial units in Colombia), and the municipalities. Briefly stated, the argument advanced in this chapter is that in the mid-1980s a political legitimacy crisis led to the formation of a mixed decentralization coalition of national and subnational actors, but in which subnational interests prevailed. Given the prevalence of subnational interests and as expected by the theory advanced in Chapter 2, the first postdevelopmental decentralization measure enacted in Colombia was a political decentralization reform. This change had a policy ratchet effect: It enhanced the power of mayors who, through coordination in a new mayoral association, were later able to push forward fiscal decentralization. It also had an incremental effect such that the political actors in the departmental level could successfully demand the political decentralization of the office of the governors. Both of these types of decentralization (political and fiscal) significantly augmented the autonomy of subnational officials with regard to the national executive. Administrative decentralization was the last type of reform to be enacted, advocated by the national executive as a compensatory measure to the prior decentralization of revenues. The end result of the early predominance of subnational interests in the process of decentralization in Colombia and of this sequence of political, fiscal, and administrative decentralization reforms was a substantial change in the evolution of the intergovernmental balance of power, such that governors and mayors significantly increased their political, fiscal, and policy-making autonomy with respect to the national government.

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Origins, Sequence, and Coalitions of Postdevelopmental Decentralization in Colombia Regional conflicts in Colombia are as old as the country itself. These conflicts have led to an episode of constitutional federalism in the late nineteenth century (1863–1886), an early decentralized fiscal system that after the 1930s crisis was centralized, and the creation in the 1960s of semi-autonomous department-level agencies for the administration of social services. The movement toward decentralization in the context of the postdevelopmental state, however, did not start until the mid-1980s. After a period of import-substitution industrialization, developmentalist economic policies were implemented in Colombia starting in the 1970s. The administrations of Alfonso López Michelsen (1974–1978) and Julio César Turbay Ayala (1978–1982) designed development plans that prioritized public expenditures in selected sectors of the economy to provide the physical and social infrastructures they thought were needed for the promotion of private investment.1 State intervention in the economy was associated at the time with “a positive and stimulating action for balanced and self-sustained progress” (El Tiempo, January 7, 1978, cited in González 1990, 75). The economic plan of President Belisario Betancur (1982–1986), “Development with Equity,” was also initially committed to massive public investment. However, the fall of coffee prices since 1981, the fall of other nontraditional exports one year later, and the dearth of foreign credit that followed the Mexican debt crisis, all compounded by the capital flight produced by the hardening of rules regarding the conversion of illegal dollars (from drug trafficking) into pesos, resulted in the fall of foreign reserves and the increase of the public sector deficit, which passed from 3.3% of the GDP in 1980 to 8% in 1982 and 1983 (González 1990, 81). Hence, despite the stated goals of his initial economic development plan, Betancur had to take a series of austerity measures starting in 1984. These orthodox economic measures moved the state away from intervention in the economy and ended the developmental model of economic growth. Hence, my periodization of postdevelopmental decentralization reforms starts with the 1

President López Michelsen’s development plan, called “To Close the Gap,” marked the end of the import-substitution industrialization strategy that had been predominant since the 1930s and advocated a balanced development among different sectors of the economy, particularly those in which Colombia had a comparative advantage. President Turbay Ayala’s development plan, known as the “National Integration Plan,” placed greater emphasis on public investments, works, and infrastructure to integrate the national market (González 1990, 70–79).

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administration of Belisario Betancur, with the first complete cycle of these reforms spanning from 1986 to 1994. In 1986, in the midst of a political legitimacy crisis, the decision to popularly elect mayors unraveled a process of decentralization policies that targeted the municipalities first and the departments later. The decision to popularly elect mayors was initially proposed by the president and mainly supported by a mixed coalition of national-ruling and subnational-opposition actors (NR-SO) formed by the national executive branch, the young generation of Liberal and Conservative politicians, and, most importantly, a social movement that exerted political pressure through civic strikes.2 It was largely due to the importance of this movement, rooted in the municipalities, that local-level interests prevailed in this first decentralizing coalition. Once the first election of mayors was held, it had a policy ratchet effect: It led to the formation of a mayors’ association, the Colombian Federation of Municipalities (Federación Colombiana de Municipios, FCM), which coordinated the municipalities and represented their interests vis-à-vis the other levels of government. Political decentralization continued in the constitutional reform of 1991, which called for the decision to popularly elect governors. The coalition behind this reform was also a mixed coalition of the type NR-SO, formed by the national executive branch and representatives of the departmental level in the Constitutional Assembly. Interestingly, this was a different coalition than that of 1986. The FCM opposed the popular election of governors, whom they saw as competitors for resources and authority. But once the popular election of governors was approved by the Constitutional Assembly of 1991, a subnational coalition, in which both local and departmental interests coincided, helped to achieve fiscal decentralization through a constitutional reform that significantly increased the percentage of automatic transfers to departments and municipalities. The national executive initiated administrative decentralization, the third type of decentralization to take place in the first cycle of reforms. It resulted from the passing of two bills (Laws 60 and 115) that transferred expenditure responsibilities to subnational governments. In the educational sector, these reforms were negotiated by a national-level 2

In this case, more than two types of partisan and territorial actors formed the decentralizing coalition, but because the two most important actors in moving the proposal forward were the national-ruling and subnational-opposition actors, I classify this coalition as a mixed coalition of the type NR-SO. For more on classification criteria and other types of coalitions, see Chapter 2.

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Colombia Partisan Interests Ruling Party

Opposition Parties

Territorial Interests

National

Subnational

National Coalition Administrative Decentralization (T4) Laws 60 and 115, 1994

Mixed Coalitions NR-SO Political Decentralization (T1 and T2) Pop. Elect. Mayors, 1986 Pop. Elect. Governors, 1991

Subnational Coalition Fiscal Decentralization Constitutional Fiscal Reforms, 1991

Figure 4.1. Decentralization Coalitions, Policies, and Timing in Colombia, 1986–1994

coalition formed by the national executive branch, the members of the national legislature, and the teachers’ union (the Colombian Federation of Educators, Federación Colombiana de Educadores, FECODE). As would be expected, mayors and governors were not the driving force behind administrative decentralization. Figure 4.1 graphically shows the different types of political coalitions that were behind each major decentralization reform in Colombia between 1986 and 1994, classifying bargaining actors in terms of their partisan and territorial interests. Table 4.1 summarizes the contents, types of decentralization, territorial interests, and beneficiaries of those postdevelopmental decentralization policies. As can be seen, and as would be expected of a unitary country, the early reforms (in T1 and T2) required the support of national-level (particularly national-ruling) types of actors, but as the process of decentralization moved forward a

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Type of Dec.

P

P

F

A

Year

1986

1991

1991

1993–1994

Laws 60 and 115

Constitutional Reform

Constitutional Reform

Legislative Act No. 1

Dec. Policy

Establish the funding schemes and distribution of responsibilities among levels of government for the management of education and health services

Increase of base and rate of automatic transfers to departments and municipalities

Popular election of governors

Popular election of mayors

Policy Description

Main Territorial Beneficiaries

Municipalities

Departments

Departments and municipalities

Departments

Subnational

Subnational

Subnational

National and subnational

National executive; subnational actors of ruling and opposition parties Subnational ruling and subnational opposition

National government (in negotiation with national teachers’ union)

National executive; factions of the Liberal and Conservative parties in Congress

Main Actors Advancing Reform

Dominating Territorial Interests

Table 4.1. First Cycle of Postdevelopmental Decentralization in Colombia, 1986–1994

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subnational-level coalition also emerged to push forward fiscal reforms. And as expected, administrative decentralization was the last type of decentralization enacted in the first cycle of decentralization, having been placed in the agenda and moved forward by a national-level coalition. In the following sections, I analyze the conditions leading to the adoption of each of these policies, their main features, and their effects on the unfolding of the decentralization process and on the intergovernmental balance of power.

The First Layer: Political Decentralization The Popular Election of Mayors: Competing Explanations of Its Causes In 1986, led by the initiative of Conservative President Betancur, the Colombian Congress approved a constitutional amendment to popularly elect all mayors as of 1988. The amendment changed 100 years of intergovernmental relations because Colombian presidents had appointed the governors since the unitary Constitution of 1886, who in turn appointed the mayors.3 Prior to 1886, Colombia supported a federal form of government, which left important political traces in the subsequent organization of the national powers, subnational politics, and intergovernmental relations.4 Until 1991, for example, five senators on average were elected per department to the national Senate. As in federal countries, this territorial chamber represented the interests of the subnational units. Local councils and departmental assemblies also continued to exist, mainly performing administrative functions, but their members were elected. Hence, local bosses and regional leaders mobilized their clienteles in both subnational and national elections. Colombian presidents used their power to appoint governors and mayors to reward local party brokers. As President Betancur said, “The president could name the mayor of any town by simply calling the governor 3

4

With the exception of the mayor of Bogotá, who was directly appointed by the president. Colombia’s fi rst Constitution (Constitution of Nueva Granada of 1853) granted to the member-states control over their budgets and their municipalities, and the right to craft their own constitutions. It also established the direct election of the governors and restricted the powers of the central government (Mejia 1995 [1978], 122–24). The Rionegro Constitution of 1863 extended the federal content by, among other things, granting universal male suffrage in local- and state-level elections.

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and telling him: – I want you to name such-and-such person in such-andsuch town” (interview with Betancur, 2001). The president could also use his appointment powers to garner legislative support. The president could get legislators’ local political allies appointed as mayors and governors in exchange for the legislators’ political support of official bills in Congress (Castro 1998, 45; interview with Castro, 2001). Why did Betancur agree to give this immense discretional power away? President Betancur explained in the following terms his support for the popular election of mayors: I had the conviction, I had the obsession that the community should be closer to their representatives. I knew that as long as the community was closer to the rulers, those rulers would feel more stimulated, with greater support to govern. . . . If popularly elected, mayors would be freer and more efficient. (Interview with Betancur, 2001)

Were the president’s political convictions sufficient to propose and pass this reform? If popularly elected, whom would the mayors be freer from? The literature on decentralization in general, and on the case of Colombia in particular, contains a wealth of material analyzing the incentives of the leaders and elites in government who propose the reforms. However, it pays very little or no attention at all to the pressures emerging from civil society, which, as I show in the next section, put the decentralization of government in Colombia’s political agenda. According to Kathleen O’Neill (1999, 2005), President Betancur had electoral incentives to propose the popular election of mayors. Since the end of the National Front in 1974, electoral support for the Conservatives had been weak at the national and departmental levels but relatively strong at the local level. Until Betancur achieved the presidency in 1982, the Conservatives had always lost the presidency, achieving a plurality of votes in only approximately four out of the twenty-two Colombian departments.5 But in the elections for local councils (in 1978, 1980, 1982, 1984, and 1986) the Conservatives had amassed majorities in more than 40% of the municipalities. If mayors were to become popularly elected, the Conservatives could win those mayoral positions (O’Neill 2005, 103–4). However, as O’Neill (2005, 112–13) recognizes, political support for the direct election of mayors was split within the two main parties, 5

The Liberals had a plurality of votes in 18 of the departments in 1974, 17 of the departments in 1978, and 19 of the departments in 1980 and 1982. The Conservatives won a plurality of votes in only 4 departments in 1974, 5 in 1978, 3 in 1980, and 4 in 1982 (O’Neill 2005, 102).

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making it hard to support the claim that electoral calculations were the primary motivation behind the adoption of this decentralization reform. There was a Conservative faction that opposed the reform (the so-called Ospinistas) and Liberal sectors that supported it. In fact, the controversy over the popular election of mayors occurred between the traditional factions of both parties that controlled clientelistic networks in the country’s interior (Velásquez 1995, 260) and the “young members of both parties supporting [the] reform” (O’Neill 2005, 113). Hence, while electoral incentives can account for why a Conservative president placed the popular election of mayors in the political agenda, it does not explain why the reform was approved in a Congress where the Conservatives were in the minority, nor does it serve to characterize the coalition that pushed forward the measure. Again, as O’Neill (2003, 1070) notes, “It would be absurd to ignore the importance of context-specific factors that affected decisions to decentralize.” Among these context-specific factors, Kent Eaton (2006) highlights the reformers’ intention to achieve a negotiated settlement with the armed insurgencies. According to Eaton, the reformers thought that decentralization would bolster the guerrillas and paramilitary groups’ allegiances to the national state, thanks to their legal incorporation in local politics. Prior to 1986, Betancur had initiated peace talks with the guerrillas (Sánchez and Chacón 2005, 9) and in the early stages of the process one of the insurgent guerrillas had demanded the popular election of the governors and mayors, along with fiscal decentralization toward the municipalities (Castro 1998, 29). But, as I show in what follows, the pressures in favor of decentralization far exceeded the guerrillas’ demands. Furthermore, my contention is that when other types of decentralization are considered, context-specific factors help to account not only for the decisions made by national-level leaders to decentralize, but, more importantly, for the type and content of the policy reform first implemented. In the case of Colombia, I argue that social mobilizations against the shortcomings of the developmental state help to explain why and how decentralization came about. They reveal the presence of subnational territorial interests in the coalition that pushed decentralization forward, a presence that has been largely overlooked. The Decentralizing Coalition: The Importance of the Civic Strikes The first round of political decentralization in Colombia cannot be understood without reference to the larger political context in which it took

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place. The supporters of the popular election of mayors were responding not only to the demands of one of the guerrilla groups, but also to the pressure of regional and local mobilizations that targeted the national government. These movements demanded improvements in the provision of social services and lobbied for more authority and resources for their local governments. As many scholars have recognized (Buenahora FebresCordero 1997; Dugas 1997; Penfold-Becerra 1999; Vargas González and Sarmiento Gómez 1997; Velásquez 1995, among others), the popular election of mayors was a response to a profound crisis of political legitimacy. The political appointment of mayors had led to a system in which mayors were solely dependent on and accountable to the legislator, the governor, the president, or whoever was politically responsible for their appointment. There were high turnover rates, and corruption was pervasive. According to one source, prior to 1986, the average tenure of mayors was only three months (Gaitán Pavía and Moreno Ospina 1992, 150–51)! Very often mayors were not native to the town they ruled. There were those called “professional mayors,” who “would travel around all the municipalities of one department until they were discredited in all of them” (interview with Osorio, 1998). The reformers understood that the political system had to change and that the two main political parties would have to change and revamp themselves as well (interviews with Betancur, 2001, and with Castro, 2001). When asked whether he had thought that Conservative mayors would win the local contests if they were popularly elected, Belisario Betancur said: No, never. No, no. I was certain, almost certain, that my party would have to revitalize itself. And that the local political forces at the municipal level would match better, across the country, the [local] realities. If in a given area people are more prone to such and such political orientation, well, then they should have the mayors of that political orientation. (Interview with Betancur, 2001)

Similarly, Liberal party leader Jaime Castro said, We knew that if the [main] parties wanted to keep their power at the local level, they would have to change their practices and ways of dealing with public problems. We did not make the popular election of mayors to end with the Liberal or Conservative parties, but we did know clearly that this measure would force them to change if they did not want to disappear. (Interview with Castro, 2001)

The second main source of popular discontent stemmed from the unequal territorial pattern of socioeconomic development during the 1960s and 1970s. In those decades, the planning and implementation

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of developmental policies had been transferred to parastatal institutions. These were relatively autonomous agencies attached to central offices and ministries. They were equipped with significant inflows of financial resources and were supposed to operate on a cost-recovery basis and nationwide scale, as they sought to provide a more efficient, uniform, and nonlocal focus to state action. These agencies supplanted the role of local government in areas such as urban planning, housing, health, education, and the provision of services such as electricity, water, and sewage. However, the coverage was not uniform. Large municipalities kept the management of more responsibilities, and the parastatal agencies tended to focus more heavily on those regions that were prone to private investment. Peripheral, poorer regions were left unattended. This pattern of investment and developmental policies created profound regional inequalities (Collins 1988, 426–27; Maldonado 2000, 72). Such inequalities were worsened by a drop in local government expenditures (from 18% of the total expenditures in 1967 to 14% in 1978) and their concentration in large urban areas. In 1979, for example, the three largest municipalities (Bogotá, Medellín, and Cali), which accounted for 26% of the Colombian population, absorbed 72% of the total local government expenditures. And after the rest of the departmental capitals were considered, only 13% of the total local funds remained to be spent among more than 900 municipalities, where more than 35% of the population lived (Collins 1988, 426; DNP and PNUD 1998, 39; Nickson 1995, 146). Such concentration and unequal territorial distribution of political and economic power created ample discontent among the inhabitants of the poorer regions. Between 1971 and 1985, more than 200 civic strikes (paros cívicos) took place. These strikes “involved the total or partial paralysis of social and economic activity in urban centers and/or regions as a means of pressing the state to accede to demands” (Collins 1988, 425). Sixty percent of the strikes were related to problems in the delivery of electricity, water, and sewage; 9% to problems with roads; 6% to problems in education; and 5% to ecological problems (Velásquez 1995, 246). The majority of these strikes occurred in mid-sized municipalities (those with 10 to 50 thousand people) in the country’s peripheral regions, particularly in the Atlantic coast departments and in the southern department of Nariño (Maldonado 2000, 73). Broad sectors of the population participated in these strikes, including employers’ associations, schools, the church, trade unions, political parties, and merchants. In some of the strikes, mayors and council members joined the protests, even at the cost of being fired or forced to resign (Collins 1988).

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The civic strikes are a crucial antecedent to the popular election of mayors because this form of protest voiced the territorial interests of the underdeveloped regions of Colombia. Their demands were not nationwide in scope; they were specifically related to the problems of the municipalities and regions where the protesters lived. As Jaime Castro said: The civic strikes had become the mechanisms of protest of the province vis-à-vis the central government. The civic strikes brought to the forefront the fact that it was necessary to strengthen the municipalities and departments. . . . They continued to happen after the popular election of mayors, but I would say that thanks to decentralization civic strikes have now disappeared. (Interview with Castro, 2001)

Indeed, the civic strikes brought local governments to the center of the political scene in several ways. First, they pointed out the deficiencies of the parastatal agencies and the local administrations in delivering public services. Second, they were a sign that the old system of handpicked mayors was coming to an end. Local bosses and traditional clientelist practices had proved unable to control or ease the popular discontent. Finally, the strikes showed that there were locally based citizens who were demanding accountability and better services in their municipalities. The popular election of mayors was thus pursued as a measure to increase the accountability of local leaders to their communities and to improve the delivery of social services at the local level. In other words, political decentralization was a response to the failure of a centrally planned and controlled developmental strategy that had led to increasing regional inequalities and political violence. The coalition that pushed forward the popular election of mayors in Colombia was a mixed coalition. It represented the interests of the Liberal and Conservative members of the national executive branch and the less entrenched members of Congress, as well as the local societal actors who demanded more authority and resources for their municipalities.

Policy Ratchet Effect: The Creation of a Mayor’s Association What were the consequences of the direct election of mayors? The immediate result was a decline in the number of civic strikes. There were fifty-one strikes in 1987, thirty-five in 1988, and only nineten by 1989 (Correa Henao 1994, 48–54). Second, new actors were incorporated into the political system. In 1992, for example, 30% of the

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municipalities went to candidates that did not run on traditional (Conservative and Liberal) or new political platforms (such as the Movement 19 of April, the Communist Party, and the Patriotic Union) (Restrepo Botero 1997). Indigenous movements and independent candidates emerged on the political scene.6 In 2003, more than 55% of the elected mayors belonged to movements or coalitions not connected to the two traditional parties (Sánchez and Chacón 2005, 14 fn.51). Third, in some cities and regions, the power of traditional caciques and local bosses lessened, and competition for public office presented them with new challenges they did not have to face in the past (Angell et al. 2001; Velásquez 1995). Most importantly, however, the popular election of mayors led to the articulation of subnational interests, which influenced the later rounds of decentralization reforms. The popular election of mayors created a policy ratchet effect: the creation of a group of followers interested in further deepening the policy change implemented, which in this case was decentralization.7 The clearest manifestation of such an effect was the creation of the Colombian Federation of Municipalities (FCM). The FCM was created by the first cohort of elected mayors in 1988, with technical support from the Spanish Federation of Municipalities and Provinces (which had been founded in 1981) and the Friedrich Ebert Colombian Foundation. The mission of the association was “to represent the collective interests of the municipalities, to lead and support the development of the municipal management, and to promote the deepening of decentralization and local autonomy.”8 In 1991, the FCM was very active in lobbying conventionalists for the extension of the mayors’ tenure from two to three years, for the recognition of municipal autonomy in the Constitution, and for the transfer of more fiscal resources to municipalities (El Tiempo, Bogotá, 23 February and 23 March 1991). Despite the reluctance of the national executive, all of these reforms were approved, and political and fiscal decentralization intensified. The following sections highlight the effects that this first round of political decentralization had on the two subsequent stages of the process. 6

7

8

One of the best known cases of independent candidates is Antanas Mockus, a university professor who won the mayoral office of Bogotá in 1994 and 2000. As explained in Chapter 2, I borrow the concept “policy ratchet effect” from the work of Huber and Stephens (2001, 10). “Misión y Visión de la Federación Colombiana de Municipios,” at http://www.fcm.org. co/es/load.php/uid=0/leng=es/0/Misionvision.htm, last accessed on July 16, 2007.

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Incrementalism: The Popular Election of Governors Although the civic strikes had diminished, the political crisis continued, and by the end of the 1980s the “drug industry was thriving, guerrilla activism continued, ordinary crime was serious, and murder had become the major cause for deaths” (Martz 1997, 292). In August of 1989, Luis Carlos Galán, a reformist Liberal pre-candidate to the presidency and popular favorite, was killed. A few months later, two other presidential candidates, Bernardo Jaramillo Ossa of the Patriotic Union (Unión Patriótica) and Carlos Pizzarro of M-19, were also murdered.9 Factionalism within the two main parties had increased to the point where there were practically two lists running for each seat in the legislature in the 1990 congressional elections.10 Furthermore, electoral abstention was now affecting 70% of the electorate. Under such circumstances, “both the Colombian public and political elites were becoming insistent that traditional political procedures needed to be updated and redefined, then reified as the constitutional law of the land” (Martz 1997, 292). Liberal president Virgilio Barco (1986–1990) presented a proposal of constitutional reform to Congress that, among other reforms, included the popular election of governors. This was part of a broader political reform that, it was hoped, would help to overcome the political crisis. In order to pass the constitutional reform, however, congressional approval was necessary in two consecutive sessions. Such approval was not likely to be achieved.11 Given the failure of Barco’s administration and previous administrations to get Congress to approve a constitutional reform, in January 1988, Barco sent a letter to the national newspaper El Espectador in which he proposed that a constitutional amendment might permit the government 9

10

11

Paramilitary groups, which had formed in the early 1980s due to their opposition to President Betancur’s pardon, amnesty laws, and peace talks with the guerrillas (Sánchez and Chacón 2005, 9), murdered more than 1,000 Patriotic Union candidates and activists between 1985 (when the Patriotic Union was created) and 1990 (Gaitán Pavía and Moreno Ospina 1992, 132). As Eaton (2006, 543) writes, this was a “major blow to the pacification through decentralization strategy.” Counterfactually, one could ask – contra Eaton’s (2006) argument about the failure of decentralization to bring about peace in Colombia – whether the decentralization program would have succeeded at pacification had it not been for the emergence of the paramilitary groups and their killings of leftist activists in what came to be known as the “dirty war.” A total of 213 lists competed for 114 seats in the Senate, and 351 lists ran for 199 seats in the Chamber of Deputies. For a good analysis of the political conditions leading to the Constitutional Assembly of 1991, see Nielson and Shugart (1999).

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to call for a referendum on constitutional reform. It was a way of circumventing Congress. The student movement, which had already been organized and mobilized against political violence, picked up on the issue.12 Before the legislative elections of 1990, the student movement sent a letter to President Barco bearing 30,000 signatures, in which they asked that a seventh ballot (hence the name of the movement that demanded the constitutional reform, séptima papeleta) be included to gauge public interest in constitutional reform during the March elections for Congress. In those elections more than a million Colombians submitted informal ballots supporting the constitutional reform.13 President Barco used his state-ofsiege powers to decree an “official” referendum on the convocation of a Constitutional Assembly in conjunction with the presidential elections in May of that year. In those elections, in which the Liberal candidate César GaviriaTrujillo was elected president, 5.2 million Colombians (89% of the voters) voted in favor of forming a Constitutional Assembly, and only 230,000 (4%) voted against it.14 Although the process of calling for a constitutional convention was unconstitutional, the Supreme Court ruled by fourteen votes to twelve in favor of the reform. A significant departure from traditional political rules occurred in the election of representatives to the Constitutional Assembly. Through a series of negotiations, political party leaders agreed that the members of the Assembly would be elected in a single national district instead of the regional districts used in Congressional elections. This change weakened the power of regional bosses to nominate candidates in separated, regionally supported party lists.15 In addition, it was decided that members of Congress or the executive would not be allowed to run for Assembly 12

13

14

15

A week after pre-candidate Luis Galán’s death, more than 20,000 students participated in a public demonstration and crafted a document in which they condemned violence and advocated for human rights and political reforms to solve the legitimacy crisis. According to Jaime Buenahora Febres-Cordero (1997, 15), this was the origin of the seventh ballot (séptima papeleta) movement that demanded the reform of the Constitution. The exact number of ballots is unknown, as the electoral office did not tally these votes. The organizers of the seventh ballot and different sources estimate that between 1 and 2 million Colombians supported constitutional reform during the legislative elections. In total, 5,891,117 people voted on the proposal. In addition to those who voted in favor and against of the reform, 7% of the total were null and void votes (Registraduría Nacional del Estado Civil 1998). However, because the lists for the Constitutional Assembly had to include members from all the country’s regions, the electoral connection between Conventionalists and regional and local constituencies was maintained (Penfold-Becerra 1999, 215).

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seats without first resigning their posts (Nielson and Shugart 1999, 328). Traditional politicians boycotted the Assembly election of December 1990 and refused to mobilize their electoral support. As a consequence there was a low voter turnout and a change in the composition of the votes.16 The Constitutional Assembly had a mixed profile of reformists and traditionalists. Its makeup was radically different from that of Congress. The Liberals had only 34% of the seats in the Assembly, followed by the newly formed M-19 party (that included former guerrilla members), which had 24% of the seats. Of the seventy-four total members of the Constitutional Assembly, twenty-five were Liberals, nineteen were from the M-19, eleven were members of the Movement for National Salvation (a new faction of the Conservative Party), nine were Social Conservatives (members of the Conservative Party), and the remaining ten members belonged to other “new” political groups such as Evangelists, the indigenous people’s movement, and the student movement (Dugas 1993, 47). Initially, President Gaviria tried to set limits on the issues that would be subject to reform (similar to what Menem and Alfonsín had done in the Olivos Pact leading to the 1994 constitutional reform in Argentina). His focus was on a constitutional reform that would lead to national reconciliation and the demobilization of guerrilla groups. In Gaviria’s initial proposal (Decree 1926), the decentralization of government was not one of the main issues, although changes to the departmental and municipal governments were contemplated. However, when the Supreme Court ruled that the Constitutional Assembly had the authority to decide on any matter and could not be restrained to a given set of issues, Gaviria changed his proposal. Instead of the initial limited constitutional reform, Gaviria presented a new constitutional project to the Assembly in which he recommended the “federalization of Colombia” (interview with Cepeda, 1998; Gaviria, César, 1991, Proyecto de Acto Reformatorio de la Constitución Política). The Assembly was in session from February to July of 1991. It was organized in five committees. The first committee was concerned with issues of civil rights, democratic participation, the electoral system, political parties, and procedures to change the Constitution. The second committee, on whose debates and resolutions I focus, was concerned with the 16

While more than 5 million people had voted in support of a constitutional reform in the presidential elections of May 1990, in December of that year only 3 million people voted to choose the members of the Constituent Assembly (Lleras de la Fuente and Tangarife Torres 1996, 40).

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territorial organization of the state, and regional and local autonomy. The third committee focused on the government structure and international relations; the fourth was devoted to the judicial system; while the fifth committee discussed economic, social, and environmental issues (Lleras de la Fuente and Tangarife Torres 1996, 45). Twelve members were part of the second committee on territorial organization. Seven were members of the Liberal Party, among them Conventionalist Jaime Castro, a strong advocate of municipal autonomy (Dugas 1993, 60). One of the main issues discussed in this committee was the degree of autonomy to be conferred on the intermediate level of government. Three proposals were discussed. The first proposal concerned the “federalization” of president Gaviria. It proposed the attribution of legislative powers to the Departmental Assemblies and the popular election of governors. The second proposal was put forward by the M-19. It subscribed to the principle of territorial autonomy but gave the Departmental Assemblies administrative functions only, albeit with the additional authority to unseat the governors and the mayors, if necessary. The last and most controversial proposal was that of the FCM. It proposed that the governors continue to be agents of the president, and that the Departmental Assemblies be formed by members of the local councils, departmental senators and deputies, and by members of the national government. In fact, the FCM proposal nicely illustrates the conflict of power and competition over authority and resources that is often between the representatives of the intermediate level of government on the one hand and the representatives of the local level of government on the other, and to which I refered in Chapter 2. The Constitutional Assembly was split with regard to the popular election of governors. A sector of the Liberal Party representated the departamentalista program. They favored the popular election of governors and greater autonomy for the departments. Eduardo Verano de la Rosa, a member of the second committee and a delegate from the Atlantic Coast, was part of this group. Another sector of the Liberal Party, as well as members of the M-19 and Conservative Parties, had a municipalista approach. They thought that the municipality was the “natural” locus of government, and that the departments should not be given any new functions or power. Jaime Castro belonged to this group. In a document sent to the proceedings of the Assembly, Castro spelled out five reasons for his opposition to the popular election of governors: It would reduce the power of the presidency; the election of governors alone would not solve the [fiscal] crisis of the departments; it would take emphasis

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away from the decentralization occurring at the municipal level; it would centralize power in the regional capitals because the votes of the inhabitants of the largest cities within each department would overwhelm the preferences of the more rural constituencies; and it would add politics to the purely administrative nature of the department. (O’Neill 1999, 150–51)

Castro and others also cited the chaos that ensued after adopting the federal system in the 1853 Constitution. Greater autonomy at the intermediate level of government was frequently associated in the public discourse with the political instability of the nineteenth-century federalist period. However, due in part to the decentralizing impulse that the popular election of mayors had generated, and in part to the attempt of the president to strengthen the departmental level as a means to palliate the political crisis, the reform for the popular election of governors was approved by the second committee and later passed in the General Assembly by two-thirds of the votes.17 In summary, the move to popularly elect governors was the result of the demands of a mixed coalition formed by the national executive and the members of the Constitutional Assembly who represented the departmental level and who wanted to extend the process of political decentralization initiated in 1986. According to Jaime Castro, who, as we saw, was against the popular election of governors: “The popular election of governors appeared to some extent to be a complement to the popular election of mayors. It was the next step. It was not subject to so much deliberation and debate as the popular election of mayors” (Interview with Castro, 2001, emphasis added). Although it was a contested issue, the popular election of governors appeared as the logical next step in a path of decentralization reforms that sought to improve the political legitimacy of the government and the political party system.

The Second Layer: Fiscal Decentralization The second type of decentralization to occur in Colombia during the postdevelopmental period was fiscal decentralization. Like the popular 17

Compared to the other reforms that were approved, this was a low level of support. About 80% of the reforms passed with 90% or more votes (Dugas 1993, 69). Unfortunately, individual votes were not recorded during the Assembly, making it impossible to link a member’s position regarding the popular election of governors with her type of constituency. Nevertheless, the different proposals and their advocates reveal the confl ict between different territorial interests.

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election of governors, it was part of the constitutional reform of 1991, but, unlike that measure, fiscal decentralization united the interests of those in the Assembly who represented the departmental and the municipal levels. In other words, it was pushed forward by a subnational coalition that represented the interests of subnational representatives of both the ruling and opposition political parties. One of the advisers of Guillermo Perry, a Liberal Party member of the Constitutional Assembly, said: In the Assembly there were regional powers. They were not articulated institutionally or in a perfectly coherent manner, but they voiced the claims of subnational powers. . . claims that went beyond the differences among political parties. (Interview with Rodríguez, 2001)

Changes to the system of intergovernmental fiscal relations were introduced in the new Constitution (Articles 356 to 364). These changes increased the number and frequency of automatic transfers from the central government to the departments and municipalities and increased the revenue base on which the transfers were calculated. One of the new articles, Article 356, specifically addressed the importance and allocation of automatic fiscal transfers to the departments and districts.18 The article said that these automatic transfers, called situado fiscal, had the purpose of financing education (at all educational levels, with the exception of universities) and health services. Regarding the distribution among subnational units, 50% of the situado fiscal would be distributed in equal parts among departments and districts, and the rest would be distributed according to population, fiscal effort, and administrative efficiency.19 Congress would legislate the specific percentage to be transferred each year and had the authority to revise the distribution criteria and percentages every five years. Not only did this article increase the automatic transfers to the departments and make their distribution more equal across departments, but it also explicitly stated that “There could not be a decentralization of responsibilities without the previous transfer 18

19

The system of automatic fi scal transfers to departments and municipalities was created in the 1968 Constitution (Article 182) and implemented in 1973 (by Law 46 of 1971). In that year, 13% of the national ordinary income went to the departments as automatic transfers. This amount increased to 14% in 1974 and 15% in 1975, and remained steady at that value until the 1991 constitutional reform. For more information on the limited effect that the 1968 and subsequent fi scal reforms had on the coffers and fiscal autonomy of departments and municipalities, see Misión de Finanzas Intergubernamentales (1981, 36) and Forero Pineda et al. (1997, 14), among others. This was a departure from the prior distribution scheme, which assigned 70% of the automatic transfers according to population benefited the most populated departments (see Article 182 of the 1968 Constitution).

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of the necessary fiscal revenues to afford them.” That is to say, the new Constitution explicitly stated that any administrative decentralization policy had to be preceded by a fiscal decentralization reform – the likely result of a negotiation dominated by subnational interests. Another article (Article 357) ruled on the transfers to municipalities or participaciones. It established that these transfers would increase from 14% of the national current income in 1993 to 22% in 2002! The new distribution criteria would benefit the small and poor municipalities, since 60% of the participaciones would be allocated according to poverty levels and the rest according to population, fiscal and administrative efficiency, and attention to quality of life. A future law would dictate the new responsibilities that the municipalities had to assume in return for these transfers, and, as with the departmental transfers, Congress could change the criteria for the distribution of participaciones every five years. It is worth noting that while the situado fiscal was tied to specific responsibilities in the education and health sectors and no particular percentage was guaranteed by the Constitution, the municipal transfers were not linked to any particular line of expenditures, and the percentage by which they had to increase over time was established in the Constitution. These provisions reflect the strength of the representation of the interests of the FCM in the Assembly. In February of 1991, Juan Martín Caicedo Ferrer, elected mayor of Bogotá (1990–1991) and president of the FCM, presented a document to the second committee of the Constituent Assembly with the FCM’s proposals on constitutional reforms. Among those proposals was an increase in transfers to municipalities.20 A month later, the FCM’s executive council acknowledged and thanked the Assembly for the attention it had paid to the FCM’s demands.21 Another major change to the system of fiscal transfers introduced in the Constitution was the expansion of the income base on which the transfers were calculated. In the past, the transfers to departments and municipalities were a portion of the ordinary national income, or national tax revenues. After 1991, the transfers became a percentage of the current income, which includes ordinary and nontax revenue income. This reform was also a response to the mayors’ demands (Jamarillo Pérez 1994, 75). As a result of the organized pressures of the subnational officials in the Constitutional Assembly, particularly the mayors, the fiscal 20 21

“Municipios piden autonomía local,” El Tiempo, Bogotá, February 23, 1991. El Tiempo, Bogotá, March 23, 1991.

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decentralization measures introduced in the 1991 Constitution meant that the total transfers to subnational governments practically doubled between 1991 and 1998. They passed from 4.3% of the GDP in 1991 to 7.9% in 1998 (Vargas González and Sarmiento Gómez 1997, 33). What were the antecedents of these fiscal reforms? Would have they taken hold without the prior self-reinforcing effects of political decentralization? As mentioned earlier, the civic strikes of the late 1970s brought local government to the center of the political scene and the national executive had to pay close attention to this issue. In 1980, a team of economic experts was formed to study how to improve the system of intergovernmental finances, and in particular how to strengthen the departmental and municipal tax systems, whose shares of revenues had more than halved since the early 1960s.22 Richard Bird led this team, whose findings and recommendations were published a year later (see Misión de Finanzas Intergubernamentales 1981). When the incoming President Belisario Betancur was confronted with increasing economic problems and the steadily declining municipal and departmental revenues, he passed an emergency plan that included some of those recommendations. Law 14 of 1983 sought to strengthen the collection of taxes in departments and municipalities. Departments were given a new tax on automobiles and the authority to update and simplify their existing taxes, whereas municipalities could modernize their tax bases – important for property taxes – and determine within certain parameters their own levels of industry and commerce taxes (Ocampo Gaviria and Perry Rubio 1983). This fiscal measure halted the trend of declining municipal and departmental revenues; however, its impact on the distribution of resources between levels of government was negligible (Wiesner Durán 1992, 117–29). After the first round of political decentralization and the creation of a mayors’ association, major fiscal decentralization reforms were incorporated in the 1991 Constitution. It is hard to believe that such reforms would have crystallized without the prior empowerment of subnational governments produced by the political decentralization measure of 1986 and the creation of the Colombian Federation of Municipalities in 1988. 22

Department and municipality shares of tax revenues had decreased from 36% of the total tax revenues in 1962 to 15% in 1979 (Misión de Finanzas Intergubernamentales 1981, 52–53).

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The Third Layer: Administrative Decentralization As in Argentina, public education in Colombia is one of the largest components of the public sector. In 1997, 36% of the central government tax revenues were allocated to public education, and the system had 85,000 schools, almost 400,000 teachers, and 8.6 million students (Borjas and Acosta 2005, 245). In this section, I focus on the decentralization of education and the evolution of the distribution of educational responsibilities among levels of government as a representative sector of administrative decentralization reforms in Colombia. The decentralization of revenues introduced in the 1991 Constitution did not have an expenditure counterpart until Laws 60 and 115 were passed in Congress in 1993 and 1994, respectively. The sequencing of these reforms correlates precisely to the domination of subnational interests in the early coalitions (those of 1986 and 1991) that pushed forward political and fiscal decentralization in Colombia. As a former public official wrote: The design of the decentralization process [in Colombia] has not followed one of the basic criteria commonly accepted in any reform: that first the functions are defined, and later the resources [to cover those functions]. Especially in the case of local governments, the practice has been to determine the amount of resources to be transferred first – which has even been indicated in the Constitution – and later to examine and discuss what functions to develop with those resources. This situation has been the result of the way in which the reforms have taken place. To the extent that decentralization has been politically promoted, the emphasis has been in guaranteeing the increase of resources for subnational governments in the form of automatic transfers without a counterpart. (Maldonado 1999, 27)

The administrative decentralization laws established the distribution of resources and responsibilities among the levels of government for the administration of social services. Law 60 ruled on the distribution of resources among departments for the financing of education and health services, and among municipalities for investment in the infrastructure and maintenance of schools, health services, housing, water and sewage, and other local programs. Law 115, also known as the General Law of Education, was fully devoted to the educational sector. As expected by the theory laid out in Chapter 2, the initial impulse to pass these laws came from the national government, eager to establish a new distribution of responsibilities among the levels of government as a means to cut the double spending that fiscal decentralization had created and to shrink the fiscal deficit. This double spending was the result of the fiscal changes of 1991. Between 1991 and 1994, the larger number and

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amounts of transfers to departments and municipalities were not met with a lower level of expenditures at the national level. Instead, there was an increase in overall expenditures. As former minister of economy Rudolf Hommes (1990–1994) said: . . . the central government is reassuming the financing of some of these services [education, basic health, water and sewage, police, local public works, environmental protection and recreation] in a way that smacks of recentralization and also creates an undue pressure on the budget because most expenditures have to be financed twice: once through revenue-sharing and then, a second time, through ad-hoc transfers to departments and municipalities to obtain political support. (Hommes 1996, 21)

The outcomes of the administrative decentralization laws were largely the result of negotiations with the national teachers’ union, the Colombian Federation of Educators (Federación Colombiana de Educadores, FECODE). These negotiations among national actors are what brought administrative decentralization to Colombia. Also as expected, governors and mayors did not push forward these reforms – the least preferred type of decentralization once they had political autonomy and fiscal resources – but they participated in the negotiations and to a certain extent benefited from them. The national executive sent the bill proposals to Congress in mid-1992. The congressional negotiations that followed reveal the territorial interests of the different key players. Three groups can be identified according to their goals. First, there were traditional politicians who were highly influential at the departmental level and who wanted to be the mediators between the national government and the municipalities. Second, there were a group of technocrats at the national level (mainly from the Ministry of Finance and the National Planning Department) who, allied with the representatives of the municipalities (institutionally organized in the FCM), wanted to take the decentralization of education to the municipal level. Third was the national teachers’ union, FECODE, which was against decentralization, particularly toward the municipal level. It took one year from the presentation of the proposal of Law 60 until its final approval in August of 1993. It was known as the “framework” law of decentralization. Regarding the distribution of responsibilities and resources between the subnational levels of government, the law most benefited the departmental level. The law established that, after a process of certification, the departments would be solely responsible for the administration and distribution of the situado fiscal to pay for education and health services. The departments, in turn, after a process of

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certification of municipalities, could then decentralize these revenues to municipalities that had more than 100,000 inhabitants as of 1985.23 The departments thus became responsible for paying and training teachers and for giving vouchers (subsidies on demand) to students with needs. 24 The municipalities, on the other hand, were responsible for investing in the construction and maintenance of school buildings. Together, departments and municipalities were responsible for managing the educational services of preschool, basic primary and secondary school, and high school. The national level retained its prerogative over the curriculum and general educational guidelines, and the three levels shared responsibilities over the evaluation of the educational system. Besides the distribution of responsibilities among levels of government, the law also established the distribution of resources among the subnational units and the creation of committees (comisiones veedoras) both at the departmental and municipal levels to ensure that the transfers were properly allocated according to the law. The law recognized that in the case of the educational sector the Teachers Handbook (Estatuto Docente) of 1979 ruled labor relations. It also granted the FCM 0.01% of the total transfers to the municipalities (or participaciones) “for the promotion and representation of all its members, . . . the districts and municipalities” (Article 37, Law 60). Law 60 was the result of compromises among the interest groups outlined previously. The national minister of education mediated between the interests of the Ministry of Economy and the Department of National Planning on the one hand, and the union on the other. The compromise reached between the union and the national government was that the decentralization of the administration of the educational system would take place toward the intermediate level of government, with funds guaranteed from the national level. As expressed by a union official: We reversed the government’s proposals on the municipalisation of education. The municipalities are not prepared to do anything. The government just wanted to dump the problem on them and to privatise education. To go from centralisation to municipalisation without taking the departments into account does not solve anything. We fought to give the departments a key role in the Ley 60. (Cited in Angell et al. 2001, 178) 23

24

This was a loss for the municipal level, since only 5% of the municipalities in Colombia had more than 100,000 people in 1985. A temporary clause allowed municipalities to pay teachers’ salaries until 1995, but the clause was later extended, so in reality both departments and municipalities paid teachers in Colombia.

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Overall, Law 60 benefited the departmental level. Nevertheless, it granted the FCM a portion of the total transfers to municipalities. The FCM thus received about 100 million pesos in 1994, an amount that increased with the municipal transfers in successive years (Jamarillo Pérez 1994, 76). Law 115 of General Education took longer to be approved, mainly due to resistance from the teachers’ union, FECODE. The union organized a national strike in May of 1993 after the proposal had passed in the Chamber of Deputies and had reached the Senate. Once again a compromise was achieved among the bargaining groups. The municipalities agreed to share with the departments the responsibilities for hiring, firing, relocating, and giving disciplinary sanctions to teachers (Articles 151 and 153, Law 115). The law also incorporated the Regional Education Funds (Fondos Educativos Regionales, FER) – autonomous educational agencies previously linked to the national Ministry of Education – into the structure of the departmental ministries of education (Article 179). This was a major reform in favor of the departments, because it meant that the national executive would not control the distribution of departmental resources through the FERs, as had been the case since their creation in the late 1960s. In sum, although administrative decentralization was initiated by the national executive and largely negotiated among national-level actors (i.e., the national government and the national teachers’ union), the administrative decentralization laws also reflect interesting tensions between governors and mayors. Through an alliance with the national teachers’ union (to prevent the municipalization of education), the governors extracted more resources from the national government. In turn, allied with the national government to curtail the resources and prerogatives of the governors, mayors secured resources for their association and reserved a considerable amount of revenues and responsibilities in the administration of public services. In general, the decentralization of responsibilities in Colombia, as was the case in Brazil, where the same sequence of decentralization (P → F → A) ensued, was funded.

Conclusion The Colombian decentralization is essentially a political phenomenon accompanied by administrative and fiscal transformations. (Vargas González and Sarmiento Gómez 1997, 7)

In the mid-1980s, in the context of a political legitimacy crisis, the national executive had incentives to decentralize authority. Responding

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to the demands of the civic strikes, the process of decentralization started with political decentralization toward the local level, a measure that was accompanied by some fiscal reforms that sought to strengthen municipal finances as well. The popular election of mayors created a policy configuration of followers. The first cohort of mayors formed the Colombian Federation of Municipalities, whose main goal was to deepen the process of decentralization. Thus, when the time came to negotiate fiscal changes, the subnational actors had the strength to assert that their conditions be met. By the time of the constitutional convention, the second cohort of mayors had been elected. Through their own association, mayors voiced their demands to the national government. Thanks to the power that they had gained in the first round of reforms, the mayors were able to write fixed percentages of transfers into the Constitution and to achieve the constitutional guarantee that administrative decentralization would take place only if accompanied by the decentralization of fiscal resources. Unlike in Argentina, where governors were given the responsibilities first, followed by the money more than ten years later, in Colombia, political authority was decentralized in the first round of reforms, giving the mayors leverage to negotiate fiscal decentralization toward the municipal level. Moreover, it was constitutionally guaranteed that any administrative decentralization of responsibilities would be preceded by a fiscal decentralization of revenues. Thus, the order of preferences of subnational actors for these two types of decentralization reforms was imprinted in the National Constitution. In 1991 the losers of the first round of reforms, the departamentalistas (those that represented the departmental level), pushed forward further political decentralization in the form of the popular election of governors, a measure that the mayors opposed since they saw it as competition to their authority. The departamentalistas also pursued fiscal decentralization in a type of reform in which their interests now coincided with, and were reinforced by, those of local officials. This led to changes in the intergovernmental fiscal arrangement, increasing the automatic transfers to both subnational levels of government. Expenditure responsibilities were decentralized last, beginning in 1993, when a compromise with the union favored decentralization toward the departmental level. Unlike the processes of decentralization in Argentina and Mexico, decentralization in Colombia unfolded relatively quickly and subnational actors were part of the coalitions that pushed forward these reforms from the beginning. However, in a unitary country such as Colombia, the initial

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Colombia

coalition with the national executive proved essential to move the process of decentralization forward. Thus mixed coalitions of national-ruling and subnational actors predominated in the early times of the reforms. Unlike in federal countries such as Argentina and Brazil, but similar to centralized federations such as Mexico, in its first stage (1986–1991) the process of decentralization in Colombia targeted the municipal level. As stated in Chapter 2, this is the preferred level of decentralization for national executives because mayors pose less of an electoral threat to the president than governors do. During the second period that went from 1991 to 1994, decentralization measures tended, instead, to favor both the municipal and departmental levels. There were differences in the composition of the mixed coalitions that supported the reforms of 1986 and 1991. The 1986 coalition was formed by a Conservative president and national and subnational politicians who represented the interests of the municipalities. At that time, traditional factions of the Liberal and Conservative parties whose strongholds of power were at the departmental level opposed political decentralization. It was a Liberal president and representatives of the departmental level who in 1991 wanted to expand the process of decentralization to alleviate the political crisis of legitimacy by pushing for the popular election of governors. Once political decentralization was achieved at both levels, local- and intermediate-level representatives (a subnational coalition) were together able to achieve fiscal changes that were favorable to them. Administrative decentralization was the last move, initiated by the national executive. More than two decades have passed since the first postdevelopmental decentralization reform was adopted in Colombia in 1986. Although decentralization has fallen short of bringing about the peace that some of its defenders had envisioned (Castro 1998), it has brought about positive policy outcomes in education, health, and public services. Literacy and educational coverage rose during the 1990s, and there were improvements in the general quality of education. A subsidized health regime increased access to health care by the poorest families, and there were also improvements in access to water and sewage services (Sánchez and Chacón 2005, 15). Moreover, a process of decentralization in which subnational interests predominated and in which political decentralization occurred first, followed by fiscal and administrative reforms, has significantly changed the institutions of intergovernmental relations in Colombia. As a result of decentralization, governors and mayors are politically autonomous from

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the national government and have the capacity to manage more resources and design innovative policies. Jaime Castro, in explaining how he became a fervent defender of municipal autonomy, said: I became a municipalista through life experience. I am from the countryside, from a small town of 20,000 inhabitants. While I was a university student, I was elected to the local council. I began to experience the municipal life there. I realized that there was intelligence and creativeness in the province [i.e., the interior], but there were not legal, economic, or administrative tools. If anything was to be done to improve or develop the townships, the mayors had to make a pilgrimage to the departmental capital or to Bogotá to beg for help. (Interview with Castro, 2001)

Decentralization has given governors and mayors those legal, economic, and administrative tools they need for good, creative government. The extent to which this is realized varies widely within the heterogenous constellation of Colombian departments and municipalities. Moreover, the ongoing civil war renders legal issues over the distribution of authority among levels of government largely irrelevant in rural communities where subnational officials are the regular targets of violence. However, even in the context of this seemingly endless war, the fact that innovative municipal programs have been adopted in cities such as Bogotá and Medellín,25 just to mention two examples, points to the fact that when power is devolved, decentralization reforms can lead to higher levels of political accountability and improve public services. 25

In the year 2000 the City of Bogotá adopted the Public School Concession (Colegios en Concesión) Program, which brought high-quality education to low-income neighborhoods. By 2003, 23 top-of-the-line schools had been built in Bogotá’s poor neighborhoods. The program was studied by the World Bank and the Inter-American Development Bank (for a description of the Public School Concession Program see Villa and Duarte 2002). In 2007, the mayor of Medellín, Sergio Fajardo, attracted international attention because of his innovative program of community development that called for the construction of luxurious libraries and other public buildings, as well as the installation of beautiful sculptures in the city’s most desperate slums (see “Medellin’s Nonconformist Mayor Turns Blight to Beauty,” in New York Times, Sunday, July 15, 2007). For other examples of successful local programs in Colombia, see Campbell (2003).

5 Brazil The Subnational Dominance Path to Decentralization in a Federal Country

Maybe . . . the most important contribution of the Brazilian case . . . to the theories of decentralization [is that] the decision to decentralize was taken by elected representatives and by subnational politicians and not by the central government. Souza 1997, 16

Starting in the early 1980s, Brazil moved away from authoritarianism and centralization. Direct elections of governors were introduced in 1982 and direct election of the president was reestablished in 1989. The decentralization of fiscal resources and social services followed in subsequent years. With a territory of 8.5 million square kilometers and a population of 188 million people, Brazil is the fifth largest country in the world. It is not surprising, therefore, that after the demise of developmentalism and the military regime (1964–1985), the country moved toward the decentralization of government as part of the democratization process. The results of decentralization, however, are extremely puzzling. While historically Brazil’s federal institutions have granted a high degree of autonomy to its states and, to a lesser extent, to its municipalities, the postdevelopmental decentralization process further increased the fiscal resources, policy-making responsibilities, and political authority of the subnational governments – municipalities in particular. Nowadays, Brazil is one of the most politically and fiscally decentralized federal systems in the developing world (Souza 1997, 1). Some scholars even consider that, since the constitutional reform of 1988, Brazil may well be “overdecentralized” (Selcher 1998, 37; Stepan 2000). From a comparative perspective, the process of decentralization in Brazil is extremely 150

Postdevelopmental Decentralization in Brazil

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appealing because it shows that there is no institutional limit as to how much power can be devolved to subnational units. In the early 1980s, the conditions of Brazil’s intergovernmental balance of power were similar to those of Argentina. At that time, Brazil and Argentina were the most decentralized countries in Latin America. Two decades later, however, the amount of change experienced in the intergovernmental relations of Brazil approximated the high levels of change experienced by Colombia and Mexico (see Table 2.6 in Chapter 2). Why is it that, after having started the process of postdevelopmental decentralization with an intergovernmental structure similar to that of Argentina, Brazil’s intergovernmental relations underwent dramatic changes (such as those experienced by a unitary country like Colombia) while Argentina’s intergovernmental relations remained practically unchanged? I argue in this chapter that the effect of decentralization on the distribution of power between national and subnational politicians in Brazil depended on the sequence of reforms that unfolded after the end of developmentalism. As in Colombia, political decentralization occurred first and was later followed by fiscal and administrative decentralization. This sequence was the result of the prevalence of subnational territorial interests in the political coalitions that pushed forward decentralization. Subnational coalitions operated in the late 1970s to bring about political reform, in the early 1980s to decentralize revenues, and from 1988 onward to implement administrative decentralization. The result of this sequence of reforms is that subnational authorities – mayors in particular – have seen their power significantly augmented.

Origins, Sequence, and Coalitions of Postdevelopmental Decentralization in Brazil In Brazil, between the developmental state and the neoliberal state we had the 1980s. (Interview with Giambiagi, 2005)

In Argentina, Colombia, and Mexico, it is easy to identify the first administrations that moved the state away from economic intervention and implemented neoliberal market reforms.1 In Brazil, on the other hand, the 1

As explained in Chapter 1, those were the administrations of Jorge R. Videla (1976– 1981) in Argentina, Belisario Betancur (1982–1986) in Colombia, and Miguel de la Madrid (1982–1988) in Mexico. Although subsequent administrations applied both orthodox and heterodox economic policies, the move away from developmentalism had already taken place (Weyland 2002, 72, 77–81).

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Brazil

passage from a developmental to a neoliberal type of state was gradual and the market-oriented reforms were less radical. There is a gap of at least one decade in Brazil between the decline of developmentalism in the late 1970s and the implementation of market-oriented reforms in the 1990s. The developmental model that had propelled economic growth during the years of the “Brazilian miracle” had become stagnant and was financially exhausted by the time of the inauguration of military President João Figueiredo (1979–1985).2 Facing the economic hardships caused by the second oil crisis and the foreign debt crisis, his government moved the state away from direct intervention in the economy. He ended the developmental policies of his predecessor,3 and less than a year into his administration Figueiredo announced major changes to the economy (Skidmore 1988, 422 fn 21). Delfim Netto, minister of planning at the time, adopted a strategy of devaluation and pre-fixed indexation. Delfim thought the neoliberal military regimes of Argentina and Chile had found the road to financial stability, and in order to stabilize the economy and curb inflation he implemented similar orthodox adjustment policies akin to those being proposed by the IMF (Skidmore 1988, 422 fn 21). Delfim’s economic strategy was the Brazilian version of the supply-side arguments made in the United States at the time (Coes 1995, 144). Admittedly, his measures were half-hearted and eventually failed, leading to heterodox economic policies in the following presidency of civilian leader José Sarney (1985– 1989) (Weyland 2002, 77–81). But starting with Figueiredo’s administration, investment in state enterprises – those with controlled ownership by federal, state, or municipal governments – fell sharply.4 Investment in state enterprises – one of the principal indicators of the state’s direct intervention in the economy – dropped from 8.7% of the GDP in 1979 to 4.3% in 1980 and continued declining until it reached 1.8% in 1990. By 1986, investments in the traditional sectors of the public administration (with 3% of the GDP) had surpassed investment in public enterprises (which

2

3

4

The years of the so-called “Brazilian miracle” correspond to the 1968–1973 period, when Brazil experienced high levels of economic growth. In those years, the per capita gross domestic product climbed at an average of 8% per year (Coes 1995, 15–17). Military President Ernesto Geisel (1974–9) had a developmentalist economic agenda, as made explicit in his Second National Development Plan. Among the most important state-owned enterprises were Eletrobrás (electric generating and distribution systems), Petrobrás (oil production and distribution), the Siderbrás Group (steel), Telebrás (telephone), Grupo Nuclebrás (nuclear development), and Portobrás (in charge of ports) (Coes 1995, 143).

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remained at about 2% of GDP into the 1990s) (Coes 1995, 142–45, 204). Although some developmentalist policies such as trade protection and regulation of the domestic economy continued throughout the 1980s, by the time of the Figueiredo administration, the second phase of import substitution industrialization and the developmentalist project had ended.5 Hence, my analysis of the postdevelopmental sequence of decentralization policies starts with Figueiredo’s inauguration in 1979. The first complete cycle of postdevelopmental decentralization reforms in Brazil spans from 1980 to the late 1990s. The cycle started with a political decentralization reform: Constitutional Amendment No. 15 of 1980, which reinstated the direct election of governors. A subnational coalition formed by members of the ruling and opposition parties was the main advocate of this reform. Once this reform was enacted, a new set of actors emerged: directly elected governors and more politically active and autonomous mayors. Governors and mayors could make a claim of electoral legitimacy that the military president could not make, and this gave them significant political leverage (particularly throughout Congress) to negotiate the next round of decentralization policies. In this case also, a multipartisan subnational coalition dominated. The result was Constitutional Amendment No. 23 of 1983, or “Emenda Passos Porto,” a fiscal decentralization measure that significantly increased the automatic transfers received by states and municipalities through the system of revenue-sharing. Encouraged by their political and fiscal successes, the subnational actors pushed for further changes, leading to the 1988 constitutional reform, which, among other measures, recognized municipal governments as units of the federation (i.e., granting municipalities the same constitutional status as memberstates) and expanded the automatic transfers and the revenue base of states and municipalities. Administrative decentralization was the last type of postdevelopmental decentralization policy to be implemented. The first changes occurred in the health sector, where, contrary to theoretical expectations, decentralization was pursued by a subnational coalition formed by a reformist health movement and governors and mayors of the opposition. By 5

As Ben R. Schneider put it, “. . . in many years it seemed like inertia, as if developmentalism continued because the government was too preoccupied with other matters (the transition to democracy, infl ation, the new constitution, Sarney’s 5th year of mandate, etc.) to undertake major economic reforms” (communication with Schneider, October 18, 2006).

154

Brazil Partisan Interests Ruling

Opposition

Territorial Interests

National

Subnational Coalition Political Decentralization (T1) Constitutional Amendment No. 15, 1980

Subnational

Subnational Coalition Fiscal Decentralization (T2) Constitutional Amendment “Passos Porto,” 1983

Subnational Coalition Political and Fiscal Decentralization (T3) Constitutional Reform 1988 Administrative Decentralization (T3) Creation of SUS

Figure 5.1. Decentralization Coalitions, Policies, and Timing in Brazil, 1980–1988

the mid-1990s, the national executive branch implemented decentralization measures in education as well. But, unlike any of the other cases of administrative decentralization considered in this book, administrative decentralization in Brazil was initially demanded by a subnational coalition, in which a strong and well-organized sectoral movement, the movimento sanitário (henceforth, sanitarista movement), equated funded administrative decentralization with democratization. Figure 5.1 graphically represents the main interests in the coalitions that pushed forward each type of decentralization policy and Table 5.1 summarizes their contents, type of decentralization, territorial interests, and beneficiaries. As can be seen, subnational coalitions prevailed throughout the first complete postdevelopmental cycle of decentralization reforms. The origins, features, and consequences of each of these policies are analyzed in the following sections.

155

Type of Dec.

P

F

F

Year

1980

1983

1985

CA 27 “Airton Sandoval”

CA 23 “Passos Porto”

CA 15

Dec. Policy

Direct election of governors and vicegovernors (in 1982) by universal, direct, and secret vote for four-year terms. Direct election of all senators, three per state, by direct and secret vote, for eight-year terms. Increase in automatic transfers to states (FPE). Increase in automatic transfers to municipalities (FPM). Increase in automatic transfers to states (FPE) and municipalities (FPM). Delegation of roadways tax (Taxa Rodoviária Unica) to states and municipalities, in equal share. Change to the distribution of tax on transportation (Imposto sobre Transporte Rodoviário): states receive a larger share (from 20% to 50%) and municipalities start to receive it (from 0 to 20%). Redistribution of other taxes toward municipalities.

Policy Description

States

States and municipalities

Subnational

Subnational

Subnational

Opposition and ruling parties in Congress; mayors’ associations

Opposition and ruling parties; governors; mayors Opposition and ruling parties; governors; mayors

(continued)

States and municipalities

Main Territorial Beneficiaries

Dominating Territorial Interests

Main Actors Advancing Reform

Table 5.1. First Cycle of Postdevelopmental Decentralization in Brazil, 1980–1988

156

P

F

A

1988

1988

1988

Const. Reform

Const. Reform

Const. Reform

Dec. Policy

Municipalities as part of the federal pact. Increase in automatic transfers to states (FPE). Increase in automatic transfers to municipalities (FPM). Creation of a universal health care system (SUS) to be administered by municipalities.

Policy Description

Sanitarista movement; governors; mayors

Mayors and other local officials Governors and mayors

Main Actors Advancing Reform

Municipalities

States and municipalities

Subnational

Subnational

Municipalities

Main Territorial Beneficiaries

Subnational

Dominating Territorial Interests

Sources: Lopreato (2000, 11–12, fn 15); República Federativa do Brasil, Diário do Congresso Nacional: November 20, 1980, December 2, 1983, and November 29, 1985; Souza (1997, 67–68).

Type of Dec.

Year

Table 5.1. (continued)

The First Layer: Political Decentralization

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The First Layer: Political Decentralization Return to Popular Election of Governors: Causes, Coalition, and Effects Unlike other authoritarian regimes of the Southern Cone, such as those of Argentina (1976–1983), Chile (1973–1990), and Uruguay (1973– 1985), that completely abolished elections, the Brazilian military regime (1964 to 1985) allowed for the maintenance of elections for subnational and legislative posts, as well as a certain degree of contestation in local governments and Congress.6 National and state legislators, city councillors, and the majority of mayors were elected.7 Through a series of electoral and constitutional reforms, however, the military engineered a political system that would systematically favor the official party and its candidates. After losing four out of ten gubernatorial races in 1965, the military created a bipartisan system and abolished the direct election of governors (Institutional Act No. 3, or Ato Institucional-3, AI-3). Since then and until 1979, only one pro-government party, the National Renovation Alliance (Aliança Renovadora Nacional, ARENA), and one opposition party, the Brazilian Democratic Movement (Movimento Democrático Brasileiro, MDB), were allowed. In the elections of 1966 and 1970, governors were indirectly elected by the state assemblies after the military approved their nomination (Abrucio 1998, 73–74; Samuels and Abrucio 2000, 48). Although the traditional politicos did not lose their strongholds of state power (Hagopian 1996), through the nomination process and the impeachment of opposition state legislators, the military directly influenced the selection of governors.8 In 1970, seven of the twenty-two 6

7

8

For this reason, among others, Linz (1973, 235) refers to this period as an “authoritarian situation” rather than an institutionalized “authoritarian regime.” The mayors of the state capitals, estâncias hidrominerais – i.e., cities with natural mineral water springs (Hagopian 1996, 108) – and municipalities of national security importance were appointed. The mayors of state capitals and estâncias hidrominerais were appointed by the governors – this practice had already been in place according to the Constitutions of 1934 (Article 13) and 1946 (Article 28). The mayors of municipalities of national security importance and Brasilia were appointed by the president (Constitutional Amendment No.1 of 1969). In these 201 municipalities with appointed mayors, the fi rst direct election of local executives occurred in 1985. The impeachment of opposition state legislators on the days leading to the gubernatorial elections was one of the means used to secure majorities in the election of officialist candidates (see República Federativa do Brasil, Diario do Congreso Nacional, March 18, 1980, 200).

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governors had bureaucratic-technical or military backgrounds, compared to only two in 1966 (dos Santos 1971, 126). In 1972, President Emilio Medici extended the indirect method for the selection of governors to the 1974 elections. Further changes were introduced in April of 1977 (a set of measures known as the “April package”), when President Geisel temporarily closed down Congress and announced a series of constitutional reforms intended to strengthen the position of ARENA in the 1978 elections. According to the April package, all the governors and one-third of the senators were to be indirectly elected by state electoral colleges that would include city councilors.9 The inclusion of city councilors, the military calculated, would give an advantage to ARENA’s candidates (Baloyra 1986, 32–33; Skidmore 1988, 373).10 Hence, from 1966 to 1978, Brazilian governors were indirectly elected. President Figueiredo presented to Congress the constitutional amendment bill (Proposta de Emenda a Constitução, PEC 76/1980) that would reinstate the direct election of governors.11 That the president was the one to introduce the bill is not surprising considering the executive branch had an active role in introducing bills and modifying laws during the military period.12 The measure was also part of a gradual and controlled liberalization process that Figueiredo had coined abertura (opening), a continuation of the distenção (decompression) started by Geisel in 1974. In the bill sent to Congress, Figueiredo explicitly portrayed the amendment as part of a larger democratization process that included previous measures such as the elimination of the extraordinary powers of the executive, the amnesty law, and the party reform law that had ended the bipartisan system.13 9

10

11 12

13

Other changes included in the 1977 April package were that the number of federal deputies per state would be established according to the state’s total population instead of the number of registered voters (discriminating against the most politically active states of the south and southeast), a simple congressional majority would be suffi cient for the passage of constitutional amendments, and political candidates’ access to radio and TV would become more restricted (Skidmore 1988, 373). According to Deputy Adhemar Santillo (PT, Goiás), the inclusion of city councilors in the electoral colleges allowed ARENA to keep four governorships – Acre, Amazonas, Rio Grande do Sul, and São Paulo – that would otherwise have been lost to the opposition in 1978 (see República Federativa do Brasil, Diario do Congreso Nacional, March 18, 1980, 202). República Federativa do Brasil, Diario do Congreso Nacional, August 23, 1980, 2065. Schmitter (1973, 190–91) counted more than 10,000 decrees and decree-laws, 12 institutional acts, and more than 80 complementary acts passed at the president’s initiative during the fi rst four years of the military regime. The latter was the political party reform of 1979. As a result of this reform, the Democratic Social Party (Partido Democrático Social, PDS) became the new government

The First Layer: Political Decentralization

159

Why did Figueiredo introduce the bill for the direct election of governors? In a process of political regime transition characterized by pacts and transactions (O’Donnell and Schmitter 1986; Viola and Mainwaring 1985), it is likely that by allowing the direct election of governors, the military sought to control the liberalization process. The military may have calculated that a certain degree of decentralization of power would strengthen the conservative elites of the northern and northeastern regions and foster a conservative transition to democracy (Kinzo 1988; communication with Samuels, 2006). The introduction of the bill by the executive, however, should not obscure the fact that there was a broad coalition in favor of the direct election of governors. This coalition included legislators of the governing party as well as legislators of the opposition and represented the interests of the subnational levels of government. In the words of a ruling party deputy: This bill of President Figueiredo is a response not only to the work of the political opposition . . . but also of all those who have fought for [direct] elections. . . . [These are] legislators of the governing party . . . city councilors, mayors, and state deputies. (Antônio Dias, PDS, Minas Gerais, República Federativa do Brasil, Diario do Congreso Nacional, August 23, 1980, 2063)

In fact, previous bills for the direct election of governors had already been presented to Congress by legislators of the opposition and ruling parties. Thus, by the time that Figueiredo’s bill reached the floor, a crosspartisan coalition in Congress that favored political decentralization already existed. Among the bills presented by the opposition were those introduced by Senator Franco Montoro from the MDB of São Paulo. In 1978, Montoro presented two constitutional amendment proposals for the direct election of governors, vice governors, and senators.14 However, through control of the ruling party majority in Congress, Presidents Geisel first and Figueiredo later defeated both proposals.15

14

15

party and several parties emerged in the opposition: among them, the Brazilian Democratic Movement (Partido do Movimento Democrático Brasileiro, PMDB), direct political heir of the MDB; the Workers Party (Partido dos Trabalhadores, PT); and the Brazilian Communist Party (Partido Comunista Brasileiro, PCB). As the process of political reforms advanced, all these opposition parties would become strong supporters of the decentralization-participation binomial (Assies 1993, 46; Cardoso 1992, 293; Figueiredo and Cheibub 1982, 39). See PEC No. 6 of 1978 in República Federativa do Brasil, Diario do Congreso Nacional, June 27, 1978, 1198–9; and PEC No. 34 of 1978 in Diario do Congreso Nacional, December 5, 1978, 2294–5. República Federativa do Brasil, Diario do Congreso Nacional, October 17, 1978; 1926 and 1934–45; and May 19, 1979, 867–81.

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As the second Montoro proposal was being defeated, a senator of the ruling party, Edison Lobão, introduced another bill for the direct election of governors and vice governors (PEC 37/1979). Lobão was a wellrespected journalist from the northeastern state of Maranhão. It seemed that this proposal had a good chance of passing because the government wanted a ruling party legislator be the author of the constitutional reform that would lead to the direct election of governors. Moreover, Lobão’s proposal had been unanimously approved by a joint committee of deputies and senators and endorsed by more than half of Congress’s members (230 deputies and 30 senators endorsed his bill).16 But when Lobão‘s bill reached the floor, President Figuereido ordered PDS legislators to vote against it and introduced his own, very similar, bill. Why did Figueiredo make this political move? Legislator Edson Vidigal, a member of the Popular Party of Maranhão and a former member of ARENA, denounced the “heavy weight of the closed decisions of the party of government.”17 Opposition legislators made similar remarks: The Franco Montoro amendment was defeated with a hideous maneuver. While the [national] government asked the ruling party representatives to leave the House, it collected signatures for the Edson (sic) Lobão amendment. . . . The reinstatement of the direct elections of governors had to be done by initiative of a government Congress member, not by a member of the opposition. . . . If in the past, to be approved, bills had to be proposed by a [ruling party] legislator, now they can only be initiated by the executive, thus, the individual freedom of Congress representatives is nullified and this branch is being ridiculed. (Antonio Russo, PMDB, São Paulo, República Federativa do Brasil, Diario do Congreso Nacional, March 22, 1980, 278)

Why did the ruling party legislators who had endorsed the Lobão proposal in 1979 turn around and vote against it in 1980? The PDS legislators’ speeches during the debate of the bill are very telling of the position they took in relation to the executive and nicely illustrate the operation of partisan politics in an authoritarian situation (to use Linz’s terminology).18 Deputy Bonifácio de Andrada (PDS-Minas Gerais) said: We believe in the leaders of our party in the executive branch, and we believe in the leaders of our party in the legislative branch. We, PDS, are Executive and 16

17 18

República Federativa do Brasil, Diario do Congreso Nacional, August 23, 1980, 2061. República Federativa do Brasil, Diario do Congreso Nacional, March 21, 1980, 258. For an excellent analysis of legislators’ strategies toward other executive bills during the military period see Desposato (2001).

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Legislative. And, as Executive and Legislative, under the leadership of President João Figuereido, we will continue the process of political opening and improvement of our institutions, but according to our own political planning, according to our own script of partisan actions in the [different] stages to follow, and not in accordance with the planning, the script, or the strategy of the opposition. . . . Today, we do not vote against the direct elections, we vote instead according to the guidelines of our leadership . . . aware of our historic role as leaders, in the Executive and the Legislature, of the political opening process. (República Federativa do Brasil, Diario do Congreso Nacional, March 22, 1980, 283–84)

Similar remarks were made by other PDS legislators, highlighting the importance of party discipline and alignment with the national executive: No member of our party, neither of the national nor the regional level, can ignore the figure of the President of the Republic as Supreme Chief of Government and of the Party that gives him political support in the National Congress. In this regard, understanding and discipline must prevail and be considered relevant, transcending even the greater interests that we may question in light of the rights and duties imposed on us by the organic and disciplinary law of the political parties. (Jorge Arbage, PDS, Pará, República Federativa do Brasil, Diario do Congreso Nacional, March 21, 1980, 261)

Lacking the support of his fellow partisans, Lobão‘s proposal was defeated.19 It is worth noting, however, that in the context of a multiparty system that was becoming increasingly more competitive, all legislators became more attuned to societal and regional demands (Desposato 2001), and even those who aligned with President Figueiredo against Lobão’s proposal felt compelled to extensively justify their vote. A few months later, President Figueiredo’s proposal was voted on and approved unanimously.20 It was the first time since the Estado Novo (1937–45) that a proposal was passed by unanimous vote in Congress (and at least 55 Congress members said they were considering running for governor of their states).21 What were the common interests of ruling and opposition legislators regarding the direct election of governors? A careful reading of the congressional debates of the failed and successful bills reveals that the majority of the members of the ruling party were interested in strengthening regional governments. Members of the opposition, such as Franco Montoro, Mauro Benevides, and Ulysses Guimarães, not only sought to strengthen the autonomy of regional governments, 19 20 21

República Federativa do Brasil, Diario do Congreso Nacional, March 27, 1980. República Federativa do Brasil, Diario do Congreso Nacional, November 20, 1980. “O Congresso Aprova a Elição Direta em 82,” in Folha de São Paulo, November 14, 1980.

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but also conceived of this political decentralization measure as part of a larger program of transition to democracy that, if they could have had their way, would have also included the direct election of the president. They sought to expand Lobão and Figueiredo’s proposals by including the direct election of the president, the direct election of mayors and vice mayors of state capitals, the end of the terms of indirectly elected senators in 1982 (as opposed to 1986), the reduction of the presidential term from six to five years, and the elimination of the national electoral college.22 In other words, there was a political demand from the opposition in Congress to deepen the democratization and decentralization processes, even if the timing and main features of these processes were largely controlled from above by the military through the manipulation of ruling party legislators. After the constitutional amendment for the direct election of governors was unanimously approved, the elections of 1982 were the widest and most important Brazil had experienced in two decades, encompassing the election of governors, mayors, and state and national legislators. Gathering 58.5% of the votes, the opposition won ten of the twenty-two governorships (nine went to the PMDB and one to the PDT), eighty-two mayoralties among the 100 largest cities of the country, and city council majorities in nineteen of the twenty-three state capitals (IBGE 2003, Chapter 24, Tables 4 and 5; Selcher 1986, 61–62).23 As Linz and Stepan (1992, 133) write: “Elections can create agendas, can create actors, can reconstruct identities, help legitimate and delegitimate claims to obedience, and create power.” This was precisely the effect of holding subnational gubernatorial and mayoral elections prior to the introduction of nationwide elections for the presidency. Governors and mayors could make a claim to electoral legitimacy that the president could not make, and grew increasingly independent of the central government. Both at the state and local levels a self-reinforcing policy ratchet effect was unfolding. A self-reinforcing effect is one that creates positive feedback (Pierson 2004, 21) and that moves an ongoing process further along the direction previously taken or chosen. As new choices are made 22

23

“O Congresso Aprova a Elição Direta em 82,” in Folha de São Paulo, November 14, 1980. See also PEC’s No. 42 by Deputy Airton Sandoval (PMDB, São Paulo), 43 by Senator Orestes Quercia (PMDB, São Paulo), and 44 by Senator Franco Montoro (PMDB, São Paulo) in República Federativa do Brasil, Diario do Congreso Nacional, October 3, 1979, 2214–17. In the election for Congress, the government party, the PDS, won 15 senatorial and 235 deputies’ seats. The opposition, meanwhile, won 10 senatorial (9 PMDB, 1 PDT) and 244 federal deputies’ seats (200 PMDB, 23 PDT, 13 PTB, and 8 PT).

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(and also as time elapses), it becomes increasingly difficult and costly for policies to move in different directions (an option that might have been highly likely at the start of the sequence of choices). Moreover, a policy ratchet effect is such that once a policy (or a reform in general) is widely accepted, it sets the base point for discussion about further policy reforms (Huber and Stephens 2001, 334). Political decentralization was one such reform that had self-reinforcing and policy ratchet effects on subnational politics. At the state level, “the rise of gubernatorial influence . . . combined with continued military control of the presidency . . . increased the importance of subnational actors and interests in national politics, to the detriment of national parties and national issues” (Samuels 2004, 79). The gubernatorial inaugurations in March of 1983 were widely regarded as the end of the absolute power of the military regime (Selcher 1986, 67). As then Minister of Planning Delfim Netto put it, “. . . there was enormous pressure right after 1982. . .the government could no longer resist the pressure from the governors. It was a question of power. The authoritarian regime was finished in 1982” (quoted in Samuels and Abrucio 2000, 57). At the local level, mayors gained more autonomy and became more politically active. Through public demonstrations and increased organization in state-level municipal associations, mayors and local activists voiced their demands for more resources and services. In 1980, a group of mayors formed a new municipal association, the National Confederation of Municipalities (Confederação Nacional de Municípios, CNM), to represent the interests of medium-sized and small cities. The strengthening of subnational actors (the self-reinforcing policy ratchet effect of political decentralization) led to fiscal decentralization – the second type of decentralization most dear to the interests of governors and mayors. Furthermore, invested with electoral legitimacy, opposition governors coordinated the direitas já (elections for the president now) campaign and combined their demands for democratization with their demands for local participation and decentralization. In contrast to the cases of Argentina and Mexico, where large portions of the population saw administrative decentralization as a process of off-loading responsibilities on provinces and states, in Brazil the demands for decentralization (even administrative decentralization) and democratization were tightly linked together in the political discourse of politicians and societal actors. This identification would be largely beneficial to subnational governments in the negotiations leading to the 1988 constitutional reform. As Celina Souza (1997, 20) argues, in the context of democratization, federalism

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and decentralization became the ideological and political devices that regional and local interests used to bring their demands to the fore.

The Second Layer: Fiscal Decentralization Increasing the Subnational Share of Revenues It is widely recognized that the 1988 Constitution was fiscally decentralizing. However, a sequential analysis of postdevelopmental decentralization reveals that the process of fiscal decentralization in Brazil had already started during the military period, with the enactment of a constitutional amendment known as “Emenda Passos Porto” in 1983. Although this constitutional amendment has gone largely understudied in the fiscal federalism literature of Brazil, it constitutes the first fiscally decentralizing measure of the postdevelopmetnal period. While during Brazil’s developmentalist state the subnational share of revenues had steadily decreased, passing from 36% in 1960 to 23% in 1983, the trend changed in the 1980s. As shown in Figure 5.2, starting in 1983 the national government’s share of resources decreased and the subnational share of total resources (collected revenues and transfers) increased steadily, with the largest gains concentrated at the municipal level. What accounts for this fiscal change in such an unexpected political context? The “Emenda Passos Porto” (Constitutional Amendment No. 23 of 1983) modified the system of revenue-sharing that had been created in 1966, in the early stages of the military period.24 It increased the portion of money given to states and municipalities from the two most important taxes collected by the federal government: the income tax and the industrial production tax. The share of these taxes received by the states, the federal district of Brasilia, and the territories, known as the States Revenue-Sharing Fund (Fundo de Participação dos Estados, FPE), increased from 10.5% to 14% and that of municipalities, known as the Municipalities Revenue-Sharing Fund (Fundo de Participação dos Municípios, FPM), increased from 10.5% to 16%. Although the national executive made explicit its opposition to the reform, the Passos Porto amendment was supported by a multipartisan coalition in Congress that included members of the opposition and the ruling party (Senator 24

For information on the 1966 tax reform and its consequences on intergovernmental fi scal relations, see Mahar (1976, 268–78) and Lopreato (2002, 49–62).

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The Second Layer: Fiscal Decentralization 80.0 1983 70.0 60.0 50.0 40.0 30.0 20.0 10.0

19 5 19 7 5 19 9 6 19 1 6 19 3 6 19 5 6 19 7 6 19 9 7 19 1 7 19 3 7 19 5 7 19 7 7 19 9 8 19 1 8 19 3 8 19 5 8 19 7 8 19 9 9 19 1 9 19 3 9 19 5 9 19 7 9 20 9 0 20 1 0 20 3 05

0.0

Union

States

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Stress + Municipalities

Figure 5.2. Total Revenues by Level of Government in Brazil, 1960–2004 Note: Total revenues (or receita disponível) include gross collections by each level of government plus transfers received minus transfers to other levels. Data for 2004 are estimated. Sources: Data for years 1960, 1965, and 1970–1995: Varsano et al. (1998); 1996 to 2004: compiled by Brazilian economist and former secretary of finance of the city of São Paolo, Amir Kahir.

José Passos Porto, who introduced the bill, was himself a member of the ruling party).25 Why, unlike what had happened in 1980 regarding Edison Lobão‘s proposal, did the ruling legislators distance themselves from the national executive this time? As a consequence of political decentralization, by late 1983 the pressure from subnational officials had markedly increased. After the 1982 election, governors denounced the chaos of the states’ finances and demanded a fiscal reform that would decentralize revenues (Souza 1997, 36). Mayors also mobilized in favor of fiscal decentralization. In September of 1983, 2,000 mayors (half of all mayors at the time!) converged in Brasilia to demand an increase in municipal revenues. Confronted with a negative 25

This “mini-tax” reform (as it was called) was the synthesis of five previous proposals: PECs No. 22, 23, 38, 39, and 40 of 1983, introduced respectively by Deputy Paulo Lustosa (PDS, Ceará), Senator Affonso Camargo (PMDB, Paraná), Deputy Irajá Rodrigues (PMDB, Rio Grande do Sul), Senator Marco Maciel (PDS, Pernambuco), and Senator Carlos Chiarelli (PDS, Rio Grande do Sul).

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response from the president and his cabinet, governors and mayors lobbied legislators of all parties, and less than two months later succeeded in securing more subnational revenues.26 Open letters were published in national newspapers demanding greater state and municipal autonomy, and national meetings of subnational authorities were convened in favor of decentralization and local participation.27 National legislators could not ignore these pressures. Even ruling party legislators realized that they needed the support of local officials. Compared to the debate over Lobão’s amendment, the different attitude of PDS legislators toward the national executive in the discussion of the Passos Porto amendment is striking. Deputy Cunha Bueno (PDS, São Paulo), for example, said: This is not the time for compromises. The National Congress . . . will approve the amendment Passos Porto, which is above political parties and ideologies, and above all in favor of the Brazilian municipality. For this reason, I ask that there will not be a political deal with the national executive branch that could postpone the voting of this amendment. I appeal to the leaders of my party, because unfortunately the president only agrees to a dialogue when confronted with a vote that could be against his own interests. (República Federativa do Brasil, Diario do Congreso Nacional, November 24, 1983, 2492)

Another ruling party deputy defied the president’s credibility: [Twenty three] Brazilian states, over 4,000 municipalities, and three national territories cannot stand any longer the federal government’s paternalist treatment when it comes to financial matters. . . . The President of the Republic made certain promises. He fulfilled some promises but not others, such as the promise of strengthening the Brazilian federation. The time has come to strengthen the Brazilian federation, starting today. (Deputy Manoel Gonçalves, PDS, Ceará, in República Federativa do Brasil, Diario do Congreso Nacional, November 24, 1983, 2500)

Meanwhile, Minister of Economy Ernane Galvêas told the press, “We will use all means available to us to defeat the Passos Porto proposal,” 26

27

See “Brazil: Congress passes ‘mini tax reform’,” Latin American Weekly Report, December 1, 1983. See, for example, the open letter from the president of the Association of Municipalities of São Paulo, Orestes Quércia, to the National Congress published in Folha de São Paulo, on November 22, 1983. See also the statement issued at the second national meeting of municipalities in Olinda, Pernambuco, that same year, which demanded greater decentralization and democratization, tax reforms, and the direct election of mayors of capital cities and national security municipalities. Both are transcribed in República Federativa do Brasil, Diario do Congreso Nacional, November 24, 1983, 2491–2.

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and Minister of Planning Delfim Netto said, “If Congress passes the mini tax reform, we will increase taxes in 1984.”28 But vested with electoral legitimacy in a context of increased competition, subnational governments proved more influential than the national executive over the legislature and the Passos Porto amendment was approved with 88% of Congress members’ votes.29 The changing attitude of the national legislators toward the national and subnational executives was not the result of changes in the formal rules of party organization, such as nomination procedures (cf. Garman et al. 2001). Instead, legislators were responding to the self-reinforcing political effects created by the previous round of political decentralization. Governors and mayors succeeded in their demands for fiscal decentralization because they had been empowered by the previous round of political decentralization reforms. It is true that a strong municipalist lobby, organized mainly by the Brazilian Association of Municipalities (Associação Brasileira de Municípios, ABM), existed prior to the political decentralization measure of 1980. The ABM had had an active role in 1979, when a parliamentary investigations committee was formed in Congress to study the causes of the increasing impoverishment of states and municipalities.30 The final report accused the federal government of fiscal tyranny and stated that states and municipalities were on the verge of a breakdown, with serious consequences for the social order (Souza 1997, 68). In other words, fiscal and political decentralization were demanded by subnational authorities and by the opposition in Congress at about the same time, but the fact that political decentralization was enacted first gave subnational authorities the bargaining strength and leverage they needed to pursue fiscal decentralization in 1983. It is also the case that previous modifications to the 1966 system of revenue-sharing had been implemented in 1975 (Constitutional Amendment No. 5 of that year) and in 1980 (Constitutional Amendement No. 17 of 1980). These amendments increased the revenue-shares of states (FPE) 28

29

30

These statements were quoted by Deputy Santinho Furtado (PMDB, Paraná) in República Federativa do Brasil, Diario do Congreso Nacional, November 24, 1983, 2493. Eighty-eight percent of the PDS legislators voted in favor of the amendment and 12% of them abstained. The percentages were similar among opposition legislators: 87% voted in favor of the amendment and 13% abstained (Desposato 2001, 304–5). See the declarations of Deputy Ruy Côdo (PMDB, São Paulo) regarding the ABM in República Federativa do Brasil, Diario do Congreso Nacional, November 24, 1983, 2503.

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and municipalities (FPM) from income and industrial taxes by about 1% per year (Prado et al. 2003, 90).31 However, as can be seen in Figure 5.2, the net effect of these formal changes on the total revenues of states and municipalities was nil. Moreover, it was not only a matter of magnitude that differentiated the previous fiscal reforms, particularly that of 1975, from the 1983 fiscal decentralization measure analyzed here. The fiscal decentralization of 1975, taking place during the Geisel administration, was part of a strategy of controlled liberalization that was advanced and led by the national executive. The fiscal decentralization reforms of 1983 and 1985, instead, were “taken away” (arrancadas) from the national executive due to the pressure exercised by mayors, governors, and legislators (Sallum 1996, 47–48). I argue that such a successful move by subnational officials was made possible by the previous round of political decentralization (1980–1982), which had the effect of strengthening their bargaining power vis-à-vis the national executive. Fernando Rezende, a Brazilian economist and specialist in public finances, put it this way: The direct election of governors and mayors in 1982 created a movement in favor of decentralization. Practically all the governors elected in 1982 were part of that movement. They exerted pressure through the National Congress. Their demand was quite obvious: “it was necessary to sanction the political autonomy with financial autonomy.” (Interview with Rezende, 2005)

The Passos Porto fiscal decentralization measure was followed by another measure, Constitutional Amendment No. 27 of 1985, which further increased the percentage of subnational revenue-sharing as well as the municipal tax collection authority.32 Finally, the process of fiscal decentralization achieved its climax in the constitutional reform of 1988 (Souza 2001, 519). As Montero writes, “Imbued with political and resource autonomy [due to the direct election of governors and the fiscal reforms of 1983 and 1985], the bancadas subnacionais emerged in their strongest position yet during the New Republic. They exerted their influence most clearly in the Constituent Assembly of 1987–1988 where 31 32

The FPE and FPM passed from 5% in 1975 to 10.5% in 1983 (Prado et al. 2003, 90). The “Airton Sandoval” amendment, introduced by opposition Federal Deputy Airton Sandoval (PMDB, São Paulo) in 1984 and passed by Congress on November 28, 1985, increased the share of automatic transfers to states (FPE) and municipalities (FPM), delegated the roadways tax (Taxa Rodoviária Unica) to states and municipalities in equal shares, changed the distribution of taxes on transportation (Imposto sobre Transporte Rodoviário) such that states and municipalities received a larger portion of it (from 20 to 50% and from 0 to 20%, respectively), and redistributed other taxes toward municipalities (Lopreato 2000, 11–12: fn 15; República Federativa do Brasil, Diário do Congresso Nacional, 29 de Novembro de 1985).

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they played a leading role in shaping the rules governing fiscal federalism to favor subnational autonomy” (Montero 2004, 147). During the constitutional reform, political decentralization – particularly benefiting the municipal level of government – also continued. In deepening both political and fiscal decentralization, subnational interests were paramount.

The Constitutional Reform of 1988: Deepening Political and Fiscal Decentralization In the 1984 “Commitment to the Nation” manifesto, which made official the alliance between the PMDB and the Liberal Front for indirect presidential elections, presidential candidate Tancredo Neves promoted the idea of a Constituent Assembly in order to complete Brazil’s transition to democracy. A call for a Constituent Assembly had been a longstanding issue in the opposition party. In 1971, a group of MDBistas (the so-called grupo autêntico) had included this issue in the Carta de Recife. By 1977 organizations of civil society (such as the Organization of Brazilian Lawyers – Ordem dos Abogados do Brasil, OAB – and religious groups) also demanded a Constituent Assembly. The issue, however, would not be fully embraced until after 1982 (Kinzo 1988, Chapter 7; Martínez-Lara 1996, 34–41). At that time, the military regime was condemned for its centralization of authority and, as a result, decentralization became largely equated with democratization. In a country stricken with regional inequalities but without major ethnic or territorially based conflicts, the strengthening of federalism and the increasing of fiscal and political autonomy for states and municipalities were thought to be silver bullets that would lead the vast nation in the direction of a consolidated democracy. The 559 members of Congress (72 senators and 487 deputies) elected in 1986 comprised the constitutional convention that reformed the Constitution in 1988. The constitutional convention was characterized by the predominance of subnational interests. Fifty-four percent of the conventionalists had been previously elected to subnational executive or legislative offices (Souza 1997, 59). Furthermore, while legislators, governors, and mayors could appeal to their electoral legitimacy, President José Sarney could not. Not only had he been indirectly elected, but he was the running mate of presidential candidate Tancredo Neves, who died before assuming office. President Sarney was weak in his negotiations with conventionalists, choosing to narrowly focus on the extension of his presidential mandate from four to five years while giving significant

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concessions in return. His main political opponent, Ulysses Guimarães – the president of the national convention and a strong and charismatic leader of the PMDB – voiced not only the demands of the opposition in the convention, but also those of the subnational governments. Based on an interview with Senator Jarbas Passarinho, Celina Souza writes, “Sarney was Guimarães’s prisoner. The PMDB delayed as much as possible the decision regarding Sarney’s term in office to keep him under control” (Souza 1997, 61). A growing consensus emerged among conventionalists regarding the need to decentralize the political and fiscal systems. A survey conducted by the weekly journal Veja revealed that, going into the convention, 94.3% of the representatives were in favor of a tax reform that would increase the revenues of states and municipalities (VEJA-LPM 1987, 26).33 The only issue up for debate was the extent to which administrative responsibilities would be transferred with the new fiscal resources. The new Constitution deepened the processes of political and fiscal decentralization and created the institutional framework for future administrative decentralization in the health sector. In the political realm, the new Constitution recognized the municipalities as sovereign members of the federation, granting them the same constitutional status as states (Article 18, 1988 Constitution). In addition, the State of Tocantins, carved out of Goiás, was created and hence the overrepresentation of the northern states in Congress increased. In proposing these reforms, Aloysio Chaves of the Party of the Liberal Front (Partido da Frente Liberal, PFL) of Pará (in the northern region) and rapporteur of the Subcommittee on Municipalities and Regions said that “there was an outcry of mayors, city councilors, practitioners, community leaders and of the people in favor of strengthening the municipality” (Souza 1997, 67). In the fiscal realm, the constitution guaranteed a higher level of automatic transfers to both states and municipalities. Moreover, the federal government lost its share of a number of specific taxes such as those on fuels and lubricants, communications, and electricity, which were 33

The question was, “Should there be a tax reform in which municipalities and states receive more money and the Union less or should the collection of revenues be centralized by the federal government?” The response rate of the survey was 85%, and although the phrasing of this question has a reformist bias, the level of consensus among Conventionalists regarding the decentralization of taxes is impressive. This was the second highest rate of agreement among those surveyed, only second to the question of whether the constitution should guarantee equal rights to men and women (to which 95.8% of Conventionalists said it should).

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subsumed under the state value-added tax (Imposto sobre Circulação de Mercadorias e Prestação de Serviços de Transporte Interestadual e Intermunicipal e de Comunicação, ICMS). The impact of fiscal decentralization measures on the evolution of the total revenues of each level of government can be appreciated in Figure 5.2. With regard to administrative decentralization, the new constitution kept most social services (such as education, health, housing, and poverty alleviation programs) as shared responsibilities (Souza 1997, 43–44). Although resources were redistributed to favor the subnational governments, responsibilities were not. In Brazil, as in Colombia, Conventionalists secured the decentralization of revenues without the corresponding decentralization of expenditures. Brazil’s 1988 Constitution, however, did include an important change to the health care system – the creation of the Unified National Health System (Sistema Único de Saúde, SUS) – which paved the way for the decentralization of health care in the 1990s.

The Third Layer: Administrative Decentralization When compared to administrative decentralization in Argentina, Colombia, and Mexico, administrative decentralization in Brazil differs in important ways. Whereas in Argentina, Colombia, and Mexico education was the first sector to be decentralized, in Brazil, reforms in health preceded those in education. Also, in Argentina, Colombia, and Mexico, administrative decentralization was advanced either single-handedly by the national executive or by decentralization coalitions in which national interests prevailed, but in Brazil, counter to theoretical expectations, a subnational decentralization coalition demanded the decentralization of the health sector. Finally, when the teachers’ unions of Argentina, Colombia, and Mexico agreed to their national governments’ decentralization programs, they demanded that the intermediate level of provinces, departments, or states become their future employers, fearing that municipal governments were too weak, poor, or corrupt for that role. Health workers in Brazil, on the other hand, demanded that municipal governments be the recipients of health services. How do we account for these differences? The Timing of Health and Educational Reforms Two main reasons explain the delay of educational reforms in Brazil. First, the historical evolution of the educational system in Brazil followed

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a very different pattern than that of Argentina, Colombia, and Mexico, in which cases a large number of schools were in the hands of the federal government. In Brazil, instead, by the mid-1970s, the federal government managed fewer than 1% of the public primary schools (see Figure 5.3) and fewer than 2% of the public high schools (see Figure 5.4). Second, unlike in the health sector, where there was an organized social movement demanding reform, there were no civil society groups requesting reforms in education in Brazil (Draibe 2004, 376, 384; Rodriguez Neto et al. 2003, 52). The unions of the sector (perhaps with the exception of the union of university professors) were fragmented and weak, and the middle classes had exited the public education system by the mid-1970s (Draibe 2004, 384–85). As a result, reform in education was a top-down process that started when a group of reformist technocrats led by Minister Paulo Renato was appointed to the National Ministry of Education after Fernando H. Cardoso came to power in 1995 (Draibe 2004; interview with Castro de Guimarães, 2005; interview with Ottoni de Castro, 2005). The most important decentralization reform that Minister Renato’s group achieved in the education sector was the creation of a new funding and redistribution scheme, the Elementary Education Development and Teacher Valorization Fund (Fundo de Manutenção e Desenvolvimento do Ensino Fundamental e de Valorização do Magistério, FUNDEF), passed in 1996 and implemented in 1998. FUNDEF directed federal transfers to elementary schools according to the number of students enrolled in the school.34 In practice, it implied a redirection of resources away from the states and toward the municipalities, which since the 1950s had become increasingly responsible for primary-level education, as Figure 5.3 shows, and even more so since the creation of FUNDEF. Whereas in 1994 municipalities handled 75% of the public primary schools, 37% of the teachers, and 36% of the students, by the year 2000, those percentages had increased to 80%, 52%, and 51%, respectively (author’s calculations based on IBGE 2003, education files). The distribution criteria also created an incentive for mayors and school directors to augment students’ enrollment in their districts and schools, which had a noticeable positive effect on children’s access to elementary schooling.35 That 34

35

There was also a redistributive criterion allowing extra federal funding for states that did not meet a minimum set level of expenditures per pupil. The percentage of children 10 to 14 years of age who were not enrolled in school decreased from 19% in 1991 to 5% in 2000 (IPEA, http://www.ipeadata.gov.br/ ipeaweb.dll/ipeadata?65370046, last accessed January 2010). Now that access

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Figure 5.3. Evolution of Primary Schools by Level of Government in Brazil, 1950–2000 Source: Author’s calculations based on IBGE (2003, education files).

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Figure 5.4. Evolution of Secondary Schools by Level of Government in Brazil, 1980–2000 Source: Author’s calculations based on IBGE (2003, education files).

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the national government decentralized administrative responsibilities and resources to the municipal level is consistent with the expectations of the theory laid out in Chapter 2. At the end of 2006, however, due to governors’ pressure, FUNDEF was extended to the high school level and was renamed the Basic Education Development Plan (Fundo de Manutenção e Desenvolvimento da Educação Básica e de Valorização dos Professionais da Educação, FUNDEB). This change returned a portion of education funding to governors, who, as shown in Figure 5.4, are largely responsible for secondary-level education. But before the enactment of these reforms in education, important changes in the decentralization of health care had already taken place. From a temporal perspective, the health sector was the first to be decentralized in the administrative layer of Brazil’s intergovernmental relations and therefore deserves special attention in my sequential narrative and process-tracing.36 Decentralization of Health Care The decentralization of health care took institutional form in the creation and evolution of the Unified National Health System (Sistema Único de Saúde, SUS). Created in the 1988 Constitution, the SUS is an integrated, universal, free, participatory, and decentralized health care system that supplanted the system created by the military. The military had previously divided health services between those provided by the National Institute for Medical Assistance in Social Security (Instituto Nacional de Assistência Médica da Previdência Social, INAMPS) and those provided by the Ministry of Health (Ministerio da Saúde, MS).37 The 1988

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to elementary education is practically universal, educators and policymakers are concerned with issues of quality and retention. After 1996, reformers in the health sector looked at FUNDEF as an exemplary funding scheme, in that it established a minimum percentage of expenditures that each level of government had to devote to the sector. This model was partially followed in Constitutional Amendment 29 of 2000 that regulated the funding of health care. The INAMPS was created in 1977, a part of the Ministry of Social Security and Welfare. It was funded from workers’ and employers’ contributions, hence covering only the workers of the formal economy. It provided mostly curative care services and instantly became one of the main channels for the transfer of social security resources to the private sector. Above all else, the INAMPS institutionalized a high-cost, specialized, curative, hospital-based health care system concentrated in the profitable regions of the country (Arretche 2004, 161; McGuire 2010, Chapter 6). The Ministry of Health, on the other hand, was largely responsible for preventive care and covered the poor and rural populations. Other national ministries, such as the Ministry of Education and

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Constitution integrated these two subsystems and organized health services according to the following principles: “I – decentralization, with a single management in each sphere of government; II – full service, priority given to preventive activities; and III – participation of the community” (Article 198, 1988 Constitution). The Constitution did not outline the distribution of responsibilities among the three levels of government and was vague regarding funding. It said that the SUS would be financed with social security funds, state and municipal revenues, as well as other sources (Article 198). The distribution of responsibilities and funding schemes were negotiated piecemeal in a series of laws, norms, and regulations, as well as in a constitutional amendment and a federal pact, all of which unfolded from 1990 to 2006.38 The contents of these measures largely reflected the relative strength of the sector’s sanitarista movement and the subnational authorities vis-àvis the national authorities who resisted the decentralization of funding and the national bureaucracies who resisted the decentralization of services. In the new health care system, coverage was universal, access was free, public services were integrated, and the delivery of health care was decentralized. While it is true that today the private sector continues to exist alongside the public sector, its importance as a contractor for the public system has diminished significantly. The member-states and some large municipalities are responsible for high complexity health services and all municipalities – more than 5,500 in total – deliver basic health care services. The proposal to create the SUS had been drafted at the 8th National Health Conference (Conferência Nacional de Saúde, CNS) that met in Brasilia from March 17 to 21, 1986.39 The conference was organized with the explicit intention of drafting a proposal to be presented to the constitutional reformers that would convene the following year. According to President José Sarney, this conference was the “pre-constituent assembly

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Culture, which was responsible for university hospitals, and the Ministry of Defense, administered smaller portions of the health care system. The most important of these laws and regulations were Laws 8080 and 8142 of 1990; the regulatory norms (NOBs and Noas) of 1993, 1996, and 2001; constitutional amendment 29 of 2000; and the Federal Health Pact of 2006. For analyses of these measures see Arretche (2004), Rocha da Costa (2002), IPEA (2007, 147–49); and on their consequences see Arretche and Marques (2002) and Viana et al. (2002). The national health conferences were created in 1937 under the government of Getúlio Vargas. Their main goal was to evaluate the health sector and consult the National Ministry of Health. Conferences prior to the 8th CNS met in 1941, 1950, 1963, 1967, 1975, 1977, and 1980. Subsequent conferences took place in 1992, 1996, 2000, 2003, and 2007.

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of the health sector” (Ministério da Saúde 1986a, 31). More than 4,000 people attended, among them 1,000 delegates. There were an equal number of government and civil society delegates.40 Among others, federal, state, and municipal authorities; health practitioners; users; and academics were represented. The sanitarista movement was represented by the medical professionals, local health authorities, and left-wing health experts who attended the conference. The conference had 135 working teams, 37 of them formed by delegates and the rest by participants (Ministério da Saúde 1986a, 1). The working teams discussed three issues: (a) health as a right, (b) the reformulation of the national health system, and (c) the funding of the sector. According to the final report of the 8th CNS, the views of the reformist sanitarista movement prevailed on every issue. Health was conceived as a right to be guaranteed by the nation-state. The health system had to be public, integrated, and decentralized. Popularly elected municipal and state health councils had to be created to facilitate citizens’ participation and the implementation and control of health programs. The working teams demanded the fiscal strengthening of states and municipalities and decided that the decentralization of health care had to target the municipalities (Ministério da Saúde 1986a, 1986b).41 This was the template that the health reforms followed in Brazil from 1988 onward. A Subnational Coalition for Administrative Decentralization In the early stages of the process, promoters of the decentralization of health care belonged to the opposition to the military regime.42 It was 40

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Among the government delegates, 50% were from the federal level, 22% were from the state level, 18% were from the municipal level, and 10% were members of Congress. Of the other 500 delegates, 15% represented the private health sector, 20% belonged to professional heath entities, 30% represented unions and urban and rural workers, 10% belonged to dwellers’ associations, 20% represented community groups, and 5% were from political parties (Escorel and Arruda de Bloch 2005, 118). According to the annals of the 8th CNS, only one mayor (Ubaldo Dantas, mayor of Itabuna, Bahia) expressed caveats regarding the municipalization proposal. He considered municipalization a possible threat to the integration of the health system (Ministério da Saúde 1986b, 161). During the period of the military dictatorship, and particularly after the subnational elections of 1978, members of the sanitarista movement worked with opposition state and municipal administrations. But with the installation of a civilian government in 1985, members of the sanitarista movement began to occupy high posts in the national bureaucracy, from which they continued to promote the decentralization of health care toward states and municipalities (see Falleti 2010).

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a coalition formed by the left-leaning sanitarista movement who found political allies in opposition governors and mayors. In terms of territorial interests, the sanitarista movement represented subnational interests in that they wanted to strengthen local governments, which were seen as the locus of citizens’ participation and a safeguard against centralization and authoritarianism. Interestingly, this is counter to the expectations laid out in Chapter 2. One would expect either a national-level or a ruling coalition – not a subnational coalition – to advance administrative decentralization, because in both of those types of coalitions national territorial interests tend to prevail. Why did a subnational decentralization coalition push forward administrative decentralization in Brazil? The answer lies in the relative weight of the civil society component (as opposed to the governmental component) of the decentralizing coalition. It is unlikely that, without the sanitarista movement defending the decentralization of health care, governors and mayors would have requested this administrative reform. Moreover, the fact that subnational interests had prevailed in each round of negotiations throughout the prior decentralization episodes gave incentives to subnational actors to pursue administrative decentralization. Based on the previous record of political and fiscal decentralization, subnational actors could safely presume that if administrative decentralization was implemented, it would be funded. Finally, the ideological orientation of the sanitarista movement gave a municipalist imprint to the decentralization of health care. The sanitarista movement originated in the developmental state during the left-leaning government of João Goulart (1961–1964). It formed as a reaction to the sanitarismo campanhista (rural sanitarista tradition) of the pre-1930 “Old Republic,” which thought that the design and implementation of health policies (mainly epidemic control) had to be done by the central government (Paiva 2006). The developmentalist sanitarista movement opposed the centralization of resources and decision-making. They demanded that health care be devolved to the municipal level – a proposal they had advanced at the 3rd CNS of 1963.43 This sectoral movement stressed preventive over curative care and understood health care to be a universal human right tied to citizens’ socioeconomic living 43

Minister of Health Wilson Fadul under João Goulart presided over the 3rd CNS. Fadul was a medical doctor from the State of Rio de Janeiro. He had been mayor and federal deputy prior to becoming health minister. Fadul was a strong defender of the municipalization of health care (CONASS 2007, 28). Unfortunately, other than the ideological orientation of Fadul, there are no records or a fi nal report from the 3rd CNS that would further explain why the 3rd CNS favored decentralizing to the municipal level.

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conditions. They claimed that issues of health care could not be disentangled from access to decent housing, education, and employment (CEBES 1980; Ministério da Saúde 1986b). The inception of the military government in 1964 implied centralization in the management and funding of health care, and was hence a setback for the developmentalist sanitarista movement. However, the University Reform of 1968 that mandated the creation of Preventive Medicine Departments (Departamentos de Medicina Preventiva) in Brazilian universities (CONASS 2007, 33) had a positive effect for the movement. Sanitarista doctors taught in these new departments and through them the movement gained organizational strength (Escorel et al. 2005, 63). In 1976, the sanitarista association Brazilian Center of Health Studies (Centro Brasileiro de Estudos de Saúde, CEBES) was created. In the pages of its influential journal Saúde em Debate, the CEBES opposed the health policies of the dictatorship (Escorel et al. 2005, 67).44 The 1978 International Conference on Basic Health Care, organized by the World Health Organization under the slogan “health for everyone in the year 2000,” gave additional strength to the progressive demands of the sanitarista movement (CONASS 2007, 35–38; Weyland 2007). A year later another sanitarista organization, the Brazilian Graduate Association in Public Health (Associação Brasileira de Pós-Graduação em Saúde Colectiva, ABRASCO), was formed. In the late 1970s, the sanitarista movement had a three-pronged strategy: (a) to produce and disseminate their progressive reform proposals, (b) to occupy positions of power whenever possible, and (c) to lobby Congress (Rodriguez Neto et al. 2003, 34–35). As a result of the pressure exerted by the sanitarista movement, the Chamber of Deputies held the first symposium on national health policy in 1979 (Escorel et al. 2005, 71). In its position paper presented at the symposium, the CEBES requested the creation of a decentralized and integrated health care system (CEBES 1980). Also, as a result of the increased political competition in the states and municipalities during the last years of the military regime, members of the sanitarista movement began to occupy local government positions. The municipalities of Campinas (São Paulo), Londrina (Paraná), Vale do Jequitinhonha, Montes Claros (both in Minas Gerais), and Niteroi (Rio de Janeiro) experimented with progressive local programs during 44

The importance of the CEBES has not declined over the years. In Sugiyama’s (2008) study of the diffusion of the local Family Health Program (Programa Saúde da Familia) in more than 200 Brazilian municipalities, she fi nds that affi liation with the CEBES often led to the adoption of the program.

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the 1970s (Cordeiro 2001, 324; Rodriguez Neto et al. 2003, 36, 45).45 The Montes Claros integration of health services project in the north of Minas Gerais became an important institutional antecedent for a more extensive and ambitious health reform program that was applied in the state of Minas Gerais and in the nine states of the Northeast.46 Since the late 1970s, an incremental process of health reform, beginning at the municipal and state levels first, ultimately led to the creation of the SUS. Particularly noteworthy in this process was the creation of the National Council of State Secretaries of Health (Conselho Nacional de Secretários de Saúde, CONASS) in February of 1982 (Escorel et al. 2005, 71), just a few months before the first direct gubernatorial elections were scheduled to take place. The council coordinated the state health secretaries and strengthened their position vis-à-vis the once-almighty representatives of the INAMPS in the states. The policy effects of early health reform programs that targeted the municipal level and the increasing coordination of subnational authorities in sectoral institutions facilitated the entrenchment of the decentralization of health care toward the local level in Brazil.47 The Implementation of the SUS and the Decentralization of Health Care Soon after the constitutional reform that created the SUS was adopted, the National Council of Municipal Secretaries of Health (Conselho Nacional de Secretarias Municipais de Saúde, CONASEMS) was formed. Together with the CONASS, this council played an important role in the negotiations over the implementation of the SUS. The first laws to regulate the SUS were passed during the administration of Collor. Collor was against decentralization and wanted to reconcentrate power at the national level. He appointed a former INAMPS official, Alceni Guerra, to 45

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In the case of Niteroi, local officials adopted health programs that had been implemented in Cuba (Weyland 2007). It was common for sanitarista doctors to travel to Italy or Cuba to study the local community health programs. For an analysis of the Montes Claros program see Escorel (1999, 143–54). The subsequent regional program was called the Program of Internalization of Health and Sanitary Actions (Programa de Interiorização das Ações de Saúde e Saneamento, PIASS), which consisted of a network of mini health stations that provided preventive care and sanitation to the population of poor and small towns (for a description of this program and its effects on health decentralization see Falleti 2010). For a description of the early reform programs and their policy effects on universalization and the decentralization of health care see Falleti (2010).

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the Ministry of Health. Guerra delayed the decentralization process by establishing direct links to providers and tightening the control of transfers (Arretche 2005, 295). In other words, instead of transferring funds directly to the states and municipalities, the government implemented a system by which the federal government paid the providers directly (Arretche 2004, 170–1). In 1990, the law that would implement the SUS was passed in Congress (Law 8080). Collor vetoed twenty-five articles of the law, particularly those related to the elimination of the INAMPS (which the sanitarista movement demanded as a step toward the full integration of the health care system) and the installation of automatic transfers to the municipalities. But due to intense pressure by the sanitarista movement and local authorities, a new law was passed three months later, Law 8142. In this law, transfers to municipalities were made automatic and there was a window for the elimination of the INAMPS, which was first transferred to the Ministry of Health and finally eliminated in 1993 (Arretche 2005, 293). Despite this victory, throughout the negotiations with Collor, the sanitarista movement became aware of the importance of institutionalizing the changes that had been introduced in the 1988 Constitution. Too much institutional power still resided at the central level. In the forthcoming years a series of Basic Operational Norms (Normas Operacionais Básicas, NOB) were instituted that regulated the implementation of the decentralization of health care. The next major display of strength from the reformist movement came during the 9th National Health Conference (9th CNS) in mid-1992, as Congress was considering the impeachment of President Collor on corruption charges. Four thousand five hundred people met at the health conference. Among them were 3,000 delegates representing health professionals, public and private health providers, three levels of government, the judiciary, the legislature, the national ministries, and consumers (Ministério da Saúde 1993, 13). The conference condemned the economic adjustment policies of Collor’s administration and demanded higher levels of funding for the health sector. They also requested that the 1988 constitutional reform be respected and implemented, and they placed an emphasis on the creation of municipal and state health councils and on the municipalization of health services. These demands that had originated in the sanitarista movement and which had been articulated by the associations of subnational health authorities were finally achieved in the NOB’s of 1993 and 1996 that regulated the SUS. In the words of Gastão Wagner, former secretary of health of Campinas, “One of the greatest creations of the Brazilian sanitarista

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movement . . . was the creation of . . . CONASS . . . and CONASEMS. . . . They were instances for the horizontal representation and coordination of states and municipalities, leading to the creation of the states’ bipartite council and the tripartite commission at the federal level” (CONASS 2007, 71). Similarly, Nelson Rodrigues dos Santos, who was president of CONASS, health secretary of the state of São Paulo, and municipal health secretary of Campinas, said, “The CONASS, the CONASEMS and Ministry of Health experts started to get together ‘in the backs’ of the federal government, ‘clandestinely.’ The tripartite [commission], which today is the main forum for managing the SUS, meets on a monthly basis, and has great competence, was born in a clandestine way” (CONASS 2007, 72). The creation and implementation of the SUS implied the redirection of health expenditures toward the subnational levels of government. As shown in Figure 5.5, from 1994 to 2005 a significant redistribution of federal expenses took place toward the states and more importantly toward the municipalities. In 1994, between payments to personnel and other expenses, the central government executed 91% of the federal health budget. A decade later, that figure had been reduced to 33%. Meanwhile, the participation of the states in the federal health budget quadrupled, increasing from 6% to 25%. But the most spectacular increase occurred at the municipal level. Municipalities increased their share in the federal health budget twentyfold, from 2% in 1994 to 40% in 2005. At the same time, states and municipalities were investing more of their own resources in health. This is most noticeable at the municipal level. As shown in Figure 5.6, Brazilian municipalities were responsible for one-third of the total subnational expenditures in health and sanitary services in 1990, whereas from 1997 to 2005 they became responsible for roughly half of the total subnational expenditures in health. In other words, the decentralization of health care created an extraordinary redistribution of responsibilities and resources toward the municipal level of government. In sum, administrative decentralization in Brazil was largely made possible by a subnational coalition. The societal actors affiliated with the sanitarista movement were paramount in that coalition. If those societal actors had not been present, it is unlikely that governors and mayors would have requested administrative decentralization. The sanitarista movement’s demands for the decentralization of health care cannot be separated from the transition to democracy. In that context, decentralization came to be seen as the safeguard against centralism and authoritarian

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rule. Moreover, the demand for decentralization to the municipal level was consistent with the ideological orientation and prior experiences of the sanitarista movement. Throughout the process, new institutional actors emerged that would be decisive in moving the decentralization of expenditures further along. Those were CONASS, CONASEMS; the commissions of states and municipal health authorities; and the commissions of federal, state, and municipal health authorities. Thus, a series of norms and laws were implemented that altered the organization of the SUS and the distribution of responsibilities and money among the levels of government and the private contractors. In the end, the decentralization of health care was largely beneficial for the municipal authorities. It was a gradual process by which an increasing number of municipalities became certified to deliver health services. Whereas in 1993, 22% of the municipalities had adhered to the Ministry of Health decentralization norms (Arretche 2004, 171), by 1995 that percentage had increased to 48% (Lucchese 1996, Anexo 2), and, in 2001, 99% of the Brazilian municipalities were certified to provide basic health care services to their populations (Ministério da Saúde 2001). Thus, resources and employment exploded at the municipal level.

Conclusion During the 1980s and early 1990s, a significant amount of power was devolved to states and municipalities in Brazil as a result of decentralization policies. Decentralization demands, in the three layers of intergovernmental relations, were imbued with the discourse of democratization. Of the four country cases analyzed in this book, Brazil is the one that exhibits the closest association between decentralization and democratization. In Brazilian public discourse, decentralization was equated with civic participation and the transition to democracy. Political decentralization in particular was couched in this discourse, as was fiscal decentralization. But interestingly, democratic language was also used in the debates over administrative decentralization. This was not the case in other countries, in which administrative types of decentralization were framed by the technical discourse of improving efficiency in the delivery of social services or of cutting expenditures. Within the larger comparative framework, the Brazilian case shows that the initial conditions in the institutions of intergovernmental relations are largely inconsequential for how much change decentralization policies bring about for the balance of power between national and subnational

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executives. Long-term structural or institutional intergovernmental legacies, such as the type of constitutional arrangement or the prior level of decentralization, are factors that may facilitate the activation of a given type of territorial interest, but they do not pose a threshold across which further changes are unlikely to occur. In this chapter, through the analysis of the postdevelopmental decentralization process in Brazil, I argue against the existence of such a threshold or ceiling – the conclusion of a static approach that takes into account only the initial conditions of the intergovernmental institutions. Instead, I propose a procedural and pathdependent explanation – the former because the amount of change experienced in the intergovernmental balance of power is a function of the process of policy reforms and their effects on subsequent negotiations, and the latter because the first move in the sequence of reforms is highly consequential, crucial in fact, for what comes next in the process. Thus, I argue that the amount of change experienced in the balance of power between national and subnational executives in Brazil has been a function of the territorial coalitions that were behind each policy reform and the timing of the different types of decentralization policies that unfolded from 1980 to 1988. Like the case of Colombia, the case of Brazil shows that the territorial interests that are victorious early in the process of reform have a greater impact on the final outcome than later interests and reforms. This, of course, does not mean that once the first policy reform takes place, reversals to the expected trajectory are impossible. It is worth noting that after the implementation of the Plano Real in 1994, fiscal measures such as the creation and increase of federal nonshareable taxes (especially the so-called contribuções sociais), the privatization of state banks, the restructuring of the states’ debt with the federal government (with an indexation system that in the long run favored the latter), and the signing of the Fiscal Responsibility Law augmented the share of revenues and fiscal authority of the central government. Some scholars interpreted these changes as part of a recentralization movement in Brazil (e.g., Eaton and Dickovick 2004; Melo 2008, 140). In my view, these fiscal and economic measures were the result of stabilization policies designed to confront the fiscal crisis of the early 1990s and do not amount to a process of recentralization of government. Similar to what had happened in Argentina after the Convertibility Law of 1991, the macroeconomic stabilization measures had the effect of fiscally constraining subnational governments while at the same time improving the coffers of the central government. However, unlike in the

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case of Argentina (where the 1992 fiscal reform strengthened the hand of the national executive in subsequent intergovernmental reforms), the process of decentralization did not suffer a reversal or setback in Brazil. This is evident when political and administrative decentralization are taken into account together with the fiscal reforms of the 1990s. As Fernando Abrucio (2005, 54) argues, by stabilizing the economy, the fiscal reforms of the “Era Real” allowed for the negotiation of funded administrative decentralization programs in a planned and coordinated manner. In education, health, and poverty alleviation, decentralization programs transferred significant (and increasing!) amounts of resources, authority, and responsibilities to subnational governments, while at the same time prioritizing civil society participation in local and sectoral councils. It is hard to imagine that this would have been the case had the process of postdevelopmental decentralization in Brazil not started with a political decentralization reform that significantly strengthened subnational interests and actors. From a political perspective, also, the relevance of subnational executives, mayors in particular, has not waned either. For example, since coming to power, President Ignacio “Lula” da Silva has created a Ministry of Cities and a Committee of Federal Articulation, in which mayors and their associations are active political brokers. The process of postdevelopmental decentralization in Brazil, like those of Argentina and Colombia, is characterized by the presence of self-reinforcing mechanisms that strengthened the bargaining power of the territorial actors that were victorious in the first round of reforms. But in my conceptualization of decentralization processes (and path-dependent processes in general), reversals to the initially expected trajectory are indeed possible. In the next chapter, the analysis of postdevelopmental decentralization in Mexico shows that reversals occur when reactive, rather than self-reinforcing, mechanisms and effects connect at least two stages of the decentralization process.

6 Mexico The Subnational Response Path to Decentralization

In Mexico, postdevelopmental decentralization was initiated from the top down by the national executive. By the end of the first cycle of reforms, however, the decentralization of government had undermined the sevendecade-long hegemony of the Institutional Revolutionary Party (Partido Revolucionario Institucional, PRI) and the power of the president. In fact, decentralization served as a tool that allowed the PRI a slow and orderly retreat.1 The decentralization of responsibilities, resources, and authority and the opening of spaces for political contestation “little by little” from the local level upward permitted the PRI to navigate through two major economic and financial crises, those of 1982 and 1994, and to hold on to the presidency until 2000, much longer than would have otherwise been possible. But unlike what happened in Argentina, where postdevelopmental decentralization was also single-handedly initiated from above, governors and mayors significantly increased their autonomy vis-à-vis the president in Mexico. Why, despite the similar prevalence of national territorial interests in the early decentralization reforms, did the intergovernmental balance of power evolve so differently between these two countries? In this chapter, I show that postdevelopmental decentralization 1

As Lorenzo Meyer nicely wrote in 1993, “The Mexican political system and its authoritarian presidentialism – like a huge army that is in retreat, yet undefeated – have concentrated their best elements in the rear guard. It continues the fight. Its withdrawal is slow and orderly; but it retreats. . . . The system yields ground to a democratic future, but it does so little by little, controlling the timing and the conditions of the transition” (Lorenzo Meyer, “Retirada sin dejar de pelear. El futuro ya no le pertenece al sistema,” Excelsior, July 1, 1993; cited in Molinar Horcasitas 1996, 155).

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in Mexico constituted a reactive sequence of reforms and not a selfreinforcing sequence, as was the case in Argentina. It is the different nature of these two path-dependent sequences that accounts for the divergent outcomes. Although Mexico is a federal country, the hegemonic rule of the PRI, a constitutionally weak Senate, and the “metaconstitutional” powers of the presidency gave intergovernmental relations a highly centralized character prior to the beginning of the process of decentralization (Diaz-Cayeros et al. 2006, 370–71; Marván Laborde 1997; Weldon 1997). Before the 1980s, the subnational shares of revenues and expenditures were lower in Mexico than in a unitary country such as Colombia. Although there were direct popular elections for governors and mayors, the president had a large say in the nomination of the governors (González Oropeza 1985), who, in turn, were mostly responsible for choosing the mayors.2 The national government was also mostly in charge of the delivery and administration of education and health care. In the late 1990s, by the end of the first cycle of postdevelopmental decentralization, however, intergovernmental relations had changed significantly in Mexico. The subnational share of revenues and, most significantly, expenditures increased. Elections of mayors and governors became freer and fairer, and governors and mayors gained an increasing amount of autonomy from the national executive. In education, which was the first reformed social service sector, the governors gained policy-making authority and, unlike their Argentine counterparts, received the necessary resources to deliver the transferred educational services. Decentralization also led to the formation of associations of mayors and governors, which coordinated subnational interests and, as the process of decentralization unfolded over time, were able to take away higher levels of resources and authority from the center. In this chapter, I argue that whereas the process of decentralization was initiated by the national executive in Mexico, two factors (one endogenous and the other exogenous to the process of decentralization) account for the disparate outcome in the intergovernmental balance of power when compared to Argentina. On the one hand, the interaction of decentralization with the process of democratization (an exogenous process) produced a reversal in the sequence of decentralization such that 2

Recent research shows that even during the period of PRI hegemony, the governors of the smaller states enjoyed a certain degree of autonomy from the center and governors had to negotiate with local traditional families regarding the selection of municipal presidents (Langston and Diaz-Cayeros 2006).

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subnational actors were able to negotiate political decentralization measures before fiscal decentralization. On the other hand, the institutional features of the early administrative decentralization reforms, namely, the fact that it was funded (an endogenous feature of the decentralization process), made it possible for subnational executives to concentrate on political decentralization and place a lower priority on fiscal reforms. This was unlike the situation of the Argentine governors between 1983 and 1987, who had to prioritize fiscal decentralization in order to palliate the fiscal consequences of the previous unfunded administrative decentralization measure. In Mexico, political decentralization, taking place after funded administrative decentralization, empowered subnational actors for the subsequent negotiation of fiscal reforms. The end result was a significant increase in the degree of autonomy of governors and mayors, even if these changes were less spectacular than those experienced in Brazil and Colombia, where self-reinforcing mechanisms prevailed throughout the process of reforms.

Origins, Sequence, and Coalitions of Postdevelopmental Decentralization in Mexico The first cycle of postdevelopmental decentralization in Mexico took place from the early 1980s to the late 1990s. It began under President Miguel de la Madrid (1982–1988), the first president to move the Mexican economy away from the developmental model of economic growth and to implement market-oriented economic reforms. De la Madrid was sworn in at the end of 1982 amidst a major economic crisis. A devaluation of the Mexican peso in February of that year had resulted in a 60% annual inflation rate (triple the amount of previous years), and in August Mexico had defaulted on its external debt – an event that triggered a debt crisis throughout Latin America. Following the default, outgoing President José López Portillo (1976–1982) announced that the banks would become nationalized. In this unfavorable economic context and under the weight of an International Monetary Fund (IMF)– imposed austerity plan, which was a precondition for a rescue loan, de la Madrid implemented major economic liberalization policies. With a master’s degree in public administration from Harvard University, de la Madrid was part of the technocratic wing of the PRI. He moved the Mexican economy away from developmentalism by applying a shock stabilization plan in 1983 and a determined structural reform in 1985 (Weyland 2002, 269). He implemented market-oriented reforms

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such as deregulation and trade liberalization and reduced the number of state enterprises in a process known as desincorporación (Schneider 1990).3 Administrative and political decentralization were the first types of decentralization reforms undertaken by de la Madrid in 1983. He proposed these reforms unilaterally, without a decentralizing coalition. The decentralization of education under de la Madrid had direct antecedents in the deconcentration policies of the previous administration, with which it shared similar goals.4 But, in the context of a new type-of-state, de la Madrid’s decentralization of education program was further reaching than the administrative deconcentration reforms undertaken by López Portillo. Between 1983 and 1986, his government signed a series of bilateral agreements with governors to decentralize education, and, following a halt in this process due to opposition from the teachers’ union, an encompassing decentralization agreement was signed in 1992, pushed forward by a national-level (ruling) coalition formed by the executive and the national leadership of the main teachers’ union, the National Union of Education Workers (Sindicato Nacional de Trabajadores de la Educación, SNTE).5 De la Madrid also advanced a political decentralization reform that strengthened municipal governments: the reform, in 1983, of Article 115 of the Constitution. Political decentralization continued in 1986, this time advanced by a mixed coalition formed by the national executive and opposition subnational actors (type NR-SO), and, following that, another political decentralization reform came in 1996, also pushed forward by a mixed coalition of the same type (NR-SO). Fiscal decentralization was the last type of reform to occur in Mexico during this first cycle of postdevelopmental decentralization reforms. It 3

4

5

The process of privatization made more progress under de la Madrid’s administration in Mexico than in Brazil at that time (which was transitioning between economic models). However, it was guided by pragmatic calculations rather than ideological or partisan reasons and thus was not as far-reaching as in the cases of Argentina, Chile, and Great Britain (Schneider 1988, 1990). As defi ned by Cheema and Rondinelli (1983, 18), deconcentration “involves the redistribution of administrative responsibilities only within the central government. . . . [It] is merely the shifting of workload from a central government ministry or agency headquarters to its own field staff located in offices outside of the national capital, without also transferring to them the authority to make decisions or to exercise discretion in carrying them out.” A “national-level (ruling) coalition” is a subtype of a “national-level coalition ,” such that it only includes members of the ruling party among the coalition main brokers. As in any national-level coalition, the expectation is that national interests will prevail in this type of coalition.

192

Type of Dec

A

P

P

A

F

P

F

Year

1983

1983

1986

1992

1995

1996

1997

Changes to Fiscal Coordination Law Popular Election of Mexico City’s Mayor Creation of Ramo 33

Creation of Mexico City’s Assembly ANMEB

Presidential decree for dec. of education (August) CA Article 115

Dec. Policy

Created a series of funds directed to states and municipalities

Decentralization of basic education to the states: about 100,000 schools, 700,000 employees, and 13 million students Increased participaciones; decentralized the collection of some taxes to the states; increased the municipal fund Direct election of mayor of Mexico City; first election took place in 1997

National executive; subnational opposition National executive and subnational opposition National executive and subnational opposition

National executive and subnational opposition National executive and SNTE

Subnational

Subnational

Subnational

National

Subnational

National

National executive

Strengthening the political and fiscal roles of municipalities in the Constitution; explicit reference to municipalities’ responsibilities and taxing authority; restrictions on statelevel congresses for the removal of mayors Creation of a legislative body in the City of Mexico

National

National executive

Decentralization of 100,000 schools, 525,000 teachers, and 15 million students (only partially implemented)

Dominating Territorial Interests in Coalition

Main Actors Advancing Reform

Policy Description

Table 6.1. First Cycle of Postdevelopmental Decentralization in Mexico, 1983–1997

Municipalities

Mexico City

National government and states States and municipalities

Mexico City

Municipalities

National government

Main Territorial Beneficiaries

193

Ongoing Reforms in the First Layer Partisan Interests Ruling Party Territorial Interests

National

Opposition Parties

Nat. Executive Adm. Dec. (T1), Educ. 1983–6 Pol. Dec. (T1), Art. 115, 1983 National Coalition Administrative Decentralization (T3) Dec. Educ., ANMEB, 1992

Subnational

Mixed Coalitions NR-SO Fiscal Decentralization (T4 and T6) Changes FCL, 1995 Mixed Coalitions Ramo 33, 1997 NR-SO Political Decentralization (T2 and T5) Mexico City Assembly, 1986 Pop. Election Mayor Mexico City, 1996

Figure 6.1. Decentralization Coalitions, Policies, and Timing in Mexico, 1983–1997

was negotiated by a mixed coalition that included the national executive and national legislators, many of whom were elected in subnational districts and who represented subnational interests (type NR-SO). Figure 6.1 summarizes the different types of decentralization reforms, their timing, and coalitions, and Table 6.1 lists the policies of the first cycle of postdevelopmental decentralization that are analyzed in the following sections.

Ongoing Reforms in the First Layer: Administrative Deconcentration and Decentralization In his presidential campaign, Miguel de la Madrid stated that one of the main goals of his presidency would be the decentralization of national public life. His presidential campaign centered around what he called

194

Mexico

the “seven theses”: revolutionary nationalism; integral democratization; moral renovation of society; greater egalitarianism; democratic planning; development, employment, and the fight against inflation; and decentralization of national life (Presidencia de la República 1988a, 149–72; interview with Olmedo, 2005).6 Interestingly, de la Madrid advanced both administrative and political decentralization (the latter to the municipal level) almost simultaneously. Yet, administrative decentralization had direct antecedents in the deconcentration efforts of López Portillo’s administration and was part of an ongoing process. Although they operated under different nation-state contexts (there was a developmental type-of-state during López Portillo’s tenure), both administrations shared similar objectives regarding the reform of the educational sector. First, they both wanted to reform an excessively enlarged and atrophied central bureaucracy and make the delivery of education more efficient. Second, they wanted to curtail the power of the national teachers’ union, the SNTE, whose strategic importance for the PRI was waning. Where the two administrations differed was that Portillo’s administration pursued a strategy of deconcentration of the National Secretary of Education (Secretaría de Educación Pública, SEP) – that is to say, he sought to transfer administrative tasks from the central offices of the SEP to their offices in the states, but without the transfer of policy-making authority. De la Madrid, on the other hand, proposed a decentralization program that involved the devolution of authority and resources to state-level actors with greater autonomy, who were not mere representatives of the center in the states. Decentralization of Education The process of decentralizing education in Mexico was characterized by its gradual pace, by its advances and setbacks, by the absence of the 6

According to Professor and PRI official Raúl Olmedo, Manuel Bartlett, the director of de la Madrid’s presidential electoral campaign, had asked Olmedo to adapt the electoral platform of the French Socialist Party in 1981 to the Mexican context. That platform included the decentralization of government (interview with Olmedo, 2005). While emulation of the French experience does not explain why decentralization was adopted in Mexico, there is further evidence of Mexican officials’ interest in the process of state reform in France. During the administration of López Portillo, for example, a conference was held between French and Mexican public officials to discuss a program of deconcentration of government that could be implemented in both countries (Secretaría de la Presidencia 1976).

Ongoing Reforms in the First Layer

195

governors at the bargaining table, by the lack of student and parent involvement, by the permanent conflicts and negotiations with the SNTE, and by the almost continuous attempt of the national executive to change the status quo. A sequence of causally connected decentralizing reforms can be identified that has its roots in the late stages of the developmental state. This process continued with advances and setbacks in a complex process of negotiations between the national government and the teachers’ union throughout the 1980s and culminated in 1992 with the transfer of enough authority and resources to manage more than 13 million students, 700,000 employees, and approximately 100,000 schools from the federal government to the states. The process of deconcentration and decentralization of education was funded by the central government and strengthened the administrative capacities of the state-level education offices (first the delegations of the SEP and later the state secretaries of education). The states (rather than the municipalities) were the main recipients of the educational services in Mexico. What were the main motivations of the national executive in decentralizing education to the states? And why, unlike what happened in Argentina, was the process funded?

Antecedents and Motivations of the National Executive The Ministry of Education: “An Arthritic and Rheumatic Elephant” In the early decades of the twentieth century, primary-level education was a responsibility of the municipalities, while secondary-level education and the training of teachers were under the jurisdiction of the states (Murillo 1999, 38; 2001, 122; Ornelas 1998, 324). Until that time, schools had been created largely as a result of municipal efforts. In the last quarter of the nineteenth century, about 65% of the schools were under municipal jurisdiction, 28% belonged to private associations and the church, and only the remaining 7% were under either state-level or federal jurisdiction (Arnaut 1998, 47).7 But when the National Secretary of Education (SEP) was created in 1921 at the initiative of José Vasconcelos, a process of expansion of the national educational system and centralization of policy-making authority ensued. Whereas in 1928 the SEP controlled approximately 7

These figures are from 1874, when there was a total of 8,103 schools in Mexico.

196

Mexico

20% of the schools and students and managed 6% of the federal budget, right before the decentralization accord of 1992 those numbers had increased to 65% and 20%, respectively. Already by midcentury the SEP was perceived as “a gigantic personnel department whose bureaucracy crushes the initiatives of responsible public officials and invalidates the actions of the ministers.” (Rafael Ramírez et al., El Problema Educativo Nacional, 1958, p.20, cited in Arnaut 1998, 247). Between 1970 and 1980 the education personnel more than doubled (growing from 400,000 to 900,000 employees) and a large portion of the education budget was spent on administration (Murillo 2001, 122). Some of the SEP offices managed as much or more money than the state governors. In 1977, the office of primary education, for example, managed an amount that exceeded the combined budgets of the states of Jalisco, Estado de Mexico, Nuevo León, Sonora, and Veracruz, and the office of secondary education allocated the equivalent to the combined state budgets of Baja California, Coahuila, Chihuahua, Durango, and Guerrero (Prawda 1984, 199).8 In the early 1980s, Minister of Education Jesús Reyes Heroles described the SEP as “an arthritic and rheumatic elephant” (Ornelas 1996, 28) that was in need of reform. Education technocrats increasingly saw the decentralization of education as a measure that would allow them to regain control of this gigantic bureaucratic apparatus and, more generally, of educational policy-making. The National Union of Education Workers, SNTE: A Monopolistic and Centralized Union Another contributing factor to the lack of government control of the educational sector was the penetration of the sector by the teachers’ union. In 1943, parallel to the centralization of responsibilities and resources in the SEP, the National Union of Education Workers (Sindicato Nacional de Trabajadores de la Educación, SNTE) was created. It emerged as a monopolistic and centralized union from the merger of four education unions and several smaller groups (Murillo 2001, 122). Although the union had sections in the states, its central national office (the National Executive Committee, Comité Ejecutivo Nacional) became increasingly 8

These amounts were 17 billion pesos in the case of the office of primary education and 5.6 billion pesos in that of the office of secondary education – or about 388 and 128 million U.S. dollars of 1980, respectively (conversion rates from INEGI 2000, 504).

Ongoing Reforms in the First Layer

197

powerful under the umbrella of Mexico’s corporatism and supported the centralization of education, from which it benefited. Due to its political affiliation with the PRI, the SNTE gained control of key posts within and outside of the educational system. Its long-time leader, Carlos Jonguitud Barrios, was a governor and senator, and in the late 1980s the union controlled 16 seats in the Chamber of Deputies, 42 state legislature seats, and more than 100 mayoral offices (Grindle 2004a, 61). In return, the nationwide union “served as a political machine and played a key role in elections due to its territorial dispersion” (Murillo 2001, 123). Within the SEP there were undersecretaries, directorships, and supervisors’ positions “reserved” for the union or occupied by officials who had started their careers as SNTE activists and who were more loyal to the union than to the government (Murillo 2001, 123; Ornelas 1995, 297). Even in the 1990s, an estimated 50% of the posts within the SEP were controlled by the union (interview with Arnaut, May 7, 1999; interview with Castrejón Díez, 2001; interview with Solana Morales, 2001). Nevertheless, as competition within the union accrued, the alliance with the SNTE became increasingly costly and less beneficial to the PRI.9 Moreover, the SNTE’s penetration of the educational bureaucracy was seen as counterproductive by the high-level officials of the SEP who did not belong to the union. As former Minister of Education Fernando Solana Morales (1977–82) said: [I]t was crucial to decrease the political and operational power of the union in the schools . . . it was necessary to regain control of the educational system, which had to be in the hands of public officials and educators rather than in those of the union and politicians. (Interview with Solana Morales, 2001)

Thus, in the 1970s, deconcentration measures started to materialize despite the union’s opposition. Phase 1: Deconcentration in the Context of the Developmental State In 1973, during the presidency of Luis Echeverría (1970–76), a group of SEP officials who had been trained in the Administration Directorship of the Secretary of the Presidency (Dirección de Administración de la 9

The most important sign of confl ict and competition within the union was the creation in 1979 of the National Coordinating Committee of Education Workers (Coordinadora Nacional de Trabajadores de la Educación, CNTE), a leftist subgroup of the teachers’ union with strongholds in the southern states of Oaxaca and Chiapas.

198

Mexico

Secretaria de la Presidencia)10 created nine regional delegations and state subdelegations (Trejo 1995, 120; interview with Arnaut, May 15, 2001).11 The rationale behind this initial deconcentration decision is easily understood when the sheer size of the educational system at that time is taken into account. In the early 1970s, Mexico was a country of 50 million people, with 11.5 million students in the national system of public education and 341,000 teachers (Secretaría de Educación Pública 1971, 17). This meant that Mexico had a national public educational system that was roughly ten times larger than Argentina’s and four times larger than Colombia’s. To improve the administration of such a large system, some of the functions of the SEP central offices were transferred to the delegations in the regions and states, although the most important divisions (such as the General Directorship of Primary Education) remained centralized in Mexico City (Arnaut 1998, 266; Trejo 1995, 120).12 During the presidency of López Portillo, Minister of Education Fernando Solana Morales (1977–1982 and 1993–1994) started to deconcentrate education toward the states. He created thirty-one delegations of the SEP in the states. His main goal was to curtail the power of the union while at the same time regain control of the offices of the SEP in the states (interview with Solana Morales, 2001). Solana’s delegates were directly accountable to him (eliminating the prior regional supra-state level units) and were given the task of coordinating and supervising the actions of all of the SEP representatives in each state. Solana appointed well-respected people such as prestigious former governors, teachers, community leaders, and former delegates of the Federal Committee for the Construction of Schools (Prawda 1984, 202). The creation of the delegations was done quickly and without too much planning, and the union could not react in time to stop the SEP’s organizational change (Arnaut 1992a, 18). The delegates arrived in each state with a letter from Solana addressed to the governor, a budget of 10

11

12

This office employed and trained what could arguably have been the fi rst generation of PRI technocrats. Fernando Solana Morales and Carlos Salinas de Gortari, both of whom promoted decentralization of education, for example, had worked in that directorship. These were called Regional Units and Subunits of Administrative Services (Unidades y Subunidades Regionales de Servicios Administrativos). There had been prior attempts to deconcentrate some of the functions of the SEP. The fi rst one, in 1958, failed due to the opposition of the teachers’ union. In 1969– 1970, the ministry tried to deconcentrate functions but failed for the same reason (Arnaut 1998, 24).

Ongoing Reforms in the First Layer

199

50,000 pesos (the equivalent of approximately 1,200 U.S. dollars) to set up their offices, and the challenge of achieving universal primary education for all children (interview with Solana Morales, 2001; interview with Arnaut, 2001; Prawda 1984, 201). The state delegates of the SEP were responsible for administration and payroll duties for teachers. Decisionmaking authority over curricula, school calendars, and textbooks was still centralized. The SEP state delegations simplified the paperwork, created bureaucratic capacities at the state level by training local employees, and, most importantly, circulated information between the levels of government and worked closely with local governments and communities (interview with Solana Morales, 2001). According to Juan Prawda, who was the Director of Planning and Budget of the SEP (1978–1991) at that time, the most important consequence of the creation of the delegations was to modify the administrative apparatus of the SEP and to transfer power downward (interview with Prawda, 1999; Prawda 1984, 204–07). In the words of a Mexican specialist on education: The delegations created a new political arena, whose dominant – and almost exclusive – actors were no longer the union representatives and federal directors and supervisors in the states, neither the national union members, nor the central authorities in the SEP. In the new political scenario, the local union representatives had to deal with the new authorities of the SEP in the states, with the local governments, and with area managers who previously did not have any interaction among themselves. (Arnaut 1998, 274, emphasis added)

Phase 2: Early Decentralization Reforms and Setbacks When President de la Madrid came to power, he appointed Jesús Reyes Heroles to the Ministry of Education. A former Minister of the Interior (the most important post in the Mexican cabinet), Reyes Heroles was a powerful and prestigious political figure. With this appointment, de la Madrid was sending a strong signal to the union that he favored reform. Only a few months into his presidency, in February of 1983, de la Madrid inaugurated the XIII National Congress of the SNTE and said he was determined to advance the transfer of basic education to subnational governments, adding that the teachers’ labor rights would remain intact (Arnaut 1992b, 26). As expected, the union reacted negatively to the announcement. They were concerned that if the transfer were to proceed, it would split the union into thirty-one state-level sectors and that there would not be enough funding (Arnaut 1992a, 17, 30). Despite

200

Mexico

the union’s opposition, in August of 1983, still in the honeymoon of his presidential term, de la Madrid signed a decree for the decentralization of 100,000 schools, 525,000 teachers, and 15 million students (Presidencia de la República 1988b, 66). The decree was to be followed by bilateral agreements signed between the federal government and each state to implement the transfer. De la Madrid’s proposal was more ambitious than the previous deconcentration reforms. His goal was to decentralize the educational system to the states and transfer the necessary resources that would pay for the new responsibilities. The state delegations of the SEP changed their name to Units of Educational Services to be Decentralized (Unidades de Servicios Educativos a Decentralizar, USEDES) and bilateral agreements were signed with the states to transfer the responsibility for education. By 1986, eighteen agreements of cooperation had been signed, which affected more than 8.3 million students, 287,000 teachers, and more than 50,000 schools (Secretaría de Educación Pública 1986, 94).13 These agreements, nonetheless, fell short of the reforms proposed in 1983. Under pressure from the union, de la Madrid was forced to issue a decree in 1984 guaranteeing that teachers’ labor rights would be maintained and proposing that the formation of state councils replace the USEDES.14 The councils would be formed by the governors, the representatives of the SEP and of the secretaries of planning and budget in the states, the state educational authorities, and members of the union. Thus, instead of the direct transfer of responsibilities and resources to the states that de la Madrid had envisioned, the agreements fostered coordination and cooperation between the state and federal levels while allowing the federal level to retain a significant role. The federal offices and federal employees in the states also remained essentially as they were. By the mid-1980s, the decentralization of the education process had stalled. Several factors contributed to this setback. First and foremost was the opposition of the union to decentralization. Second was the death of Minister Reyes Heroles in 1985. His replacement, Miguel González Avelar, a former leader of the Senate, was more receptive to the union’s demands (interview with Gonález Avelar, 2001). Finally, the worsening of the economic situation (exacerbated by the devastating 1985 earthquake 13

14

These were the coordination and decentralization agreements signed with the states of Aguascalientes, Baja California Sur, Campeche, Colima, Guerrero, Jalisco, Michoacán, Morelos, Nayarit, Puebla, Querétaro, Quinta Roo, Tabasco, Tamaulipas, Tlaxcala, Sonora, Yucatán, and Zacatecas (Secretaría de Educación Pública 1986, 94). Presidential decree of March 19, 1984.

Ongoing Reforms in the First Layer

201

in Mexico City) made the government more dependent on the SNTE for electoral support. In 1986, the SNTE controlled more than 40% of the SEP delegations in the states and was able to stop the process of decentralization (Arnaut 1992a, 21). Phase 3: Decentralization of Education Takes Hold The next phase of the process of decentralization of education took place during the administration of Carlos Salinas de Gortari (1988–1994). In a speech presenting the government’s educational program, Salinas announced: “The educational system is going to be decentralized” (Discurso pronunciado en la ceremonia de presentación del Programa para la Modernización Educativa 1989–1994, transcribed in Poder Ejecutivo Federal 1989, xii). Salinas, a Harvard-trained technocrat, was committed to boosting the legitimacy of the PRI after the disastrous 1988 presidential elections.15 His first move was to separate the presidency from the corporatist pillars of the PRI (Trejo 1995, 123). He appointed Manuel Bartlett, who, like Reyes Heróles, was also a former Minister of the Interior for the Ministry of Education. Bartlett was a powerful figure within the PRI, a hard-liner who could oppose the teachers’ union and its long-term leader, Carlos Jonguitud Barrios.16 After a meeting with Salinas on April 23, 1989, Jonguitud was forced to resign.17 Elba Esther Gordillo, from another SNTE internal group, replaced him. Gordillo was a moderate union leader who had strong presidential support. As Salinas wanted, one of her first actions was to end the formal affiliation of the SNTE with the PRI. As Minister of Education, Bartlett pushed forward the negotiations over decentralization with the governors. Still under PRI hegemony, neither the PRI governors – whose “nominations” were dependent on the president – nor the federal bureaucracy could oppose the national 15

16

17

In the 1988 elections, fearing that the presidential candidate of the leftist coalition National Democratic Front (Frente Democrático Nacional), Cuauhtémoc Cárdenas, could win the election, the PRI resorted to electoral fraud, voter intimidation, multiple voting, stuffed ballot boxes, and fi nally an electric shutdown while the votes were being counted in order to retain the presidency. Jonguitud was the leader of the internal faction Vanguardia Revolucionaria, a traditional sector of the SNTE that maintained power and control through clientelism, cooptation, corruption, and censorship of the opposition. This meeting and Jonguitud’s resignation followed the arrest of union leader Joaquín Hernández Galicia “La Quina” of the oil workers’ union, who had been charged with murder and illegal arms possession (Loyo Brambila 1997, 37; Murillo 2001, 113).

202

Mexico

executive’s project of decentralizing education. The opposition parties only had one governor at the time, Ernesto Ruffo in Baja California, and they were a minority in Congress, so they could not effectively oppose the president’s plan either. Meanwhile, the SNTE crafted a document in 1991 entitled “The SNTE’s Seven Proposals. The Modernization of the Primary School,” which focused on three points: a reorganization of the educational system, a redesign of educational content, and the redesign of the societal role of teachers (Grindle 2004b). With this proposal, the new leadership recognized that major educational changes were needed to improve the quality and efficiency of the service. However, the union still resisted the government’s plan of decentralization, and the process did not move forward until Ernesto Zedillo was appointed Minister of Education in 1992.18 Instead of talking about decentralization or the transfer of educational services, Zedillo and his team emphasized the federalization and modernization aspects of their proposal.19 After three months of intense negotiations with the union in which salary and benefits concessions were made, Zedillo, Gordillo, and the governors signed the National Agreement for the Modernization of Basic Education (Acuerdo Nacional de Modernización de la Educación Básica y Normal, ANMEB) on May 18, 1992.20 Although the reform was advanced under the initiative of the national executive, it was a national-level (ruling) coalition formed by the national executive and the leadership of the national teachers’ union that negotiated the terms of the ANMEB. The governors were neither promoters nor important bargaining actors in this reform. The agreement stated that: To correct the centralism and red tape that characterize the educational system . . . from the present date state governments will be in charge of managing . . . 18

19

20

In 1991, when the decentralization of education was discussed in Congress, the SNTE called eight local strikes (in addition to four local strikes called by the internal opposition faction CNTE), three large demonstrations plus sit-ins and meetings, and a national process of consultation with the rank-and-fi le (Murillo 2001, 124). Interestingly, whereas in the 1920s to “federalize” education meant to create a national educational system with the federal government in charge (see Arnaut 1998, particularly chapters IV to VII), in the 1990s the same term was used to refer to the opposite process of devolving education to subnational governments. This example points to the importance of the temporal context in the assignment of meanings and defi nitions to processes and concepts that only on the surface are similar. The agreement was signed three days after Zedillo announced the annual raises to teachers’ salaries. By then, teachers’ salaries had increased steadily since 1988, and governors’ expenditures in education had surpassed other sectors of the economy (see Cook 1996, 280–81; Murillo 2001, 124; SNTE 1995, 68–93, 112–13).

Ongoing Reforms in the First Layer

203

preschools, primary and secondary education . . . teachers’ education programs, as well as programs of indigenous and special needs education. (ANMEB, Chapter IV, cited in Arnaut 1998, 313)

The agreement transferred the administration of 700,000 employees, 13.4 million students, and about 100,000 schools to the subnational governments (Arnaut 1998, 279).21 The federal government remained responsible for curriculum design and educational plans, the production of primary school textbooks, the authorization of other textbooks, teachers’ training and improvement programs, and the design of policies that would help to palliate educational regional disparities. The agreement also guaranteed recognition by the state governments of all teachers’ labor rights, improved their salary structure (which particularly benefited primary-school teachers), and gave teachers priority for public housing. Because the agreement emphasized the national character of the educational system, the negotiation of basic wages remained centralized – one of the key conditions of the SNTE leadership to sign the agreement – but the benefits portion of the salaries (about 15% of the basic wage) were negotiated by the state section of the union and the governors in each state.22 Finally, the federal government also “committed to transferring sufficient resources to the state governments” so they could assume the new responsibilities. A year later, health care services were also decentralized to the states. Figure 6.2 summarizes the different stages in the process of the deconcentration and decentralization of education in Mexico, highlighting the main actors, policies, and their effects in this sequence of self-reinforcing reforms taking place in the administrative layer of intergovernmental relations. As can be appreciated, the gigantism of the SEP and the concentration of power in the SNTE – within and outside of the educational system – were the two main factors that unleashed the process of deconcentration. The creation of thirty-one state delegations in the initial phase of the process, still under the developmental model, had the self-reinforcing policy effect of creating a new political arena where state authorities and local governments emerged as new political 21

22

Of the 700,000 employees, 513,974 were teachers, 116,054 were administrative personnel, and the rest were the equivalent of 3,954,000 hour-salaries (Arnaut 1998, 279). With time, subnational negotiations over benefits (including pensions, holidays, etc.) led to a wide range of variations in teachers’ benefits among states. These negotiations empowered the state sections of the union, undermining the importance of the national executive committee (interviews with Ornelas, 2001 and 2005).

204 1983

Phase 2

Phase 3

Decentralization Postdevelopmental State-Context

1992

ANMEB Dec. of Basic Education

Increases Fiscal Transfers to States

Figure 6.2. Stages and Policy Effects of the Decentralization of Education in Mexico, 1978–1992 Note: Bargaining actors are at the top of the figure in rounded rectangles, policy outcomes are in rectangles at the bottom, self-reinforcing policy effects are in ovals, and exogenous institutional and structural factors are in circles.

Phase 1

Deconcentration Developmental State-Context

1978

USEDES

SNTE Gordillo

National-level bargaining

Nat.Exec Salinas –Zedillo

Coordination and cooperation between the states and federal education administrations

Econ Crisis

Nat.Exec de la Madrid –Reyes Heroles

Public Contestation

New political arena: state-level SEP authorities

SNTE Concent. of Power

31 State Delegations

SEP Gigantism

Nat.Exec Lopez Portillo –Solana

Ongoing Reforms in the First Layer

205

actors in the educational sector. The strengthening of these subnational actors facilitated the creation of the USEDES in the second phase of reforms, now in the context of a postdevelopmental type-of-state. And although the process of decentralization was halted due to opposition by the teachers’ union, the creation of the USEDES had in turn the self-reinforcing policy effect of fostering coordination and cooperation among state- and federal-level educational authorities, which facilitated the implementation of the ANMEB in 1992, drawing the support of the union. In sum, exogenous reasons account for the incentives of the national executive to initially undertake administrative decentralization in Mexico. Contingent events (such as the death of Reyes Heroles and the nomination of Bartlett or Zedillo to the Ministry of Education) either facilitated or impeded negotiations over reforms with the union. But it is worth highlighting here that the process of decentralization of education in Mexico was a gradual self-reinforcing process, initiated from above and negotiated primarily in conjunction with the teachers’ union. Regarding the consequences of decentralization of education on intergovernmental relations, Diaz-Cayeros et al. (2006) argue that an unclear division of responsibilities has rendered governors mere implementers of decisions that are still made at the center. However, from a comparative perspective, it can be appreciated that the ANMEB did establish a clear division of responsibilities between levels of government – certainly much clearer than in the case of Argentina – and although the federal government still maintained centralized command over important decisions such as textbooks, the administrative capacities of the state secretaries of education to deliver and administer educational services have been expanded (interview with Maliachi, 2001; interview with Trujillo de Cobo, 2001).23 Why Funded Administrative Decentralization? Comparing the Decentralization of Education in Mexico and Argentina Unlike the process of the decentralization of education in Argentina, the decentralization of education in Mexico was funded by the national government. In other words, administrative decentralization coincided with 23

For an account of the variation in the implementation of decentralized education among subnational states, see Grindle (2004, 174–79).

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Mexico

the decentralization of expenditures. This was even recognized by the national teachers’ union, the SNTE: It is only fair to recognize that to the present day, the federal government has fulfilled its commitment to assign increasing revenues . . . to education: last year [1994], the budget assigned to education equaled 5.2% of the GDP, the highest percentage [assigned to education] in our country’s history. (SNTE 1995, 35)

What accounts for the difference in funding schemes for the decentralization of education in Argentina and Mexico? In both cases, administrative decentralization was pushed forward by the national executive, either acting on its own or with other ruling actors. Also in both cases, administrative decentralization occurred at the beginning of the sequence – and the fact that administrative decentralization was funded in Mexico cannot be explained by a previous round of political decentralization, as in the case of Colombia.24 Moreover, while governors were key bargaining actors in Argentina, they were not influential in the negotiations of Mexico’s administrative decentralization. Governors’ participation (or lack thereof) in the bargaining process cannot therefore explain the decentralization of expenditures for education in Mexico. Maria Victoria Murillo (1999) points to the different unions’ organizational structures and the linkages between unions and political parties to explain the differences in funding schemes and benefits that the teachers could reap out of decentralization in Argentina and Mexico. According to Murillo, in Mexico, leadership competition within a monopolistic union led Elba Ester Gordillo to seek an agreement with her partisan allies in government. Hence, the union leader was able to achieve important concessions from the government. In Argentina, on the other hand, union fragmentation and the alliance of the main teachers’ union (Central de Trabajadores de la Educación de la República Argentina, CTERA) with one of the opposition parties allowed the national government to ignore the union’s demands (Murillo 1999).25 Murillo’s explanation works well 24

25

It is worth noting that while there had been a political decentralization reform in Mexico in 1983, it was limited to augmenting the capacities of mayors and did not have an impact on the governors or the states, which were the recipients of education services and resources. Murillo’s explanation would also hold for the case of Colombia, where the monopolistic teachers’ union (Federación Colombiana de Educadores, FECODE) sat at the bargaining table and was able to set limits on the reforms and to guarantee that the federal government would make the necessary transfers to fund the educational services once they were transferred to the states.

207

Ongoing Reforms in the First Layer 100.00 Percentage

80.00 60.00 40.00 20.00

2000

1995

1990

1985

1980

1975

1970

0.00

Year Federal Schools

State Schools

Municipal Schools

Private Schools

Figure 6.3. Evolution of Primary Schools by Level of Government in Mexico, 1971–1999 Source: Author’s calculations based on Secretaría de Educación Pública (1971, 1982, 1992a, 1992b, 1993, 2000).

to explain the outcome of the negotiations at the time they took place. However, while the power of teachers’ unions in Mexico declined after 1992, transfers of funds for education have increased and restrictions on their use have been relaxed (since 1998, transfers for education have been less strictly earmarked than they were before). Therefore, while the organizational structure of the unions and their partisan affiliations are important determinants in explaining the concessions granted to the unions at the time of the reforms, their role is not sufficient to explain the intergovernmental fiscal arrangements that followed administrative decentralization. I argue that besides the role of the union, two other factors account for the decentralization of expenditures that accompanied the decentralization of education in Mexico. First, unlike in Argentina, where the provinces had managed a significant portion of primary education prior to 1978, in Mexico there had not been state-level control of the educational system prior to 1992. Second, in Argentina there had been a process of provincialization of primary education since the 1920s and of secondary education since the 1970s. In Mexico, on the other hand, the educational system had evolved through the almost exclusive expansion of national services. First, since at least the 1970s, a large percentage of the public primary schools were in the hands of the national government. As shown in Figure 6.3, before the decentralization agreement of 1992, as many as 80% of

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60

50

40

30

20

0

Mexico State Nuevo León Baja California Jalisco Veracruz Sinaloa Sonora Chihuahua Durango Guanajuato Puebla Yucatán Zacatecas Chiapas Tlaxcala Coahuila Guerrero Nayarit San Luis Potosi Tabasco Colima Michoacán Quintana Roo Campeche Aguascalientes Baja California Sur Morelos Querétaro Tamaulipas Oaxaca Hidalgo Average

10

State Level Students

Figure 6.4. Students Enrolled in Primary State Schools in Mexico, 1991 Source: Merino Juárez (1999, 51).

the primary public schools were under federal jurisdiction. By 1992, with the exception of four states – México, Nuevo León, Baja California, and Jalisco – that managed more than one-third of basic education students at the state level, the rest of the states relied heavily on the personnel and resources of the federal government to provide educational services. Five states did not even have their own educational systems. And, whereas in Argentina the average percentage of primary schools administered by the provinces and territories prior to the first round of decentralization was 37% (see Figure 3.3 in Chapter 3), in Mexico the average percentage of students registered in elementary education state-level systems was only 18%, as shown in Figure 6.4. At the secondary level of education, and since at least the 1970s, the Mexican federal and state governments have had similar numbers of schools under their jurisdictions. Yet, close to 50% of the secondary schools were in the hands of the federal government before the 1992 decentralization agreement was signed, as can be appreciated in Figure 6.5.

209

2000

1995

1990

1985

1980

1975

90.00 80.00 70.00 60.00 50.00 40.00 30.00 20.00 10.00 0.00 1970

Percentage

Ongoing Reforms in the First Layer

Year Federal Schools

State Schools

Municipal Schools

Private Schools

Figure 6.5. Evolution of Secondary Schools by Level of Government in Mexico, 1971–1999 Source: Author’s calculations based on Secretaría de Educación Pública (1971, 1982, 1992a, 1992b, 1993, 2000).

Given this institutional evolution, when education was decentralized in Mexico in 1992, the state-level secretaries of education were not capable of absorbing all the formerly federal personnel, students, and schools. Second, in Argentina, the Ministry of Education operated only from its offices in Buenos Aires, meaning that once primary and secondary schools were decentralized, the national ministry was able to pull out of the provinces without necessitating any major organizational restructuring at the provincial level. In Mexico, however, the state representatives of the national SEP could not simply disappear, as they were essential for running the educational services in the states. They had to be integrated with the state-level administrations, and this was done in different ways. Eleven states – including the six states that did not have state educational systems – opted for a direct transfer and created state-level ministries of education. Eleven other states fused the two former systems (state and federal) through law. The nine remaining states opted to create decentralized institutions to administer the former national school systems, keeping them separate from the state systems (Grindle 2004b).26 Regardless of how the state bureaucracies were reorganized, the decentralization of education was in all cases accompanied by resources. 26

Educational services in the federal district of Mexico City remained under the national government’s jurisdiction.

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30.00 25.00 20.00 15.00 10.00

0.00

1975 1976 1977 1978 1979 1980 1981 1982 1983 1994 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000

5.00

National Educ. Expend./Total Expend.

Figure 6.6. National Education Expenditures in Mexico, 1975–2000 Sources: Author’s calculations based on International Monetary Fund (1985, 1990, 1995, 1999, 2007).

In short, although the process of administrative decentralization was initiated from above – first by the national executive and later by a national-level (ruling) coalition – administrative decentralization in Mexico was funded. The transfer of responsibilities was accompanied by a transfer of resources. This was in stark contrast with what happened in Argentina and was partially due to the role played by the national teachers’ union in the negotiations over decentralization (Murillo 1999). It was also due to the structural constraints set by the evolution and organization of the educational system in Mexico. The fact that Mexico had not institutionalized a subnational system of education rendered unfunded administrative decentralization unfeasible. The main goals of the Mexican national executive in pursuing the decentralization of education were to improve the efficiency of public education and to curtail the power of the union – not to cut national expenditures, as in the case of Argentina. Figure 6.6 shows the national expenditures in the education sector as a percentage of the total national expenditures (without lending repayment). As can be seen, the level of expenditures dropped significantly during the early 1980s crisis, but it recovered by 1991 and increased after the signing of the ANMEB in 1992. This trend of decentralization of resources – even if some governors deemed it insufficient in 2002 – was later reinforced by the evolution of political and fiscal decentralization in Mexico, which are discussed next.

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The Second Layer: Political Decentralization Like the decentralization of education, the process of political decentralization was gradual, and the national government largely controlled the timing and pace of the reforms. Contrary to the theoretical expectations laid out in Chapter 2, the national executive initiated the political decentralization reforms. However, as expected, the national executive decentralized toward the local level of government. This shift of power to the local level allowed the president to address some of the increasing societal discontent while at the same time keeping a tight grip on statelevel politics. This process of political decentralization developed parallel to a process of democratization. Starting in 1977, a series of electoral reforms augmented the representation of opposition parties in the national and state legislatures and made elections increasingly freer and fairer. Among those reforms were changes to the number and distribution of seats among political parties in both chambers of Congress as well as in the state legislatures.27 As a consequence of increased political contestation, between 1978 and 1982, the PRI lost forty municipal elections (Martínez Assad and Ziccardi 1989, 250), including large cities such as Mérida (Yucatán), Hermosillo (Sonora), San Nicolás de los Garza (Nuevo León), Juchitán (Oaxaca), and Guanajuato (capital of the homonymous sate). During the first year of de la Madrid’s presidency, the long-standing opposition party National Action Party (Partido Acción Nacional, PAN) won the mayoral elections of Ciudad Juárez and Chihuahua (both in the state of Chihuahua), San Luis Potosí (San Luis Potosí), Durango (Durango), and Uruapán (second largest city in Michoacán) (Lujambio 2000, 87–89). The municipal opposition victories did not come about without loud demonstrations against the PRI’s electoral frauds, yet they demonstrate that the national executive had the intention of gradually allowing for higher levels of contestation, particularly at the local level.28 According to a phrase attributed to President Adolfo Ruiz Cortínez (1952–1958): “The chambers and the governorships belong to the president, the state 27

28

There are by now numerous excellent studies of the electoral reforms that paved the way to democratization in Mexico. Among others see Alcocer (1995), Crespo (1996), De Remes (2006), Medina Peña (2001, 29–40), Molinar Horcasitas (1996), Núñez Jiménez (1993), and Ochoa-Reza (2004). For telling examples of mobilizations against electoral fraud in local and state elections, see Crespo (1996), Eisenstadt (1999), Granados Chapa (1985), and Ochoa-Reza (2004).

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assemblies to the governors, and the city halls to the people” (quoted in Alcocer 1995, 70). The increasing political contestation strengthened local governments and thus helped to advance political decentralization reforms toward the local level. However, as I argue in Chapter 2, it is important to distinguish between democratization and political decentralization reforms and processes. Public contestation reforms, to use Dahl’s (1971) terminology, are those reforms that increase the electoral competition and make elections freer and fairer – such as the electoral reforms of 1977 or the creation of the Federal Electoral Institute (Instituto Federal Electoral, IFE) in 1990. They do not explicitly target the subnational levels of government. And even if – given the territorial distribution of political parties’ electoral support – they may lead to the strengthening of subnational governments, they cannot be considered decentralization reforms because they were not designed to transfer political authority downward. Political decentralization reforms, on the other hand, are those that create new arenas for the representation of subnational polities or activate existing but dormant or ineffective spaces of subnational representation. Political decentralization reforms explicitly target subnational governments or actors. These are the types of political reforms I analyze in what follows. Strengthening Municipal Governments Shortly after taking power, de la Madrid presented a bill to reform Article 115 of the Constitution that deals with the attributes of municipalities. The objective was to strengthen the political and fiscal roles of municipalities. The PRI-dominated Congress passed the bill in February of 1983, and the amendment came into effect on January 1, 1984. In his reform proposal, de la Madrid said: [T]he centralization that in an earlier period allowed the country to accelerate its economic growth and social development has outlived its usefulness and become a serious limitation on the country’s national project. . . . Centralization has seized from the municipio the ability and the resources needed for its development and, without question, the moment has come to stop this centralizing tendency. (Rodríguez 1998, 173)

According to de la Madrid, with this political decentralization reform, he intended to increase local autonomy and local political contestation and ameliorate the legitimacy problems of the PRI:

The Second Layer: Political Decentralization

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I knew the reform would encourage greater participation of the political parties at the municipal level, and I did it with that goal in mind . . . with the objective of achieving a more pluralistic democracy . . . and thus solving the political problems in an institutional manner, without violence, without ungovernability. (Interview with de la Madrid, 2001)

Similarly, another PRI official involved in the reform of Article 115 said that one of its main goals was to strengthen the political opposition in the municipalities because “without competition the PRI becomes incompetent.” In order for the PRI to innovate, to renovate itself, it was necessary to promote the opposition (interview with Olmedo, 2005).29 The reform of Article 115 consisted of a series of comprehensive changes aimed at strengthening the role of municipalities in intergovernmental relations. First, while Article 115 of the 1917 Constitution referred to both the municipal and the state levels of government, since 1983 Article 115 has been devoted exclusively to the municipal level. Second, the reform clearly spelled out all the public services for which municipalities would be in charge such as water delivery; street lighting and cleaning; public squares, markets, and gardens; and public security and transit. Municipalities could charge fees for the delivery and maintenance of these services and could share these responsibilities with the states, should they prefer to do so. Third, the new Article 115 listed the income sources of municipal governments (taxes, service fees, and transfers from the federal government) and granted them exclusive rights to property taxes. Finally, Article 115 established that a two-thirds majority vote was required in state legislatures to suspend or remove mayors from their offices. This change had important consequences, particularly as the process of public contestation progressed. Since January 1, 1984, for example, governors may no longer remove ruling or opposition mayors at their discretion. While the administrative and fiscal consequences of the reform were relatively minor at the beginning (Mizrahi 2001, 10–11; Rodríguez 1997; 1998, 174), the increased political openness at the municipal level began to act as a steam valve, allowing a release of the social and political 29

The interviewee added that they never thought that the weakening of the PRI would be so rapid and that the PRI would be incapable of controlling the political minorities (interview with Olmedo, 2005). It is hard to prove beyond the declarations of the participants and observers of the political opening process whether these were indeed the motivations and calculations of the PRI leadership at the time. As is usually the case, it appears that a combination of societal discontent and protests with concessions from above were behind the adoption of the early democratizing and political decentralization reforms.

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pressures generated by the economic crisis and the increasing mobilization against electoral fraud. From the early 1980s, opposition parties won in an increasing number of municipalities, as can be seen in Figure 6.7. This process of increased public contestation at the local level strengthened municipal actors, who were able to negotiate the deepening of political and (later) fiscal decentralization reforms. This exogenous event implied reversing what otherwise would have been the expected order of decentralization reforms. Had the national executive maintained the upper hand over the negotiation process, fiscal decentralization (instead of political decentralization) would have probably followed administrative reforms.30 As Victoria Rodríguez writes, the municipal reform “did mark the beginning of an era in which the municipality would come to occupy a primary place within the framework of national political priorities” (Rodríguez 1997, 58). It led, for example, to the creation of associations that represented the interests of local governments and that further advanced those interests in the process of decentralization. As in the case of Colombia, political decentralization had a policy ratchet effect: It created its own group of supporters. However, unlike in Colombia and contrary to theoretical expectations, political decentralization was fostered by the national executive in Mexico. As such, the first institutions that advanced the municipalist agenda were created by the government. In May of 1984, a presidential decree created the National Center for Municipal Studies (Centro Nacional de Estudios Municipales, CNEM), an institution responsible for guiding the process of municipal reform and the implementation of Article 115 in all of the states. Raúl Olmedo, a university professor and editorial columnist for the newspaper Excelsior, was appointed to direct the center. It was housed within the Ministry of the Interior, and it organized seminars and meetings for state and municipal officials to promote the decentralization of public life to the municipalities (interview with Olmedo, 2005). After its creation, the CNEM was heavily promoted in the mass media. This included a weekly television program entitled Why the Municipal Reform? (¿Por qué la reforma municipal?) and a thirty-minute daily radio program, “Municipal Voice” (Voz Municipal) (Rodríguez 1997, 76). The

30

It is worth noting that although administrative decentralization was funded, those changes are not what I call fiscal decentralization. Recall, from Chapter 2, that fi scal decentralization implies a transfer of revenues or revenue-collecting authority, and not the expenditures necessary to afford newly transferred services.

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0

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45

2.4 1.18

1.95 1.33

3.7

4.74

5.96

9.08 6.14

24.66 23.14

Munic. Oppos. / Total Munic. Elections

Year

1980 1981 1982 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998

1.49 0.8

2.38 3.05

12.26

16.99

28.53

42.22

Figure 6.7. Opposition Victories in Municipal Elections in Mexico, 1980–1998 Note: Percentages are calculated over the total number of municipalities that held elections in a given year (not the total number of municipalities). Source: De Remes (2000, 30).

Percentage

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CNEM also published two journals for the dissemination of municipal experiences and information (one of them, Estudios Muncipales, with more of an academic profile than the other) and produced a thirty-one– volume encyclopedia with the basic information of all the municipalities of the country (interview with Olmedo, 2005). The CNEM also coordinated activities and meetings with other ministries at both the national and state levels, to discuss issues such as sectoral decentralization. The states, in turn, created their own municipal centers (Rodríguez 1997). The CNEM changed its name to the Municipal Development Center (Centro de Desarrollo Municipal, CEDEMUN) during the administration of Salinas and to the National Institute for Federalism and Municipal Development in 2002 (Instituto Nacional para el Federalismo y el Desarrollo Municipal). According to Carlos Gadsden, head of the institute at the beginning of Vicente Fox’s presidency (2000–2006), the Institute’s goals are to strengthen federalism both at the state and municipal levels of governments, to improve correspondence between revenues and expenditures by demanding more taxing capacities for states and municipalities, and to increase the accountability and bureaucratic efficiency of local governments by creating a public service career (interview with Gadsden carried out by Yemile Mizrahi, in Mexico City, 2000).31 If indeed the intention of de la Madrid and the PRI leadership was to promote “controlled” contestation (possibly to palliate increasing political discontent), it is logical that their political decentralization measures would have targeted the local- rather than the state-level governments. As outlined in Chapter 2, mayors pose less of an electoral threat than governors do. In fact, while de la Madrid promoted the strengthening of the municipalities and allowed for a degree of electoral competition at the municipal level, at the state level he and the PRI tightened their control of the governorships, particularly in those states where the PAN was gaining electoral support. During de la Madrid’s tenure, governors Oscar Ornelas of Chihuahua (1980–1985) and Enrique Velasco Ibarra (1979–1984) of Guanajuato were asked to resign.32 In Chihuahua, the governor was replaced with Saúl González Herrera, a state group leader who, according to de la Madrid, could “prepare the state for the coming elections, which 31

32

I thank Yemile Mizrahi for making the transcription of this interview available to me. The third case of federal intervention during de la Madrid’s administration was in the state of Yucatán, where Governor Graciliano Alpuche Pinzón (1982–1984) was replaced by interim Governor Víctor Cervera Pacheco.

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were going to be highly competitive” (interview with de la Madrid, 2001, his emphasis ).33 In Guanajuato, according to Ward et al. (1999, 66), the governor was removed because “he supported the wrong candidate to succeed him as governor and openly opposed the party in so doing.” In de la Madrid’s words, “he had neglected his duties as a governor” (interview with de la Madrid, 2001). These examples show that de la Madrid kept tight control of the governorships while at the same time left important cities to the opposition parties. Political Reforms in Mexico City The subsequent postdevelopmental political decentralization reform also targeted the local level, although this time it affected only the City of Mexico and was actively promoted by the opposition. In 1986, the Representatives’ Assembly of Mexico City was created. This change was as much a response to the daunting task of governing a city of nearly 8 million people at the time as a reaction to the pressures coming from the political opposition.34 The PAN had long demanded local elections in Mexico City, but, with a majority in Congress, the PRI could control the timing and extent of political decentralization reforms. The political reform in Mexico City started with the creation of an assembly of sixty-six seats (forty seats to be elected by plurality rule and twnety-six by proportional representation), in which the PRI had a simple majority from 1988 to 1997.35 In a subsequent reform negotiated between the PRI and PAN in 1993, the assembly was given the authority to pass legislation. The 1993 reform also stated that by 1997 the national executive would choose the mayor 33

34

35

The reference is to the 1986 elections, in which the PAN candidate Francisco Barrio, the former mayor of Ciudad Juárez, ran against the PRI candidate Fernando Báez. Official results were 60% for the PRI candidate and 35% for Barrio. The PAN, the Catholic Church, and foreign journalists heavily questioned the results. Barrio ran again for the governorship in 1992 and won with 51% of the vote, compared to 44% for the PRI candidate (Langston 2000, 7–13). According to Ward et al. (1999, 66), “Ornelas was removed because he had ‘allowed’ too many PAN victories in his state.” In 1990, the total population of Mexico City was 8 million inhabitants. This was the second largest concentration of people in a single subnational unit, surpassed only by the Estado de México, with a total of 9.8 million inhabitants at the time (INEGI 2000, 13). Of a total of 66 seats in the assembly, the PRI controlled 34 seats in the fi rst legislature (1988–1991), 40 seats in the second legislature (1991–1994), 38 in the third (1994– 1997), and only 11 in the fourth (1997–2000), when the majority of the seats (38) went to the PRD (Lujambio 2000, 139).

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from among the federal or local legislators of the majority party in the federal district’s assembly of representatives (Alcocer 1995, 62).36 In 1996, however, President Ernesto Zedillo (1994–2000) and the opposition parties negotiated the popular election of the mayor of Mexico City. Thus concluded the process of political decentralization in the country’s capital city. The first election took place in 1997 and the candidate of the Revolutionary Democratic Party (Partido Revolucionario Democrático, PRD), Cuauhtémoc Cardenas, won. From Government to Society: Policy Ratchet Effects of Political Decentralization When Carlos Salinas de Gortari assumed the presidency in 1988, it was clear that increased political contestation would continue to evolve, particularly at the subnational level. At this time, the gradual and ongoing process of democratization intersected the sequence of decentralization reforms and produced a reactive effect in the sequence.37 Although administrative and local-level political decentralization reforms – the earliest reforms in the postdevelopmental decentralization sequence of Mexico – had been advanced by the national executive, by the 1990s democratization had strengthened the position of actors in the civil and political societies who were able to build on the early decentralization reforms. Unlike what happened in Argentina, where the national executive kept the upper hand in the negotiations over decentralization policies for most of the sequence of reforms, in Mexico subnational actors were able to scale up the gains achieved at the local level to the state level and deepen the process of devolution of power by pursuing further political and fiscal decentralization reforms. The first gubernatorial electoral victory was conceded to the PAN in Baja California in 1989, largely to legitimate the national government after the electoral fraud of 1988. Guanajuato followed (albeit after an electoral dispute) in 1991 and Chihuahua in 1992. Meanwhile, the PAN continued adding victories at the local level (see Figure 6.7) and ruling governors were forced to accept the new situation. As PRI Governor José Francisco Ruiz Massieu of Guerrero (1987–1993) said, “Before, our

36

37

Had this part of the 1993 reform been enacted, Mexico City’s mayor would (also) have been a PRD mayor in 1997. For an excellent discussion on how the intersection of social or political processes may produce reactive effects in path-dependent sequences of events, see Mahoney (2000).

The Second Layer: Political Decentralization

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party was the dominant party; now it is the majority party” (in Reyes Nevares 1989). The goal of strengthening municipal governments trickled from governmental bodies to civil and political society. In 1990, the first civic association for the promotion of local governments emerged: the Center of Municipal Services Heriberto Jara (Centro de Servicios Municipales Heriberto Jara A.C., CESEM), named after one of the Constitutionalists who crafted Article 115 of the 1917 Constitution. This civic association provided training and legal advice to local officials as a way of helping with “the transition to democracy, transforming the political culture, and the style of government” in Mexico.38 By 1994 the PAN was ruling in 118 municipalities.39 In March of that year, through an initiative of the PAN mayor of Tijuana, a group of 20 newly elected PAN mayors established the association Townships for a Free Municipality (Ayuntamientos por el Municipio Libre), which later changed its name to the Association of Mexican Municipalities (Asociación de Municipios de México A.C. or AMMAC). The goal of the association was to strengthen the role of the municipalities in Mexico’s intergovernmental relations and to coordinate mayors (opposition mayors in particular) so that they could succeed in negotiations with the national executive over discretionary transfers. Although all the founding members were from the PAN, the association was created as a nonpolitical entity. The association was formed by municipalities, not mayors. Membership in the AMMAC therefore required approval of the municipal council. With twenty-two member municipalities, the association started by lobbying the federal government through PAN Congress members. The reputation of the association as a source of municipal information grew steadily, as did its membership. By 1997, when the PRI lost its majority in the national legislature, opposition Congress members were able to advance some of AMMAC’s proposals on municipal funding and constitutional reform. By the end of 2001, AMMAC had 250 member municipalities and oversaw a budget of 1.5 million dollars.40 The association also prided itself on having achieved the 1998 financial reform that increased the financial transfers to municipalities, and on the 38 39

40

http://www.cesemheribertojara.org.mx [last accessed in June of 2007]. The PAN electoral victories increased steadily to 218 municipalities in 1995, 249 in 1996, and 303 in 1997. The PAN stronghold was in the most developed urban areas. In 1997, the PAN was ruling in 16 of the 20 largest cities. Through its municipalities alone, the PAN governed 34.7% of the total population (PAN 1998, 7–10). http://www.ammac.org.mx [accessed in October of 2002; this information is no longer accessible on the Web site].

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1999 Constitutional reform of Article 115 (Bueche 2002; Santín del Río 2001). In 1997, two other municipal associations, linked to the other two major parties, were created. The Association of Local Authorities of Mexico (Asociación de Autoridades Locales de México, AALMAC) linked to the PRD and the National Federation of Mexican Municipalities (Federación Nacional de Municipios de México, FENAMM) associated with the PRI. But by the end of Zedillo’s administration, these associations had not exerted as much pressure on the federal government as had the AMMAC (Santín del Río 2001, 24–25).

The Third Layer: Fiscal Decentralization On December 16, 1997, the national executive committee of the PAN published a full-page advertisement in the main national newspapers entitled, “The PAN cares about Mexico. 53.7 percent more resources for all municipalities in the country.”41 The advertisement read: “. . . the National Action Party pushed forward substantial changes to the assignment of revenues for municipalities throughout the country. . . . As a result of the debates and negotiations of PAN legislators the following achievements have been obtained. . . .” A chart followed showing an increase in municipal revenues from 26 billion pesos in 1997 to 40 billion pesos for the 1998 budget, an increase equivalent to 1.72 billion dollars (INEGI 2000, 504). A dotted list of other achievements followed, including a reduction of the president’s discretional funds to 50 million pesos (approximately US$6.2 million) from a prior level of almost 300 million pesos. The process of decentralization of revenues had started in Mexico about two years before, when, in December of 1995, Congress passed a fiscal reform that increased the revenues of states and municipalities. Nevertheless, the most far-reaching fiscal decentralization reforms took place in 1997, when the PRI lost its majority in Congress and the opposition parties – particularly the PAN – pushed forward the decentralization of revenues toward the subnational governments. Changes in the intergovernmental allocation of resources were so radical that a World Bank report called this process a “bold expenditure-cum-transfer revolution in Mexican fiscal federalism.” (World Bank 1999b, 15) 41

In Spanish, the headline was: “El PAN piensa en México. 53.7 por ciento más recursos para todos los municipios del país,” in La Jornada, Tuesday, December 16, 1997, 23.

The Third Layer: Fiscal Decentralization

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Prior Evolution of Intergovernmental Fiscal Relations According to the Mexican Constitution, the federal level of government is responsible for taxes on foreign trade, mining, oil and its derivatives, financial institutions, electricity, forest exploitation, tobacco, and alcohol. Since the 1983 Constitutional reform of Article 115, municipalities have under their jurisdiction property taxes (including those for the division, sale, and improvements to property) as well as the right to charge fees on the delivery of municipal services such as water. However, largely due to the lack of institutional capacities at the municipal level, most states have signed agreements with their municipalities to carry out the management of the property tax, charging the municipality a percentage from the collection (Cabrero Mendonza and Carrera 2000, 11). Finally, the Constitution does not grant any specific taxes to the states (Díaz Cayeros 1997; Sempere and Sobarzo 1998, 28). Since 1927, a series of tax conventions and agreements between the states and the national government have dictated their taxation rights and responsibilities (see Diaz-Cayeros 2006; Díaz Cayeros 1997; Martínez Almazán 1988). A system of revenue-sharing was created in 1943 and later modified in 1953 (Ortega Lomelín 1994). The revenues allocated to states and municipalities under this system, however, were based on the collection of only a few federal taxes and were never sufficient to cover subnational expenses (Ward et al. 1999, 98). In 1980, during López Portillo’s presidency, the National System of Fiscal Coordination (Sistema Nacional de Coordinación Fiscal, SNCF) was created. This system has been the legal foundation for revenuesharing in Mexico up to the present. Within this framework, the Fiscal Coordination Law (Ley de Coordinación Fiscal, LCF) is approved every year by the Chamber of Deputies in Congress. The creation of the SNCF helped to avoid double or triple taxation by coordinating the three levels of government in one system. The states had to relinquish their taxes in exchange for transfers from the federal government. As with the implementation of the system of coparticipation in Argentina in 1935, the SNCF entailed a centralization of the collection of revenues at the federal level. Although the SNCF made the governors more dependent on federal transfers, they also benefited from sharing new sources of revenues with the national government, such as those generated by the national oil company (Petróleos Mexicanos, PEMEX). As Alberto Díaz Cayeros (1997, 312) describes it: The creation of the SNCF was accepted by the states with almost no resistance. This was attributable to the political conditions, the timing of the reform, and

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the state of federal finances. . . . [T]he country was in the midst of an oil boom. The federal government was obtaining a substantial amount of revenue from the windfall gains of the nationalized oil company, PEMEX. . . . The SNCF offered the opportunity for states to reap part of the benefits of the oil boom as unconditional tax transfers.

Since 1980, states and municipalities have also been entitled to a percentage of all the revenues collected from federal taxes, the most important of which are the income tax, the value-added tax, and a special tax on production and selected services (Ward et al. 1999, 99). When the SNCF was created, states and municipalities were originally allocated 13% of the federally collected taxes, but as a result of economic and fiscal crises the percentage had increased to 18.51% by the beginning of Zedillo’s term. This automatic revenue-sharing portion of the states’ and municipalities’ income is called participaciones. Besides participaciones, states and municipalities also receive discretionary funds from the federal government in the form of a federal investment or other types of transfers. In the early 1980s, through Development Agreements (Convenios Unicos de Desarrollo, CUDs), revenues for public works were channeled directly from the federal government to the states first and to municipalities later. During Salinas’ administration, the CUDs turned into the well-known and much-studied National Solidarity Program (Programa Nacional de Solidaridad, PRONASOL). Both the CUDs and PRONASOL had a fiscal impact on intergovernmental relations, as they decentralized resources to subnational levels. However, unlike the reforms that would take place after the mid-1990s, the CUDs and PRONASOL were highly discretionary programs. PRONASOL, in particular, was meant to serve the political goals of the national executive, who made the decisions about resource allocation and transferred the money directly to local councils in the communities, bypassing governors and mayors. Fiscal Decentralization Reforms of 1995 and 1997 When Zedillo took power, the PAN legislators had already presented several bills for the decentralization of revenues in Congress. On November 29, 1994, PAN legislators presented a bill to increase, over a period of four years, the level of participaciones from 18.51% to 40% of federally collected taxes. They also suggested that the distribution of automatic revenue-sharing be changed. Instead of the current system that distributed 45.17% of the participaciones by the number of inhabitants,

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45.17% by the fiscal efforts made in the two previous years, and the remaining 9.66% by inverse proportion to the population, the PAN legislators proposed that the participaciones be distributed 80% by fiscal effort of the subnational unit and only 20% by population.42 This proposal voiced the subnational territorial interests of the PAN legislators, particularly those in the northern states where the higher proportion of taxes is collected.43 A few months later, on April 6, 1995, PAN Deputy Manuel de Jesús Espino Barrientos presented another bill for the decentralization of revenues. This proposal requested that up to 100% of all of the revenues generated by tolls and customs posts placed on bridges and roads along the borders be shared with the border municipalities, mostly for the maintenance of roads (which were heavily used due to border traffic).44 Salinas had agreed to allocate 10% of those resources to states or municipalities as matching grants for the construction, maintenance, and improvement of municipal roads along the borders. State and local resources, however, were never sufficient to match these grants, so the municipalities rarely received the full 10% from the federal level. The proposal to raise this transfer to 100% and to make it unconditional was signed by a list of PAN legislators and “all those deputies who are from the border.”45 Once again, the PAN legislators were voicing subnational territorial interests, in this case those of the border municipalities. However, none of these bills were passed by Congress. On December 15, 1995, when the PRI still had a majority in Congress, the fiscal coordination law was revised. The reform provided for three major changes. First, it increased the participaciones from 18.51% to 20% of federally collected taxes (a minor change when compared to the

42

43

44

45

See Diario de Debates de la H. Cámara de Diputados 1916–1997. LVI Legislatura, Año Legislativo I, November 29, 1994, Diario Número 12, Debate Ley de Coordinación Fiscal, 848–53. During the 1990s, given its municipal- and state-level victories, PAN legislators – even those elected in a national district – started to represent the territorial interests of subnational governments. Advances in decentralization, particularly fiscal and political decentralization, would give the PAN party more power vis-à-vis the PRI national and state executives. The issue of sharing fees collected at the borders was so salient that a PAN mayor chained himself to the border bridge of his municipality as a sign of protest for not sharing the revenues collected by the national government. See Diario de Debates de la H. Cámara de Diputados 1916–1997. LVI Legislatura, Año Legislativo I, April 06, 1995, Diario Número 9, Debate Ley de Coordinación Fiscal, 392–95.

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PAN proposal). Second, it provided new opportunities for the states to raise taxes and income on their own, such as the tax on new automobiles and overheads to existing federal taxes on hotels and car licenses. Third, the municipal fund was incremented from 0.56% to 1.0% (Alvarado 2000, 6; Rodríguez 1997, 95). Although these reforms fell short of PAN’s requests, they nonetheless represented the first move toward fiscal decentralization in the postdevelopmental state. As Cabrero Mendoza and Carrera (2000, 11) write: “Since 1995, when the fiscal decentralization process began, states were given some few new sources, such as taxes on spirits, beer and tobacco, and a tax on hotels.” According to José Antonio Alvarado, who, at the time of the reform, was the Director for Education and Health Budgets at the National Ministry of Finance (Secretaria de Hacienda y Crédito Público, SHCP): It is estimated that the changes [introduced in] 1996 permanently increased the participaciones by an approximate amount of 12,400 million pesos, equivalent to 0.3% of the national GDP. Of these resources, 8,659.4 million pesos went to the states, and 3,740.6 million to the municipalities. Given their nature, these changes implied more resources without responsibilities attached. (Alvarado 2000, 6)

The 1995 reform was passed in a PRI-dominated Congress and therefore did not require the formation of a multipartisan coalition. However, the PAN legislators, governors, and mayors – particularly those of the northern states – had already requested the increase of participaciones to 40%, so the reform was a response to demands that came from the opposition voicing subnational interests. Fiscal decentralization in 1995, as in 1997, was the result of a mixed national-ruling and subnationalopposition actors’ (NR-SO) coalition formed by opposition legislators who represented subnational interests and the national executive, who recognized that greater correspondence between the collection of revenues and expenditures at the subnational levels was needed. Since he had assumed power, Zedillo’s rhetoric was to strengthen federalism and subnational governments.46 Although the reforms of his presidency may have fallen short of the federal discourse endorsed by his administration (Peredo 2000; Ward et al. 1999), the national executive 46

See Zedillos’s speech to the national forum on authentic federalism in Guadalajara on March 29, 1995. Extracts of the speech are cited in Diario de Debates de la H. Cámara de Diputados 1916–1997. LVI Legislatura, Año Legislativo I, April 28, 1995, Diario Número 19, Debate Ley de Coordinación Fiscal, 1226–27. Undersecretary of Expenditures Santiago Levy (1994–2000) also emphasized Zedillo’s intention of cutting presidential discretionary power and making the negotiations over the national budget more transparent (interview with Levy, 2001).

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did accept and facilitate the reforms that were pushed forward by the opposition. Zedillo, for example, set limits to the discretionary funds he had available, even prior to 1997. In 1995 and 1996, Zedillo spent less money from the president’s discretionary secret fund (partida secreta del presidente) than he had assigned in the national budget (which was no small achievement after the 1994 economic crisis). By 1998, the president’s discretionary funds had disappeared. But the most important changes to the system of revenue sharing and allocation of expenditures had to wait until the PRI lost its majority in the Chamber of Deputies and its two-thirds of the seats in the Senate. At the end of 1997, under a divided government, a new budget line, Item 33 (Ramo 33), was created. This line was formed by automatic transfers to the states and municipalities called aportaciones, to distinguish them from the participaciones that states and municipalities had received as part of the system of revenue-sharing. The original proposal of the national executive outlined the creation of three funds within Ramo 33. These were (1) the Fund for Basic Education (Fondo de Aportaciones para la Educación Básica, FAEB), (2) the Fund for Basic Health Services (Fondo de Aportaciones para los Servicios de Salud Básica, FASSA), and (3) a General Purpose Fund that would be allocated to the states (Fondo de Aportaciones Múltiples). By the initiative of the opposition legislators – particularly PAN legislators lobbied by the municipal association AMMAC – two other funds were created. 47 The Fund for the Strengthening of Municipalities and the Federal District (Fondo de Aportaciones para el Fortalecimiento de los Municipios y del Distrito Federal, FAFOMUN) targeted municipalities exclusively and was not earmarked. The Fund for Social Infraestructure (Fondo de Aportaciones para la Infraestructura Social, FAIS) targeted both states (therefore the name FAISE) and municipalities (FAISM) (Comisión de Fortalecimiento Municipal 2000). The creation of Ramo 33, and particularly of these two funds that targeted municipalities, almost doubled the amount of resources available to local governments between 1996 and 1998. Whereas municipalities had received 7.1 million pesos in automatic transfers in 1996 and 8.2 million in 1997, with the creation of FAFOMUN and FAISM, municipal governments received 15.87 million pesos in 1999 (Comisión de Fortalecimiento Municipal 2000, 13). 47

According to Peredo (2000, 20), after several weeks of intense negotiations with the national executive, PAN legislators made the increase in municipal fi scal revenues a condition for their signing on to the 1998 federal budget.

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Moreover, for the first time, the 1998 budget legislated on the direct transfers from the federal government to the municipalities, eliminating the discretionary power of governors in the allocation and distribution of these revenues to municipalities.48 The creation of Ramo 33 was followed by minor reforms in 1999 and 2000. Like the 1995–1996 fiscal reforms, the fiscal changes of 1997–1998 were largely the result of the previous rounds of political decentralization and the power that municipal associations had gained through those reforms. Fiscal decentralization would have been unlikely without the strengthening of subnational associations and the representation of territorial subnational interests, which were fostered by political decentralization measures. The previous funded administrative decentralization reforms also had a positive impact on fiscal decentralization. The decentralization of education in 1992 and the expenditures to cover its cost led to the creation of the FAEB in 1997–1998. Although it was earmarked, the fund’s supervision was transferred to state institutions, and governors and mayors gained control over the lion’s share of educational expenditures. In the early 2000s, the funds of Ramo 33 surpassed those that the states received as participaciones. While in 1988 participaciones represented 87% of the transfers to states and municipalities, by the year 2000 this percentage dropped to 42%, with the remaining 58% coming from Ramo 33 (Alvarado 2000, 14). Subnational access to these resources would not have been possible if a funded administrative decentralization had not taken place beforehand. Finally, it is worth highlighting that the municipal level profited the most from the creation of Ramo 33. Although municipal transfers represent only about one-fifth of state transfers, they have seen a more substantial increase as a result of the changes introduced in 1997. Table 6.2 shows the evolution of revenues at the state and municipal levels between 1998 and 1999. The aportaciones to the municipalities increased by 36.8%, whereas those to the states increased only by 10.6%. When participaciones and other agreements are also considered, the overall

48

In Mexico, the federal law dictates that 20% of the participaciones transferred to the states must be distributed among municipalities. However, the distribution criteria are specific to each state. This issue has led to controversies between opposition mayors and PRI governors over the distribution of municipal participaciones. An example of such controversies was the confl ict between the governor of Puebla, Manuel Bartlett , and the states’ PAN mayors in 1998. The 1997 fi scal reform to the LCF establishing the criteria for the distribution of Ramo 33 among municipalities curtailed some of the governors’ discretionary power.

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The Third Layer: Fiscal Decentralization Table 6.2. Revenues of States and Municipalities in Mexico, 1998 and 1999 (in millions of 1999 pesos) Type Fund

1998

1999

% Difference

1 – Aportaciones (Ramo 33) States Municipalities 2 – Participaciones (Aut.Transfers) States Municipalities 3 – Agreements

143,082 124,563 18,519 130,817

163,137 137,794 25,342 140,963

14 11 37 8

100,033 30,783 24,863

107,682 33,281 18,501

8 8 27

Total (1+2+3) Total States Total Municipalities

298,762 249,460 49,302

322,601 263,977 58,624

8 6 19

Source: Casillas (2000, 331).

revenues of municipalities still increased at a higher rate than those of states (18.95% for municipalities compared to 5.8% for states). In fact, the municipalities had benefited so much from fiscal decentralization in the 1990s that the governors pressed the national executive to increase the amount of transfers to the states. As a result, a new compensatory fund targeting the states exclusively, the Program of Assistance to the States (Programa de Apoyo a las Entidades Federativas, PAEF), was created in 2000. Why did municipal governments benefit more from fiscal decentralization in the 1990s than the states did? As we have seen, the opposition controlled a large number of municipalities, so it cannot be argued that it was an electoral calculation that made the national executive channel resources to the local level. Rather, the fact that municipalities were empowered by previous rounds of political decentralization explains why they benefited the most from the later rounds of fiscal reforms. As the Minister of Finance of the Estado of Mexico and a former PRI legislator put it: I witnessed these negotiations when I was in the Chamber of Deputies. The National Action Party, which was in control of capital cities, sought to privilege the municipalities. We [the PRI legislators] were forced to adopt some of the PAN criteria so that Ramo 33 could be approved, and the PAN and PRI voted together in favor of it. (Interview with Luna de la Vega, 2001)

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Reinforcing Effects of the First Cycle of Postdevelopmental Decentralization on Intergovernmental Relations After fiscal decentralization in 1995 and 1997, in 1999 another reform of Article 115 was passed. It was pushed forward by the PAN and concerned the constitutional nature of municipalities. Whereas prior to this reform municipalities were constitutionally “administered” by mayors and councils, after 1999 they were constitutionally “governed” by them. This meant that municipalities were no longer administrative bodies, but instead they were constitutionally recognized as another level of government. The 1999 reform also gave greater responsibilities and functions to municipal governments, some of them shared with the states and the federal level.49 The Mexican governors did not sit in the sidelines, however. In 1999, the PRD governors of Nayarit, Mexico City, Zacatecas, and Tlaxcala formed the National Association of Governors (Asociación Nacional de Gobernadores, ANAGO). The motivation was to create a forum to discuss the decentralization of resources and responsibilities and to improve the delivery of state-based services such as education and health. The ANAGO became more dynamic and confrontational in 2002, when the governor of Tlaxcala threatened to devolve the educational system to the federal government if President Vicente Fox (2000–2006) did not offer more resources to the states (De Remes 2006, 188; Grindle 2004a, 179). Other PRD and PRI governors made similar threats, and Fox had to channel additional resources to those states to settle the dispute (De Remes 2006, 188). In July of 2002, twenty-three governors (seventeen from the PRI, five from the PRD, and one “independent” from Chiapas) formed the National Conference of Governors (Conferencia Nacional de Gobernadores, CONAGO) (http://www.conago.org.mx/ reuniones/2002–07–13.aspx; De Remes 2006, 188). PAN governors joined in later – initially prevented from doing so by the minister of the interior (Diaz-Cayeros 2005b, 24) – and by 2007 all thirty-two governors were in the CONAGO. Among its stated objectives, the CONAGO seeks to strengthen and promote the process of decentralization.50, 51 49

50 51

For a detailed analysis of the contents of the reform see CEDEMUN (2000) and Comisión de Fortalecimiento Municipal (1999). http://www.conago.org.mx/Sobre/QueEs.aspx [accessed on July 3, 2007]. The CONAGO was instrumental in the organization of the National Fiscal Convention of 2004. Although recommendations of that convention were not passed in Congress,

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At the municipal level, in 2005 the three municipal associations joined in an umbrella association, the National Conference of Mexican Municipalities (Conferencia Nacional de Municipios de México, CONAMM), which also works in favor of federalism and decentralization.52

Conclusion The Mexican case provides an example of a sequence of reforms in which there was a reactive mechanism at work between the first and second stages of the process. Although the president put the process of decentralization underway, this decentralization was funded and also intersected with an exogenous process of democratization, which significantly strengthened the subnational actors and interests for the next round of reforms. Hence, a sequence that started with administrative decentralization implemented from above was followed by political decentralization reforms (the earliest of which were promoted by the national executive) and lastly by fiscal decentralization. Subnational actors, coordinated in subnational associations, were able to obtain greater amounts of resources and authority from the center as the process of decentralization unfolded. When the process of decentralization began in Mexico, national interests prevailed. The first move was therefore to implement administrative deconcentration (initiated in the context of the developmentalist state) and then, later, to implement administrative decentralization. The process of administrative decentralization grew from the objective to reform an excessively enlarged and atrophied state. It was planned from above by a group of technocrats who sought to enhance the efficiency of the state in the delivery of public social services while at the same time curtailing the power of the civil servants’ unions. Administrative decentralization evolved slowly, in part as a result of the political will of the national executive and in part as the result of political conflicts with the teachers’ national union. Unlike the case of Argentina, in Mexico the transfer of responsibilities was accompanied by fiscal resources. This was due to the role played by the union in the negotiations, but it was also due to the

52

since 1997 legislators have been more attuned to subnational demands when negotiating the budget and “in virtually every legislative process [since 1997] . . . there has been an increase in the funds available for states and municipalities” (Diaz-Cayeros 2005a, 8). See the agreement for the formation of CONAMM at http://www.ammac.org.mx/ Servicios/Politico/CONAMM/Acuerdos/Documentos/POLAC001.pdf, page 6 [last accessed July 2007].

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institutional constraints set by the historical evolution of the educational system, namely, the lack of significant or sizable state-level educational systems in most of the states. Crafted from above, political and administrative decentralization advanced together throughout the 1980s and into the 1990s. As intended by President de la Madrid, political decentralization had the effect of augmenting the degree of contestation at the local level. But municipal democratization and other democratizing electoral reforms had the unintended consequence of strengthening territorial interests and hence subnational actors. Thus, although the national executive single-handedly crafted administrative and political decentralization in the early 1980s, subnational actors, acting in mixed national-ruling and subnational-opposition (NR-SO) actors’ coalitions, were responsible for deepening political and fiscal decentralization in the 1990s. In other words, exogenous democratization reforms produced a reactive effect between the early stages of decentralization in the early 1980s and the following round of reforms in the 1990s, such that instead of allowing for the increase of power in the national executive (as it happened in Argentina), subnational actors were empowered. By the time the fiscal decentralization reforms were negotiated, the subnational officials had gained sufficient bargaining power to shape the terms of those reforms at the bargaining table. Compared to Argentina on the one hand, and Brazil and Colombia on the other, Mexico represents an intermediate case in which the process of decentralization was initiated from above (as in Argentina) but where the political reforms intersected the sequence of decentralization relatively early. This allowed for the formation of subnational followers of decentralization who were empowered to advance further political and above all fiscal decentralization. The end result of the process was that, of the four countries analyzed in this book, Mexico experienced the most progress in terms of the evolution of the share of expenditures allocated to subnational governments (a 61% increase, as can be seen in the second row of Table 2.6 in Chapter 2). Governors and mayors have also gradually gained policy-making capacity and authority over the allocation of revenues. Finally, the formation of associations of mayors and more recently of governors is yet another indication that through coordination subnational governments can promote the advancement of decentralization and increase their autonomy vis-à-vis the national executive.

7 Conclusion Decentralization, Temporal Analysis, and Territorial Politics

The scholarly record regarding the impact of decentralization on a wide range of political and economic phenomena such as democratization, conflict resolution, governance, macroeconomic stability, and social and regional inequality is mixed, to say the least. The claim that decentralization leads to higher levels of fiscal efficiency, better government performance, and higher levels of political participation and accountability has been disputed by those who argue that decentralization increases economic instability and political clientelism.1 Interestingly, both the advocates and the critics of decentralization alike assume that these policies necessarily augment the power of subnational governments. In their analyses, an increase in the power of subnational officials (seen either as local heroes or as tyrants) is the intervening variable between decentralization and the outcomes of the reforms. However, as this book shows, a closer examination of the consequences of decentralization across Latin America reveals that the magnitude of such change can range from insignificant to substantial. In some countries, such as Brazil and Colombia, decentralization policies led to the expected result – increasing the power of subnational officials. In other countries, decentralization had a more moderate effect, as in the case of Mexico, or did not even alter the balance of power between levels of government, as in the case of Argentina. Why do some governors and mayors gain power from decentralization reforms while others do not? What are the conditions that allow the governors and mayors of one

1

See Chapters 1 and 2 for bibliographical references that illustrate these debates.

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Conclusion

country to reap the benefits of decentralization policies while those of another country see little or no benefit from a similar set of reforms? This concluding chapter summarizes the book’s main findings regarding, first, the effects of decentralization on subnational politics and, second, the role of territorial interests on the origins of the decentralization reform processes. It also outlines the main contributions the book makes to the literatures on decentralization, territorial politics, and path dependence and identifies some of the research tasks that lay ahead for the future.

Sequences of Decentralization, Policy Effects, and Their Impact on the Intergovernmental Balance of Power The book has developed a sequential theory of decentralization (Chapter 2), which has been applied to the four largest countries of Latin America (Chapters 3 through 6). I argue that the sequence in which different types of decentralization policies (administrative, fiscal, and political) unfold over time is a key determinant of the evolution of the intergovernmental balance of power. If administrative decentralization takes place first, it will tend to reproduce the power of the national executive, who will be able to off-load responsibilities without necessarily transferring resources. If, instead, political decentralization happens first, it will likely generate a group of followers and engender self-reinforcing policy ratchet effects that will further strengthen the ability of subnational actors to negotiate more devolution of political and fiscal authority. In Argentina, the sequence of postdevelopmental decentralization reforms conformed to the order of preferences of national executives. The process started with administrative decentralization, continued with fiscal decentralization, and ended with political decentralization. Unfunded administrative decentralization in 1978 reproduced the power of the national executive, who was able to delay a fiscal decentralization measure until an exogenous event – the midterm elections of 1987 – shifted the political playing field in favor of the governors. As Figure 7.1 illustrates, this is how the first and second stages of the decentralization reform process are connected in Argentina. The administrative decentralization of 1978 also produced an incremental and a demonstration effect. First, by forcing provincial governments to augment their responsibilities in the educational sector, it made

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Decentralization, Policy Effects, and Their Impact Adm. Layer

Adm. Dec. of Primary Education

Incrementalism Demonstration effect

Adm. Dec. of Secondary Education

Reproduction of power of the national executive

Reactive Fiscal Dec.: Effect Coparticipation Law

Fiscal Layer

Fiscal Centralization: 1992 Fiscal Pact

Political Dec.: Constitutional Reform

Political Layer

Year

1978

1988

1992

1994

Figure 7.1. Sequence and Policy Effects of Postdevelopmental Decentralization in Argentina, 1978–1994 Note: The dotted rectangle indicates that the Fiscal Pact of 1992 was a fiscally centralizing reform.

governors more receptive to further decentralization of educational services. Second, once national-level policymakers observed that unfunded administrative decentralization had worked in a context of fiscal expansion, they were able to adopt the same type of unfunded decentralization policy, although this time under a democratic political regime. The fiscal decentralization of 1988, in turn, had a reactive effect. In 1992, the national executive pursued a cut in automatic transfers to the provinces. This cut would not have been possible had decentralization produced a group of followers after the first stage of the process. Finally, political decentralization did not come about as a consequence of the way in which the prior decentralization reforms evolved in Argentina (note that in Figure 7.1 there is no arrow connecting political decentralization and the prior reforms). On the contrary, political decentralization merely happened due to a national-level negotiation in which President

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Conclusion

Carlos Menem used the political autonomy of the City of Buenos Aires as a bargaining chip in his bid for reelection. The sequence of decentralization reforms experienced by Argentina did not empower the subnational officials. Instead, governors were loaded with more responsibilities, had less relative revenues, and had the same amount of political authority as they had enjoyed in the early 1970s, before the process of postdevelopmental decentralization started. The sequences of decentralization in Colombia and Brazil are at the opposite end of the spectrum. In Colombia, the decision to popularly elect the mayors, which stemmed from subnational social and political pressures, had the self-reinforcing effect of augmenting the bargaining position of local authorities in the subsequent round of fiscal decentralization. They coordinated their actions in the Colombian Federation of Municipalities (Federación Colombiana de Municipios, FCM) which, created after the first cohort of mayors was elected in 1988, had an active role in lobbying the 1991 conventionalists for more fiscal decentralization. The popular election of mayors also led the governors and the departmental-level politicians (the losers of the first political reform) to pressure the national executive and the constitutional Conventionalists to pass the popular election of governors in 1991. The popular election of mayors thus had an incremental effect on the political structure of intergovernmental layers in the sense that the popular election of governors came to be seen as the “next step,” as illustrated in Figure 7.2. Empowered by this political change, the governors could also join in with the mayors in their demands for greater fiscal decentralization. Administrative decentralization was the last type of reform, brought about by the national executive to compensate for the prior fiscal decentralization of resources. But given the power already amassed by the subnational authorities, in alliance with the teachers’ union FECODE, the reform was funded. The Colombian sequence of postdevelopmental decentralization, in which political power was devolved first, followed by resources, and finally by responsibilities, empowered the governors and especially the mayors. Brazil followed the same sequence of reforms as Colombia. It started with a political decentralization reform: the decision, approved in 1980, to return to the popular election of governors. When the newly elected governors were chosen in 1982, they had a claim to legitimacy that the military national executive did not have. Subnational actors were able to demand, and ultimately to pursue, a course of fiscal decentralization against the wishes of the central government. Both reforms continued reproducing the power of subnational actors, who were in a favorable

235

Decentralization, Policy Effects, and Their Impact Adm. Dec. of Education and Health

Adm. Layer

Reactive Mechanism: Compensation Reproduction of power of subnational actors

Fiscal Dec: Const.Ref.

Fiscal Layer

Policy ratchet effect (Coordination in FCM)

Political Layer

Year

Pol. Dec: Incrementalism Popular Election of Mayors

1986

Pol. Dec: Popular Election of Governors

1991

1993–94

Figure 7.2. Sequence and Policy Effects of Postdevelopmental Decentralization in Colombia, 1986–1994

position to negotiate other fiscal, political, and administrative reforms in 1988. Within the political and fiscal layers, earlier reforms also had policy ratchet and incremental effects on later ones, as illustrated in Figure 7.3. This sequence of reforms resulted – as in Colombia – in a significant devolution of power to subnational officials. Mexico began its process of decentralization with an administrative reform, but it also tackled political decentralization at about the same time. The administrative reforms of the early 1980s had direct antecedents in the deconcentration efforts that had taken place in the context of the developmental state – aimed at reforming the education bureaucracy and cutting the power of the teachers’ union. The early administrative decentralization reforms created state-level education agencies (USEDES) that promoted coordination and cooperation between the states and the federal education authorities. Such policy effects facilitated the implementation of the National Agreement for the Modernization of Basic Education (ANMEB), which decentralized all basic educational services to the states in 1992. The political reforms, on the other hand, were part of a

236

Conclusion Administrative Decentralization of Health

Admin. Layer

Fiscal Layer Reproduction of power of subnational actors

Political Layer

Year

Political Dec.: Popular Election of Governors

1980

Fiscal Dec.: Incrementalism Constitut. Amendment Passos Porto

Policy ratchet effect

1983

Fiscal Dec.: Increase of Transfers to States and Municipalities

Political Dec.: Municipal Autonomy

1988

Figure 7.3. Sequence and Policy Effects of Postdevelopmental Decentralization in Brazil, 1980–1988

project aimed at strengthening local governments as a means of retaining power at the state and federal levels of government. This resulted in the organization and coordination of local authorities into their own associations, such as the Association of Mexican Municipalities (Asociación de Municipios de México A.C., AMMAC), which represented the territorial interests of municipalities. As political contestation increased, they were successful in advancing fiscal decentralization. As can be appreciated in Figure 7.4, the fiscal and political layers are connected in Mexico by the action of local authorities. Finally, the signing of the ANMEB, in the administrative layer, also facilitated further fiscal decentralization in 1997, as Ramo 33 provided for more transfers of revenues for education. In summary, although the sequence of decentralization in Mexico started as it had in Argentina (administrative decentralization imposed from above), the strategic decision of the national executive to decentralize authority to the municipal level (to retain power at higher levels) and the intersection of democratizing political reforms had the

237

Decentralization, Policy Effects, and Their Impact

Adm. Layer

Adm. Dec. of Education: State Agreements

Coord.

Adm. Dec. of Education: ANMEB Self-reinforcing effect

Fiscal Dec.: Reform LCF

Fiscal Layer

Fiscal Dec.: Creation Ramo 33

Policy ratchet effect (Coordination in CNEM; CESEM; AMMAC)

Political Layer

Year

Pol.Dec.: Reform Art.115

1983

Pol.Dec.: Creation D.F. Leg. Assembly

1986

Pol.Dec.: Popular Elec. D.F. Mayor

1992

1995 1996 1997

Figure 7.4. Sequence and Policy Effects of Postdevelopmental Decentralization in Mexico, 1983–1997

effect of creating a subnational group of supporters of decentralization who succeeded in obtaining fiscal decentralization in 1995 and 1997. It is worth noting that while I categorize Mexico as an intermediate case in terms of the change in the intergovernmental balance of power, it has the potential to see increased devolution of resources, responsibilities, and authority in the years to come due to the empowerment of local authorities. The formation of two other municipal associations (linked to the other two main political parties), an umbrella mayoral association, and a governors’ association speaks to the further devolution of autonomy to states and municipalities that could result from their actions and from the coordination of subnational territorial interests. In the four cases just summarized, the earlier reforms defined the intergovernmental structure in which future negotiations would take place.

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The early decentralization reforms produced incremental, demonstration, coordination, and compensation effects that significantly affected the bargaining power of the negotiating parts in the subsequent rounds of reforms. Thus, the impact of decentralization on the distribution of power among national and subnational executives varied widely from one country to another, as these countries followed different sequences or paths of reforms. It must be noted, however, that institutional legacies also played a role in defining the contents of decentralization policies. For example, both Argentina and Mexico initiated their processes of postdevelopmental decentralization with the decentralization of education. Also, in both countries, national territorial interests prevailed when these policies were enacted. However, because Mexico did not have a well-developed statelevel educational system, unfunded decentralization was not an option as it was in Argentina, where the provinces historically had a significant role in the delivery of educational services. Argentina and Brazil also started their processes of postdevelopmental decentralization under authoritarian rule. In Argentina, as one would expect under such a political regime, administrative decentralization was adopted first. In Brazil, instead, the first decentralizing reform was a political one. The reason for this variation lies in the institutional differences in the power organization of both authoritarian regimes. Whereas the military in Argentina suppressed and banned all forms of political association and representation, the Brazilian military allowed for some continuation of political representation and, to a small degree, contestation. Thus, the Brazilian Congress was in session during most of the military period, and the subnational legislative bodies and the mayors were popularly elected (with the exception of the mayors from the state capitals, cities of national security importance, and estâncias hidrominerais). There was, in Brazil, an institutional avenue for the voicing of subnational demands in favor of political decentralization that simply did not exist in Argentina (for more on this comparison, see Falleti 2007). Overall, despite these differences in institutional constraints and possibilities, it can be concluded from the comparative sequential analysis of decentralization processes that the type of decentralization first enacted is consequential for the rest of the process of reforms and for the degree of autonomy finally conferred to subnational executives. And yet, this conclusion begs the question of what brings the first type of decentralization about.

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Territorial Interests and the Origins of Decentralization Processes As Chapters 3 through 6 have shown, myriad factors led to the initial decisions to decentralize. At times, there were pressures from subnational societal and political actors (such as in the cases of Colombia and Brazil). On other occasions, the opportunistic calculations of national executives prevailed (as in the cases of Argentina and Mexico). The empirical chapters have shown that varied contextual and institutional factors account for the initial impulses to decentralize. Given their heterogeneity across cases, these factors render our attempts at generalizing on the causes of decentralization largely fruitless. Thus, I do not find it worthwhile to generalize about what causes decentralization across time and space. However, once a decentralizing coalition has been identified, the analysis of its main territorial and partisan components and the type of territorial interests that prevail go a long way toward explaining the type of decentralization reform first adopted (which in turn is so important for the sequence of reforms and its effects on the intergovernmental balance of power). In fact, one may productively ask: Under what conditions are different types of decentralization likely to be adopted in a postdevelopmental nation-state? Of the twenty instances of administrative, fiscal, and political decentralization analyzed in this book, the explanation of territorial interests advanced in Chapter 2 (see the summary of hypotheses in Table 2.4) accounts for the occurrence of 85% of the total cases. Furthermore, two of the cases that do not conform to the territorial interests explanation can be accounted for once the reforms are placed in the chronology of the sequence of reforms. Thus, the theory correctly predicts 95% of the cases analyzed. As stated in Chapter 2, the predominance of national territorial interests in the coalitions that push forward decentralization reforms should lead to the adoption of administrative decentralization. I expect national territorial interests to predominate in the national-level coalitions and in the ruling coalitions. On the contrary, the predominance of subnational territorial interests in the decentralizing coalitions should lead to the adoption of either political or fiscal decentralization measures. I expect subnational territorial interests to be predominant in three types of coalitions: subnational coalitions, opposition coalitions, and mixed NR-SO (national-ruling and subnational-opposition actors) coalitions. How do

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Table 7.1. Decentralization Coalitions, Types of Decentralization Policies, and Predominant Territorial Interests in Argentina, Colombia, Brazil, and Mexico, 1978–1997 Decentralization Coalition

Argentina

No Coalition

A, 1978 (national)

National-Level Coalition

P, 1994 (mostly national) A, 1992 (national) F, 1988 (subnational)

Ruling Coalition Subnational Coalition

Mixed NR-SO Coalition

Colombia

Brazil

A, 1983–1986 (national) P, 1983 (national) A, 1992 (national)

A, 1993–1994 (national)

F, 1991 (subnational)

P, 1986 (subnational) P, 1991 (subnational)

Mexico

P, 1980 (subnational) F, 1983 (subnational) P, 1988 (subnational) F, 1988 (subnational) A, 1988 (subnational) P, 1986 (subnational) F, 1995 (subnational) P, 1996 (subnational) F, 1997 (subnational)

Note: A: administrative decentralization, F: fiscal decentralization, and P: political decentralization, followed by the year of adoption. The predominant type of territorial interests corresponding to each reform is in parentheses.

these expectations fare against the background of the empirical cases analyzed in this book? Table 7.1 summarizes the empirical findings regarding decentralizing coalitions, prevailing territorial interests, and the types of reforms adopted in each country. It shows that the expectations of Chapter 2, regarding decentralization coalitions and types of interests, were

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correct. National interests predominate in the reforms pushed forward by national-level coalitions and ruling coalitions. Subnational interests predominate in those coalitions that were formed primarily by subnational actors as well as in the mixed NR-SO (national-ruling and subnational-opposition actors) types of coalitions. And as one would have predicted, whenever the reforms were single-handedly imposed from above by the national executive (without a coalition), national interests prevailed. In the empirical cases, I did not observe any instances of mixed coalitions formed by subnational-ruling and national-opposition (SR-NO) types of actors. Neither did I observe any cases of opposition coalitions. Regarding the absence of mixed SR-NO coalitions, as explained in Chapter 2, it is hard to think of the political conditions that would lead to the formation of this type of alliance. If subnational-ruling and nationalopposition actors wanted decentralization, they would find better allies in the national-ruling and in the subnational-opposition actors, respectively.2 Based on my cases, it also appears rare for opposition coalitions – those formed by national- and subnational-opposition actors – to be the sole authors of decentralization policies. This may be due to the fact that decentralization policies require negotiations with the national executive or the party in office. Even in the cases of decentralization reforms that were advanced by subnational types of coalitions, governors and mayors of the ruling party and of the opposition had to negotiate with the national executive over the extent of the reform. Moreover, with the exception of the reforms that were single-handedly imposed by the national executive, all the other reforms came about as the result of political bargaining, not as the consequence of an abrupt or revolutionary political change. Even in the case of Colombia, where the demonstrations of civil society in the civic strikes put significant pressure on the political system, the popular election of mayors was proposed to Congress by the president. In other words, decentralization constitutes, at best, a “quiet revolution” and not a noisy breakthrough that can be imposed on the ruling party solely by an opposition coalition.3 Two further conclusions can be drawn by observing the differences in decentralizing coalitions among the four countries. First, there was an 2

3

I cannot thereby deductively or inductively theorize about the type of interest that such a type of coalition advances. “The Quiet Revolution” is precisely the title of a book devoted to local reforms in Latin America (Campbell 2003).

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absence of reforms imposed from above in Colombia and Brazil, although they existed in Argentina and in Mexico. The fact that in Colombia and Brazil all of the reforms were the result of bargaining and none of them were imposed from above speaks to the subnational character of the decentralization paths undertaken in those countries, unlike those of Argentina and Mexico, where, for different reasons, decentralization was initiated by the national executive. Second, Argentina is the only case in which a ruling coalition was found. This is consistent with what I expected. The formation of a ruling coalition that made possible the decentralization of secondary schools (as well as the centralizing fiscal pact of 1992) reflects the higher bargaining power enjoyed by the national executive in Argentina. The preferences of the president outweighed those of the governors. While this could be attributed to the idiosyncrasies of President Carlos Menem’s (1989–1995 and 1995–1999) leadership style, Chapter 3 has shown that previous rounds of administrative and fiscal reforms were determining factors in the prevalence of the president’s interests over those of the governors of his party and of the opposition. Regarding the types of decentralization reforms advanced by the different types of coalitions, as expected, the six fiscal decentralization reforms (those of 1988 in Argentina, 1991 in Colombia, 1995 and 1997 in Mexico, and 1983 and 1988 in Brazil) were pursued by coalitions in which subnational interests prevailed (mixed NR-SO or subnational types of coalitions). Of the seven instances of administrative decentralization reforms, six were advanced by coalitions in which national interests prevailed, as I would have predicted. Those were the administrative reforms of 1978 and 1992 in Argentina, 1993–1994 in Colombia, 1996 in Brazil, and 1983– 1986 and 1992 in Mexico. Only one case of administrative decentralization did not conform to the theoretical expectations: the administrative decentralization in 1988 of health care in Brazil. In this case, it was a subnational coalition formed by a sectoral social movement (the sanitarista movement), allied with local and state officials, that pressured the 1988 constitutional conventionalists to have health care services decentralized. Finally, of the eight instances of political decentralization, six conformed to the theory (the reforms of 1986 and 1991 in Colombia, 1980 and 1988 in Brazil, and 1986 and 1996 in Mexico). Nevertheless, political decentralization of the City of Buenos Aires in 1994 and the first political decentralization measure in Mexico (legislated by the amendment to Article 115 of the Mexican Constitution in 1983) did not

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243

conform to expectations. The first reform was advanced by a nationallevel coalition and the latter by the president, rather than by subnational interests. Why did the administrative decentralization of health care in Brazil, the political decentralization of the City of Buenos Aires in Argentina, and the political decentralization reform of Article 115 in Mexico not conform to the expectations laid out in Chapter 2? The timing of the reforms helps to explain the answer to this question in Argentina and Brazil. In both cases, the nonconforming policies were passed in the last rounds of negotiations in the first cycle of decentralization. I have earlier referred to the last policies in the sequence of reforms as “residual” policies in the sense that they are the only types of decentralization “left” to be implemented. In both of these last reforms, the predominant territorial interests are the same ones that dominated throughout the process of decentralization. These cases evidence the strengthening of the initially winning territorial interests as the process of decentralization moved forward. In both Argentina and Brazil, the level of government that benefited the most from the first postdevelopmental decentralization measure kept its comparative advantage over the other levels of government for the remainder of the first cycle of reforms. This was so much so that in Argentina the national executive determined the contents and timing of political decentralization, and in Brazil the sectoral health movement and the subnational governments requested the decentralization of social services. The case of political decentralization in 1983 in Mexico is different. As explained in Chapter 6, this was a strategic move by the president to devolve power at the local level in order to keep power at the higher levels of government. This reform is evidence that, as the famous Marxist dictum goes, political actors make their own history but under circumstances that are not of their own choosing (Marx 1968 [1852]). In the midst of a colossal economic and financial crisis, the hegemonic-party system had to renovate itself, and for that reason de la Madrid proposed political decentralization. But de la Madrid was able to choose the level of government to be the target of his political reform, and, as expected, he chose the municipal level. As we see, the prevailing territorial interests in the first decentralizing coalition have great explanatory power to account for the different types and contents of the decentralization policies adopted. Now, what are the substantive implications of these findings?

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Decentralization, Subnational Politics, and Institutional Change A fascinating feature of decentralization policies is their potential to reverse long-standing, deeply embedded features of intergovernmental institutions. In a relatively short time span, decentralization reforms such as the direct election of governors and mayors, the transfer of national schools and health care services to states and municipalities, and the devolution to the subnational units of the authority to levy taxes can undo the “skillful organization of authority,” the “complicated administrative machine” described by Tocqueville in this book’s opening epigraph. In other words, decentralization has the potential to produce rapid and radical institutional changes in the historical pattern of intergovernmental relations and in the horizontal distribution of power among territorial units. However, while this potential is reached in some countries, it is not fulfilled in others. In fact, the analysis of decentralization policies in Latin America reveals that decentralization is a malleable tool. In the hands of either national or subnational actors, decentralization policies pursue different objectives and produce different effects. In the hands of national executives, decentralization policies are tools to hold on to power (as in the case of Mexico) or to off-load responsibilities without resources (as in the case of Argentina). Under this scenario, decentralization is unlikely to bring about extensive institutional change or to improve the quality of government or the delivery of social services, as the critics of decentralization contend. In Argentina, for example, the difficulty of organizing the local level and promoting local programs reflects the limits of a decentralization process that was largely commanded by national territorial interests and actors. Instead, in the hands of subnational actors, decentralization policies seek to democratize the political system (as in the cases of Colombia and Brazil) and to improve the quality of and access to public services (as it is most evident in the Brazilian reform of health care). In these contexts, decentralization becomes a powerful tool for institutional innovation, and improvements in governance and political accountability are likely as a result, as the advocates of decentralization claim. The increasing salience of Brazilian and Colombian municipalities in intergovernmental relations and in the implementation of public programs, for example, is a sign that the subnational dominance path to decentralization is bearing its fruits in those countries. Mexico may also evolve in this direction

Looking Back and Ahead

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if subnational governments are able to capitalize on the gains obtained from the first cycle of postdevelopmental decentralization. These findings suggest that the debates in the literature about the consequences of decentralization on processes and outcomes such as democratization or fiscal and administrative efficiency are not likely to be settled. Empirical cases will always be found to support either the claims of the advocates of decentralization or those of its critics. Instead, only by sorting cases according to the territorial interests and the actors who were victorious in advancing decentralization proposals will we be able to assess whether decentralization policies are likely to be successful in bringing about fiscal efficiency and political participation and accountability. For policy-making reasons also, it is important to understand the effects of decentralization on subnational politics. In Latin America, the ongoing processes of political and economic reforms are dependent on those effects. Political reforms, such as electoral or constitutional changes, and economic reforms, whether they are economically liberalizing or nationalizing in nature, all require negotiations and coordination among the central, state, and local governments. The quality of subnational governments and their capacities to carry out what are often desperately needed political and economic reforms depend on whether power has been devolved to those subnational governments in the first place. Hence, the present and future of the quality and coverage of public social services, the balance of fiscal systems, the accountability of state and local governments, and the vibrancy and relevance of the subnational associations all hinge largely on the changes that decentralization policies bring about to intergovernmental relations and subnational politics. Knowing how subnational governments have been affected differently by decentralization policies places us in a better position to grasp the opportunities and constraints that lay ahead.

Looking Back and Ahead To conclude, I would like to highlight the main contributions that this book makes to the literatures on decentralization, intergovernmental relations, institutional evolution, and path dependence, as well as the important research tasks awaiting future attention. First, the book breaks new ground in the literature on decentralization by providing a clear, extensive, and exhaustive definition of decentralization reforms. The unpacking of decentralization processes into their

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political, fiscal, and administrative dimensions, as defined in Chapter 2, will facilitate future measurement of decentralization policies and will allow much more nuanced analyses of the interactions among different types of decentralization reforms and their effects on a wide array of economic, political, and policy outcomes. I have focused, however, on the first cycle of postdevelopmental decentralization reforms, which ends once the three types of decentralization (administrative, fiscal, and political) have all occurred. But like many other political processes that seek to reform the organization of the state, decentralization is an ongoing phenomenon. New redistributions of responsibilities, resources, and authority among levels of government have taken place since the first cycle of postdevelopmental decentralization. My claim is that understanding how the first cycle of reforms has affected every layer of intergovernmental relations is essential to gauge the opportunities and constraints that governors, mayors, and presidents will have to confront if they want to deepen, stall, or reverse previous devolutions of responsibilities, resources, and authority to subnational governments. Future research thus will have to specify the degree to which the consequences of the first cycle of decentralization constrain more recent rounds of intergovernmental reforms and the degree to which exogenous political and economic changes could contribute to relax those constraints. I expect that within the context of the same type of nationstate (postdevelopmental or neoliberal), the first cycle of decentralization policies will greatly influence the contents of the intergovernmental reforms that would follow, but this expectation needs to be corroborated empirically. Second, unlike the bulk of the literature on decentralization that stresses the partisan or electoral incentives of politicians to decentralize, this books takes into account the territorial interests of societal and political actors who not only voice the interests of their political parties or ideological affiliations but also represent their levels of governments and geopolitical territorial units. My claim is that in analyzing the incentives of bargaining actors toward decentralization reforms, their territorial interests are more illuminating than their partisan loyalties or affiliations and future research will benefit from taking territorial interests more systematically into account. My disaggregation of territorial interests has focused on levels of governments. Hence, I classify them as either national or subnational. There are two types of subnational territorial interests’ distinctions on which I have not focused but that deserve further investigation. The first type

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247

of horizontal territorial distinction stresses the differences in incentives and preferences between intermediate-level and local-level actors. The theorization of preferences of central-, intermediate-, or local-level actors toward the level of government that would be the recipient of decentralized resources, responsibilities, or authority in Chapter 2 touched on this distinction (see the last column of Table 2.3). The chapters on Colombia and Mexico brought to the fore some empirical evidence on the national executives’ incentives to decentralize political and fiscal authority toward the local level of municipalities, rather than toward the departments or member-states. However, future research on decentralization and intergovernmental relations will have to further analyze the relationship between state-level and local-level actors. In particular, as the downward transfer of resources, responsibilities, and authority moves from the national to the intermediate level, the interactions between governors and mayors will become increasingly relevant for politics and for policymaking and management. The second type of horizontal subnational territorial interests that deserves further attention is that one emanating from the representation of different types of geopolitical units (rural or urban locations, rich or poor states, etc). Future research on territorial politics will have to systematize the incentives of subnational actors to cooperate or compete given the type of geopolitical unit they represent. Third, unlike most political science works on decentralization that explain this process as a function of political institutions, I reverse the direction of the causal arrow. I show that decentralization can be treated as a process of interconnected policies that (as Paul Pierson says) creates politics. My research reveals how decentralization policies foster new groups of supporters; modify the political dynamics among national executives, governors, and mayors in ways that were not necessarily intended or anticipated when the first policies were designed and implemented; and how they ultimately lead to the creation of new institutions for the representation of subnational interests. But, undoubtedly, as these policies get institutionalized – in laws, constitutions, and even new institutions or organizations – there are feedback loops going from the newly created or reformed institutions to the adoption of new intergovernmental policies that will have to be further investigated. Finally, the temporal approach adopted in this book is markedly different from previous studies of decentralization. It challenges the traditional theories that view the evolution of intergovernmental relations as a result of the constitutional type of government and of the characteristics of the

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political party systems. Instead, incorporating the territorial aspects of interest representation, this book constitutes, to my knowledge, the first attempt at systematically theorizing the causal relationships between distinct types of decentralization policies in a sequence of reforms and their impact on intergovernmental relations. The temporal approach adopted in this book entails an analysis of the chain of bargaining situations among national and subnational political and societal actors over different types of policies. It also entails a scrutiny of how previous rounds of reforms affect later ones and of the type of self-reinforcing or reactive mechanisms that bring about the observed outcomes. Thus, the book provides evidence of the fact that decentralization processes conform to path-dependent processes in which earlier events matter much more than later ones (Pierson 2000, 253) for the final outcome of interest. However, the book also provides evidence of the fact that the intersection of decentralization with other processes, such as democratization, may create reactive mechanisms that change the pattern of reforms expected from the original path undertaken. In this regard, the book advances an account of path dependence that is nondeterministic, explaining reproduction as well as change along a sequence of reforms. Yet, more research and refinement of self-reinforcing and reactive mechanisms are needed. The book has advanced the study of some powerful self-reinforcing mechanisms such as reproduction of power, policy ratchet effects, incrementalism, and demonstration effects. However, the further specification of causal mechanisms that underpin social interaction and connect the different stages of policy reform processes, particularly in reactive types of sequences, is fertile terrain for future studies.

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Appendix List of In-Depth Interviews

Argentina Interviewees Aguerrondo, Inés. Vice secretary of education programming at the National Ministry of Education (1994–1999). November 16, 2000; January 24, 2001; and February 13, 2001. Buenos Aires. Angeloz, Eduardo César. Governor of Córdoba (1983–1989 and 1989–1995); national senator of Córdoba; presidential candidate (1989). December 19, 2000. Buenos Aires. Arlía, Alejandro. Provincial director of economic studies at the Ministry of Economy of the Province of Buenos Aires; official at the Ministry of Economy (1991–1997). February 12, 2001. Buenos Aires. Baldrich, Jorge. National deputy; vice secretary of regional programming at the Ministry of Economy under Domingo Cavallo’s administration. February 7, 2001. Buenos Aires. Barry, Luis Antonio. Secretary of education at the National Ministry of Education (1989–1992). November 30, 2000 and December 4, 2000. Buenos Aires. Berensztein, Sergio. Specialist in tax reforms; professor at University Torcuato Di Tella. July 21, 1998. Buenos Aires. Bordón, José Octavio. Governor of Mendoza (1987–1991); director of culture and education for the Province of Buenos Aires (1999–2001); national senator of Mendoza (1992–1996); presidential candidate (1995). February 8, 2001. Buenos Aires. Ciccone, Antonio. Specialist in education reforms for the provinces. February 9, 2001. Buenos Aires. Decibe, Susana. National minister of education (1996–1999). February 7, 2001. Buenos Aires. Dufour, Gustavo. Specialist in education decentralization. September 15, 2000. Buenos Aires. España, Sergio. Minister of education of Chubut (1987–1990); official at the National Ministry of Education; adviser to the governors of Santa Fe and Cordoba. Janurary 26, 2001. Buenos Aires. 271

272

Appendix

Faierman, Eduardo. Database manager at the Federal Institute of Municipal Matters (IFAM), Ministry of the Interior. July 1998. Buenos Aires. Feijoo, María del Carmen. Director of educational planning and evaluation at the Ministry of Education of the Province of Buenos Aires (2000); representative to the 1994 Constitutional Assembly. July 20, 1998; November 11, 2000; and December 4, 2000. Buenos Aires. Fiszbein, Ariel. Official at the World Bank, Buenos Aires office. January 30, 2001. Buenos Aires (previously in Bogotá, Colombia). Gadano, Nicolás. Vice secretary of budget at the National Ministry of Economy (1999–present). November 1, 2000. Buenos Aires. García, Diego. Minister of economy of Misiones (1995–1999); adviser to National Deputy and former Governor of Misiones Federico R. Puerta. December 18, 2000. Buenos Aires. Garnero, Hugo. Minister of economy of Santa Fe (1995–1999); member of Domingo Cavallo’s team at the National Ministry of Economy prior to 1994. February 15, 2001. Buenos Aires. Ghio, José María. Professor at University Torcuato Di Tella. September 21, 2000. Buenos Aires. Laurnagaray, Ricardo. Economist at the National Ministry of Economy. July 1998; September 11, 2000; December 13, 2000; and January 22, 2001. Buenos Aires. Llach, Juan José. National minister of education (1999–2000); vice minister of economy (1996); secretary of economic programming (1991–1996). January 30, 2001. Buenos Aires. Makón, Marcos. Vice secretary of budget at the National Ministry of Economy (1991–1996); in charge of the state’s administrative reform at the “Jefatura de Gabinete” (1999–2001); official at the Federal Council of Investments, CFI (1963–1973). Janurary 26, 2001. Buenos Aires. Narodowsky, Mariano. Education consultant, CEDI. August 31, 2000. Buenos Aires. Nores, Milagros. Education specialist, CEDI. September 21, 2000. Buenos Aires. Novick de Senen González, Silvia. Adviser to the CFI and the National Ministry of Education. November 14, 2000 and February 5, 2001. Buenos Aires. Pezoa, Juan Carlos. Vice secretary of fiscal and economic relations with the provinces at the Ministry of Economy (1991–1997). February 13, 2001. Buenos Aires. Remes Lenicov, Jorge Luis. Minister of economy for the Province of Buenos Aires (1987–1996); national deputy for the Province of Buenos Aires. February 6, 2001. Buenos Aires. Repetto, Fabián. Public official of the National Ministry of Social Welfare; specialist in social policies and poverty. September 11, 2000. Buenos Aires. Roisecco, Juan Carlos. Former official of the National Ministry of Interior; national director of education programs for adults (1983–1989). October 24, 2000 and December 5, 2000. Buenos Aires. Salonia, Antonio. National minister of education (1989–1992). December 15, 2000. Buenos Aires.

List of In-Depth Interviews

273

Sanguinetti, Juan. Economist; specialist in fiscal federalism. September 28, 2000. Buenos Aires. Sarabia, Leticia. Governmental administrator: in commission at the National Ministry of Education for the transfer of high schools to the provinces (1992) and official at the national cabinet of ministers (2000–2001). December 14, 2000. Buenos Aires. Seijas, Marcelo. Governmental administrator: in commission at the National Ministry of Education for the transfer of high schools to the provinces (1992) and official at the national cabinet of ministers (2000–2001). December 15, 2000. Buenos Aires. Smulovitz, Catalina. Professor at University Torcuato di Tella, political science. September 14, 2000; December 6, 2000; and February 18, 2001. Buenos Aires. Sterenlicht, Edmundo. Official of CFI. November 29, 2000. Buenos Aires. Tenti Fanfani, Emilio. Sociologist. February 13, 2001. Buenos Aires. Tommasi, Mariano. Political economist. September 28, 2000. Buenos Aires. Van Gelderen, Alfredo. Member of the National Academy of Education. January 31, 2001. Buenos Aires. Zuleta Puceiro, Enrique. Political analyst; pollster. January 18, 2001. Buenos Aires. Brazil Interviewees Afonso, Jose Roberto. Economist at the Brazilian National Development Bank; congressional consultant. August 17, 2005. Rio de Janeiro. Amorim Neto, Octavio. Professor of political science at the Getulio Vargas Foundation (FGV) in Rio de Janeiro. August 5, 2005. Rio de Janeiro. Arretche, Marta. Professor of political science at CEBRAP; specialist on public policy decentralization. July 13, 2005 and August 18, 2005. São Paulo. Avelino, George. FGV in São Paulo. August 19, 2005. São Paulo. Barreiro de S. Lemos, Leany. Advisor to Senator Ana Julia (PT). July 29, 2005. Brasilia. Braun, Augusto. Responsible for municipal revenues at the National Confederation of Municipalities (Confederação Nacional de Municipios, CNM). July 28, 2005. Brasilia. Calmon, Paulo. Professor of political science at the University of Brasilia. July 19, 2005. Brasilia. D’Alva Kinzo, Maria. Political scientist; professor at USP. August 18, 2005. São Paulo. dos Anjos Marques Teixeira, Manuel. Secretary of the Executive National Council of Finance Policy (Conselho Nacional de Politica Fazendaria, CONFAZ). July 28, 2005. Brasilia. dos Santos Santos, Joao Luiz. Secretary of the Executive National Front of Mayors (Frente Nacional de Prefeitos, FNP). July 27, 2005. Brasilia. Fabio, Paulo. Professor of Public Policy at the Federal University of Bahia. June 10, 2005. Salvador. Figueiredo, Argelina. Professor of political science at CEBRAP and IUPERJ. July 14, 2005. São Paulo.

274

Appendix

Fleischer, David. Political consultant. July 18, 2005. Brasilia. Giambiagi, Fabio. Economist for the Institute of Applied Economics and Research (IPEA). August 16, 2005. Rio de Janeiro. Gremaud, Amaury Patrick. Adjunct general director for the School of Finance Administration (Escola de Administração Fazendaria, ESAF); Ministry of Finance (Ministerio da Fazenda). July 27, 2005. Brasilia. Guimarães de Castro, Maria Helena. Secretary of education, São Paulo State; official and vice minister of the National Ministry of Education (1995–2002); secretary of education of the Municipality of Campinas (1993–1995); professor at the University of Campinas. August 19, 2005. São Paulo. Hochman, Gilberto. Professor at Fundação Oswaldo Cruz. August 15, 2005. Rio de Janeiro. Junquiera Zanin, Mauricio. Responsible for international cooperation and management for the CNM. July 28, 2005. Brasilia. Kahir, Amir. Finance secretary of the City of São Paulo; president of ABRASFI (1989–1992). July 16, 2005. São Paulo. Mendes, Marcos Jose. Senate public finance consultant. August 4, 2005. Brasilia, phone interview conducted from Rio de Janeiro. Mueller, Bernardo. Professor of economics at the University of Brasilia. July 28, 2005. Brasilia. Ottoni de Castro, Marcelo. Senate education consultant. August 26, 2005. Brasilia, phone interview conducted from Philadelphia. Pelizari Romero, Luiz Carlos. Senate health consultant. August 4, 2005. Brasilia, phone interview conducted from Rio de Janeiro. Piancastelli de Siquiera, Marcelo. Director of public finance, regional and urban studies at the IPEA; Ministry of Planning, Budget and Management. July 25, 2005. Brasilia. Pojo do Rego, Carlos Antonio. Consultant for the Chamber of Deputies. July 19, 2005. Brasilia. Rezende, Conceicao Aparecida Pereira. PT adviser in the Chamber of Deputies; health secretary of the municipality of Betim, Minas Gerais; psychologist. August 3, 2005. Brasilia. Rezende da Silva, Fernando Antonio. Adviser to the minister of development, industry, and commerce; economist; public finances and budget specialist. July 20, 2005. Brasilia. Santos, Fabiano. Professor of political science at IUPERJ. August 1, 2005. Rio de Janeiro. Souza, Celina. Professor at the Center of Human Resources at the Federal University of Bahia. June 8, 2005. Salvador. Tavares de Almeida, Maria Herminia. Professor of political science at the University of São Paulo. August 18, 2005. São Paulo. Vargas Cortes, Soraya. Professor of sociology at the Federal University of Rio Grande Do Sul. June 10, 2005. Salvador. Velloso, Raul. Economist; consultant. July 25, 2005. Brasilia. Ziulkoski, Paulo. President of the CNM; former mayor of Mariana Pimentel (RS). July 22, 2005. Porto Alegre, phone interview conducted from Brasilia.

List of In-Depth Interviews

275

Colombia Interviewees Ahumada Beltrán, Consuelo. Professor of political science at the Pontificia Universidad Javeriana. March 12, 2001. Bogotá. Betancur, Belisario. President of Colombia (1982–1986). March 28, 2001. Bogotá. Castro, Jaime. Mayor of Bogotá (1990–1992); Minister of interior during the presidency of Belisario Betancur; former mayor of Bogotá; conventionalist (1991). March 29, 2001. Bogotá. Cataña, Gonzalo. Professor of the Universidad Pedagógica Nacional. March 20, 2001. Bogotá. Escobar Navia, Rodrigo. Minister of government (1982–1983); minister of education (1983–1984). March 29, 2001. Bogotá. Gantiva, Jorge. Leader of the Colombian Federation of Teachers (FECODE); adviser in the constitutional convention of 1991. March 20, 2001. Bogotá. Gómez, Victor Manuel. Adviser to the Ministry of Education for the Plan Decenal de Educación de Colombia (1993); professor of sociology of education at the National University of Colombia. March 13, 2001. Bogotá. López, Margarita. Director of planning at the Ministry of Education. March 26, 2001. Bogotá. Maldonado, Alberto. Public official at the Unit of Territorial Development (Unidad de Desarrollo Territorial, UDT) of the National Department of Planning, March 22, 2001. Bogotá. Melo, Jorge Orlando. Director of the Luis Angel Arango Public Library, Banco de la República. March 22, 2001. Bogotá. Napes Solano, Félix. Public official at UDT, DNP. March 16, 2001. Bogotá. Orjuela, Luis Javier. Professor of political science at the University of the Andes; specialist in political decentralization. March 13, 2001. Bogotá. Osorio, Luis Camilo. Member of the State Council. July 1998. Bogotá. Ospina Sardi, Jorge. Chief of the National Department of Planning (1982–1985). March 28, 2001. Bogotá. Palacios, Marco. Adviser to President Belisario Betancur; professor at the University of the Andes. March 14, 2001. Bogotá. Peña Borrero, Margarita. Vice minister of education. March 27, 2001. Bogotá. Ramírez, Francisco. Coordinator of decentralization at the Ministry of Education (1989–present). March 21, 2001. Bogotá. Ramírez, William. Director of the Institute of Political Studies and International Relations at the National University of Colombia. March 21, 2001. Bogotá. Rodríguez, Abel. President of FECODE (1978–1988); member of Bogotá Government Council (1988–1990); constitutional conventionalist (1991); vice minister of education (1998). March 28, 2001. Bogotá. Rodríguez, Jorge Armando. Director of fiscal issues at the Ministry of Economy (1994–1998). March 25, 2001. Bogotá. Romero, Mauricio. Professor at the Institute of Political Studies and International Relations at the Universidad Nacional. March 21, 2001. Bogotá. Sánchez Torres, Fabio José. Professor of economy at the University of the Andes, specialist in fiscal decentralization. March 14, 2001. Bogotá.

276

Appendix

Sarmiento Gómez, Alfredo. Director of the social mission (in charge of decentralization of social services) at the National Department of Planning. March 26, 2001. Bogotá. Serpa, Horacio. Liberal Party leader; presidential candidate; minister of interior; constitutional conventionalist. November of 2004. La Paz, Bolivia. Tarazona de Niño, Lucía. Adviser to the Ministry of Education and to the Secretary of Education of Cundinamarca. March 23, 2001 and March 26, 2001. Bogotá. Vasco Moscovich, Mauricio. Adviser to departmental governments. March 23, 2001. Bogotá. Vergara de De la Rosa, Carmen Helena. Chief of the Division on Education and Culture of the Unit of Social Development of the National Department of Planning (1991–1993); general director of planning at the Ministry of Education (1994–1996). March 19, 2001. Bogotá. Weisner Durán, Eduardo. Economist and consultant; former minister of economy. July 1998. Bogotá. Zapata, Juan Gonzalo. Specialist on fiscal issues. March 21, 2001. Bogotá. Mexico Interviewees Acosta Arévalo, José Octavio. Founding member of CESEM. October, 19, 2005. Mexico City. Alvarado, José Antonio. Chief of budget at the Ministry of Finance (SHCP) (1998–2001); director of education and health budget at the SHCP (1994– 1997). June 6, 2001. Mexico City. Arnaut, Alberto. Adviser to the Ministry of Education (Secretaría de Educación, SEP) under the administration of Manuel Bartlett (1988–1991); professor of sociology, specialist in education. May 7, 1999 and May 5, 2001. Mexico City. Avila, Antonio. Director of the unit of coordination with the states at the Ministry of Education (1994–2000). June 5, 2001. Mexico City. Baranda, Verónica. Adviser to the undersecretary of income at the Ministry of Finance (2000). May 31, 2001. Mexico City. Barrio, Francisco. Governor of Chihuahua (1992–1998). April 30, 1999. Mexico City. Bracho, Teresa. Specialist in education. May 3, 1999. Mexico City. Cabrero Mendoza, Enrique. Professor of public administration at CIDE; specialist in government decentralization and municipal governance. May 28, 1999 and May 14, 2001. Mexico City. Castrejón Díez, Jaime. Director of educational coordination at the Ministry of Education (1970–1975); director of political development at the Ministry of Interior (1990–1992). May 2, 2001. Mexico City. Colmenares Páramo, David. Chief of the unit of coordination with the states at the Ministry of Economy; minister of economy (Secretarío de Finanzas) of the state of Oaxaca. May 23, 2001. Mexico City. Cruz, Lizbeth. Official of AALMAC. October 18, 2005. Mexico City. D’Avila, Adriana. Adviser for the AMMAC. June 5, 2001. Mexico City.

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277

de la Madrid, Miguel. President of Mexico (1982–1988). May 31, 2001. Mexico City. De Remes, Alan. Political scientist and public official. October, 20, 2005. Mexico City. Díaz Cayeros, Alberto. Political scientist. August 1998. Mexico City. Elizondo, Carlos. Political analyst. May 20, 1999. Mexico City. Fuentes Molinar, Olac. Former under-secretary of basic and normal education. April 25, 2001. Mexico City. Garcia del Castillo, Rodolfo. Specialist in public administration and municipal governments. May 4, 1999. González Avelar, Miguel. Minister of education (1986–1988). June 12, 2001. Mexico City. Guerrero, Juan Pablo. Professor of public administration at CIDE. June 2, 1999; May 16, 2001; and May 24, 2001. Mexico City. Heredia, Blanca. Political scientist. May 21, 2001. Mexico City. Hernández Fausto. Economist; former adviser to Undersecretary of Finance Santiago Levy. May 20, 1999. Hernández, Samael. Adviser to the minister of education of the state of Oaxaca. Oaxaca. July 1, 2001, phone interview conducted from Chicago. Jones, Claudio. Social scientist; consultant. August 1998. Mexico. Langston, Joy. Professor of political science at CIDE. June 15, 1999 and April 9, 2001. Mexico City. Levy Algazi, Santiago. Undersecretary of finance and expenditures at the Ministry of Finance (1994–2000). June 1, 2001. Mexico City. Loyo, Aurora. Professor of sociology at the National Autonomous University of Mexico; former adviser to SNTE. May 28, 1999 and April 25, 2001. Mexico City. Luna de la Vega, Héctor. Minister of finance and planning of the state of Mexico (1999–present); federal deputy (1997–1999). June 8, 2001. Mexico City. Maliachi, Eduardo. Minister of education (Secretaría de Educación) of the state of Guerrero (1997–1999); representative of the Ministry of Education in the state of Jalisco (1992). June 14, 2001. Mexico City. Mancera Concuera, Carlos. Undersecretary of planning at the Ministry of Education (1992–2000). May 21, 2001. Mexico City. Marván, Ignacio. Adviser of former Mayor of Mexico City Manuel Camacho (early 1990’s); professor of political science at CIDE. May 9, 2001. Mexico City. Martínez Uriarte, Jacqueline. Consultant. August 1998. Mexico City. Medina, Luis. Undersecretary of education (1983–1988). May 26, 1999. Mexico City. Mesta Delgado, Jesús A. Minister of finance of the state of Chihuahua (1996); director of expenditures at the same ministry (1992–1996). June 8, 2001. Mexico City. Mizrahi, Yemile. Professor of political science at CIDE. August 1998; April 19, 1999; and April 20, 2001. Mexico City. Nieto, Dulce Maria. Adviser to the Ministry of Education. June 16, 1999.

278

Appendix

Nuñez Jiménez, Arturo. Federal deputy for Tabasco (1997–2000); leader of the PRI in Congress (1999–2000); undersecretary of the Ministry of Interior (1989–1993); director of IFE (1993–1994). May 16, 2001. Mexico City. Olin Balderas, Jorge. Coordinator of the unit of state representations of the Ministry of Education. May 30, 2001. Mexico City. Olmedo, Raúl. First Director of CNEM. October, 20, 2005. Mexico City. Ornelas, Carlos. Professor of education and communication at the Autonomous Metropolitan University – Xochimilco; specialist in education. June 4, 1999; June 4, 2001; and October, 19, 2005. Mexico City. Prawda, Juan. Director of Planning and Budget of the Ministry of Education (1978–91). September 7, 1999. Washington, DC, phone interview conducted from Chicago. Rodríguez, Antonio. Adviser to the SNTE (1989–1992). May 17, 2001. Mexico City. Santiago, Angel. Vice director of municipal administration of AMMAC. October, 19, 2005. Mexico City. Scott, John. Economist; specialist in public finances. April 28, 1999. Mexico City. Sobarzo, Horacio. Specialist in public finances. May 27, 1999. Mexico City. Solana Morales, Fernando. Minister of education (1977–1982 and 1993–1994); federal senator (1997–2000). June 7, 2001. Mexico City. Trejo, Guillermo. Professor of political science at CIDE. April 9, 2001. Mexico City. Trujillo de Cobo, Graciela. Minister of education of the state of Tabasco (1994– 2000). June 10, 2001. Mexico City. Zenteno, Giovanni. Minister of finance of the state of Chiapas (1994–2000). June 6, 2001. Mexico City. Ziccardi, Alicia. Sociologist; specialist in local governance. August 1998. Mexico City.

Index

ABM , 73, 167 ABRASCO, 179 Abrucio, Fernando, 187 administrative decentralization, 7, 13, 18, 19, 20, 33, 36, 37, 38, 50, 51, 54, 55, 57, 58, 59, 232, 239, 242 and deconcentration, 229 defi nition, 35, 17 funded, 17, 35, 47, 55, 58, 154, 187, 190, 226 in Argentina, 54, 74, 79, 81–84, 88–101, 116, 119, 232 in Argentina and Mexico, compared, 205 in Brazil, 151, 153, 171, 180, 187 in Colombia, 53, 123, 125, 141, 143–46, 147 in Mexico, 30, 190, 193, 229, 230, 236 in national executive’s order of preferences, 18, 44 in subnational executives’ orders of preferences, 18, 44, 46 unfunded, 18, 35, 47, 58, 78, 79, 83, 84, 88, 89, 104, 108, 119, 233 AI-3, 157 Alfonsín, Raúl, 7, 77, 102, 104, 107, 110, 111, 113, 117, 119, 120, 137 Aminzade, Ronald, 20 AMMAC , 73, 219, 220, 225, 236

ANAGO, 228 analytic equivalence, 13, 24, 26 analytic narratives, 22 ANMEB , 202, 205, 210, 235, 236 aportaciones (Mexico), 225, 226 April package of 1977 (Brazil), 158 ARENA , 157, 158, 160 Article 115 (Mexico), 8, 191, 212, 213, 214, 219, 220, 221, 228, 242, 243 Barco, Virgilio, 135, 136 Barrio, Francisco, 45 Barry, Luis A., 90, 92, 98 Bartlett, Manuel, 201, 205, 226 Bates, Robert, 22 Bauzá, Eduardo, 105, 108 Betancur, Belisario, 26, 52, 124, 125, 128, 129, 130, 131, 142 Bird, Richard, 142 Bolivia, 2, 7, 12, 27, 53 Boone, Catherine, 32 Bordón, José Octavio, 93, 98, 100 Cardoso, Fernando H., 172 Castro, Jaime, 123, 131 causal mechanism, 20, 21, 22, 23, 24, 25, 53, 248, See also reactive mechanism, self-reinforcing mechanism 279

280 Cavallo, Domingo, 84, 90, 93, 94, 95, 100, 105, 108, 118, 120 CEBES , 179 CEDEMUN, 216 centralization, 1, 15, 116, 145, 150, 169, 178, 179, 186, 195, 196, 212, 221, See also recentralization CESEM , 219 CFCE , 90 CFE , 24, 83 CFI , 72, 100 Chile, 7, 11, 26, 27, 152, 157 City of Buenos Aires, 8, 13, 79, 80, 103, 109, 110, 111, 113, 114, 119, 120, 234, 243 civic strikes, 12, 125, 132, 130, 135, 142, 147, 241 Clérici, Federico, 92 clientelism, 5, 231 CNEM , 214, 216 CNM , 73, 163 CNS , 176, 177, 178, 181 CNTE , 197, 202 comparative historical method, 21, 22 comparative sequential method, 20–24, 34 compensation effect, 16, 23, 238 CONAGO, 73, 228 CONAMM , 73, 229 CONASEMS , 180, 182, 185 CONASS , 180, 182, 185 constitutional Amendment No. 15 of 1980 (Brazil), 153, 158–62 constitutional Amendment No. 23 of 1983 (Brazil), 153, 164–67, See also Passos Porto, José constitutional Amendment No. 27 of 1985 (Brazil), 168 constitutional reform of 1988 (Brazil), 150, 168, 169–71 constitutional reform of 1991 (Colombia), 125, 135–42 constitutional reform of 1994 (Argentina), 79, 109, 114–19

Index context. See nation-state (or type-ofstate) context, temporal context coordination, 10, 16, 23, 50, 55, 60, 61, 64, 73, 120, 123, 180, 182, 200, 205, 230, 235, 236, 237, 238, 245 coparticipación (Argentina), 8, 102. See also coparticipation (Argentina) coparticipation (Argentina), 102, 103, 104, 105, 108, 115, 117, 118, 119, 221, See also coparticipación critical junctures, 25 CUD, 222 Dahl, Robert, 15, 60, 212 de la Madrid, Miguel, 26, 48, 52, 190, 191, 193, 194, 199, 200, 211, 212, 213, 216, 217, 230, 243 decentralization, defi nition, 6, See also postdevelopmental decentralization decentralization of education, 12, 62, 70 in Argentina, 51, 81–84, 88–98 in Argentina and Mexico, compared, 205, 238 in Brazil, 34 in Colombia, 70, 143–46 in Mexico, 41, 42, 191, 194–205, 226 decentralization of health in Brazil, 42, 170, 175–77, 180–85, 242, 243 Decibe, Susana, 91, 93 deconcentration of education in Mexico, 197–99 democratization, 6, 11, 14, 57, 231, 245 and decentralization, 16, 185, 189, 229, 248 and political decentralization, 39, 211, 212 in Argentina, 71, 79 in Brazil, 12, 76, 150, 154, 158, 162, 163, 169, 185 in Mexico, 29, 194, 218, 230

281

Index demonstration effect, 119, 232, 248, 88, 16, 23, 78 in Argentina, 89–91 desarrollista state, 26, See also developmental state developmental state, 1, 4, 6, 8, 23, 130, 151, 178, 195, 235 developmentalism, 26, 78, 150, 151, 152, 190 Diaz-Cayeros, Alberto, 205 divided government, 77, 107, 225, See also unified government Duhalde, Eduardo, 95, 112 Eaton, Kent, 100, 102, 105, 130, 135 Echeverría, Luis, 197 Ecuador, 12, 27, 122 elections of 1982, Brazil, 162, 165, 168 Escobar Navia, Rodrigo, 46 Escobar-Lemmon, Maria, 15 FAEB , 225, 226 FAFOMUN, 225 FAM , 72–74, 120 FCM , 74, 125, 134, 138, 141, 144, 145, 146, 234 FECODE , 126, 144, 146, 234 Federal education law, Argentina, 70 federalism, 12, 31, 69, 85, 103, 105, 109, 111, 116, 117, 118, 120, 121, 124, 163, 169, 216, 224, 229, See also fiscal federalism federal country, 28, 37, 72, 128, 148, 189 federal system, 3, 77, 114, 115, 116, 139, 150 FENAMM , 73, 220 FER , 146 FG , 114, 116, 117, 118 Figueiredo, João, 26, 152, 153, 158, 159, 160, 161, 162 fiscal decentralization, 5, 7, 12, 13, 18, 19, 20, 33, 35, 37, 38, 39, 40, 45, 50, 51, 54, 55, 57, 58, 59, 69,

73, 74, 75, 77, 79, 80, 107, 108, 116, 119, 125, 130, 143, 230, 232, 233, 236, 239, 242 defi nition of, 37 in Argentina, 101–04 in Brazil, 153, 163, 164–69, 170, 171, 178, 185, 234 in Colombia, 53, 123, 134, 139–42, 147, 234 in Mexico, 30, 190, 210, 214, 218, 220–27, 228, 229, 236 in national executives’ order of preferences, 18, 44 in subnational executives’ orders of preferences, 18, 45 fiscal federalism, 5, 33, 164, 169, 220 FNP, 73 FONAVI , 105 Fox, Vicente, 216 FPE , 164, 167 FPM , 164, 168 FUNDEB , 175 FUNDEF, 172 Garman, Christopher, 40, 45 Gaviria Trujillo, César, 136, 137, 138 Geisel, Ernesto, 158, 159, 168 George, Alexander, 21 Gibson, Edward L., 32 globalization, 11 González Avelar, Miguel, 200 Gordillo, Elba Esther, 201, 202, 206 Grindle, Merilee, 33 Guimarães, Ulysses, 161, 170 Haggard, Stephan, 40, 45 Hall, Peter, 27 Hommes, Rudolf, 144 Huber Stephens, Evelyne, 21, 55 ICMS , 171 IFAM , 72 IFE , 212 INAMPS , 175, 180, 181

282 incrementalism, 120, 248, 88, 16, 23, 78 in Argentina, 95–98 in Colombia, 135–39 indigenous movement, 134, 137 institutional change, 4, 75, 244, See also institutional evolution institutional conversion, 23 institutional evolution, 3, 16, 30, 52, 84, 87, 209, 245 primary education, Argentina, 85–88 secondary education, Argentina, 98–101 institutional layering, 23 intergovernmental balance of power, 4, 5, 14, 15, 17, 18, 20, 23, 28, 29, 30, 32, 49, 54, 57, 58, 59, 60– 74, 75, 76, 78, 120, 123, 128, 151, 186, 188, 189, 232, 237, 239 international fi nancial institutions, 4, 11, 120 Jonguitud Barrios, Carlos, 197, 201 Kaufman, Robert, 33 Láinez law, Argentina, 85, 87 Laurnagaray, Ricardo, 46 Law 115, 143, 146 Law 60, 143, 144, 145, 146 LCF, 221 learning, 23, 36 Lobão, Edison (or Edson), 160, 161, 162, 165, 166 López Michelsen, Alfonso, 124 López Portillo, José, 190, 191, 194, 198, 221 Luna de la Vega, Héctor, 46 M-19, 135, 137, 138 Mahoney, James, 3, 218 Manzano, José Luis, 105, 108 market-oriented reforms, 6, 151, 152, 190 Martínez de Hoz, José, 84, 90

Index McKeown, Timothy, 21 MDB , 157, 159 Medici, Emilio, 158 Menem, Carlos, 13, 72, 78, 90, 92, 95, 103, 105, 110, 112, 113, 117, 118, 119, 137, 234, 242 methodological individualism, 22 mid-durée, 22 military regime in Argentina, 76, 77, 152 in Brazil, 12, 71, 76, 150, 157, 163, 169, 177, 179 in Chile, 152 mixed NR-SO coalition in Colombia, 52 MODIN, 114, 118 Montero, Alfred, 12, 168 Montoro, Franco, 159, 160, 161 movimento sanitário, 42, 154, See also sanitarista movement municipal autonomy, 110, 111, 114, 115, 118 in Brazil, 166 in Colombia, 134, 138, 149 Murillo, Maria Victoria, 206 Muskie, Edmund, 2 national dominance path (to decentralization), 18 national response path (to decentralization), 20 national-level coalition, 48, 50, 81, 191, 243 in Colombia, 126, 128 in Mexico, 191, 202 nation-state, 25 nation-state (or type-of-state) context, 25, 27, 124, 191, 194, 205, 229, 235, 246, 25, 13 Nelson, Joan, 33 neoliberalism, 6, 11 neoliberal program of government, 83 neoliberal state, 25, 26, 152, 246 Netto, Delfi m, 152, 163, 167

Index Neves, Tancredo, 169 NOB , 181 NR-SO coalition, 49, 51 in Colombia, 52, 125 in Mexico, 191, 193, 224, 230 O’Neill, Kathleen, 12, 13, 40, 129, 130 OAB , 169 oligarchic state, 25 Olivos Pact, 113, 115, 137 opposition coalition, 49, 51, 241 PAL , 91 PAN, 73, 211, 216, 217, 218, 219, 220, 222, 223, 224, 225, 227, 228 parastatal agencies, Colombia, 132, 133 paros cívicos, 132, See also civic strikes participaciones, Colombia, 141, 145 participaciones, Mexico, 222, 223, 224, 225, 226 partisan interests, 41, 42, 48, 50, 79, 110, 111, 115, 117, 40 partisan polarization, 50 party discipline, 40, 51, 161 Passos Porto, José, 165, 168, See also Constitutional Amendment No. 23 of 1983 (Brazil) path dependence, 3, 25, 30, 75, 232, 245, 248 path-dependent explanation, 186 path-dependent process, 25, 187, 248 PDP, 118 PDS , 160, 161, 166 PEC , 158, 160 PEMEX , 221, 222 periodization, 24, 26, 124 Peru, 12 PFL , 170 Pierson, Paul, 3, 16, 52, 53, 247

283 PJ, 72, 91, 93, 94, 95, 102, 103, 104, 111, 112, 113, 114, 115, 116, 117, 118 PMDB , 162, 169, 170 policy feedback effects, 53, 54 policy ratchet effect, 55, 123, 125, 163, 232, 248, 54, 23 in Brazil, 162 in Colombia, 133 in Mexico, 214, 218–20 political decentralization, 8, 12, 13, 17, 18, 19, 20, 35, 39, 42, 54, 55, 57, 58, 59, 71, 74, 76, 79, 80, 101, 119, 120, 130, 191, 232, 233, 239, 242, 243 defi nition of, 38 in Argentina, 74, 109–19 in Brazil, 151, 153, 157–64, 165, 167, 168, 169, 187, 234, 238 in Colombia, 52, 123, 127–30, 133, 134, 139, 142, 147, 148 in Mexico, 30, 190, 191, 194, 206, 211–20, 214, 226, 227, 229, 230, 235 in national executives’ order of preferences, 18, 44 in subnational executives’ orders of preferences, 18, 45 postdevelopmental decentralization, 4, 6, 8, 9, 11, 13, 15, 26, 27, 29, 34, 64, 70, 76, 77, 78, 80, 81, 119, 120, 123, 124, 126, 148, 150, 151, 153, 164, 186, 187, 188, 189, 190, 191, 218, 232, 234, 238, 243, 245, 246 Prawda, Juan, 199 PRD, 73, 218, 220, 228 PRI , 45, 71, 73, 188, 189, 190, 194, 197, 201, 211, 212, 213, 216, 217, 218, 219, 220, 223, 224, 225, 227, 228 privatization, 34, 42, 186, 191 process-tracing, 20, 21, 22, 175 PRONASOL , 222

284 Ramo 33, 225, 226, 227, 236 reactive effect, 218, 230, 233, See also reactive mechanism, compensation effect reactive mechanism, 16, 19, 20, 53, 57, 58, 229, 248, See also reactive effect recentralization, 26, 80, 107, 119, 144, 186, See also centralization Remes Lenicov, Jorge Luis, 46 Renato, Paulo, 172 reproduction of power, 16, 19, 23, 57, 248, See also self-reinforcing mechanism of national executive, 78, 232 revenue-sharing, 37, 101, 102, 103, 105, 109, 110, 115, 116, 118, 144, 153, 167, 168, 222, 225 Reyes Heroles, Jesús, 196, 199, 200, 205 Riker, William, 14 Rodden, Jonathan, 38 Rodríguez, Victoria, 214 Rueschemeyer, Dietrich, 21, 42 Ruffo, Ernesto, 202 ruling coalition, 49, 50, 51, 79, 95, 178, 239, 241, 242 in Argentina, 91–95 Salonia, Antonio, 92, 93, 101 Samuels, David, 12, 40, 61 sanitarista movement (Brazil), 176, 177, 178, 179, 181, 182, 185, 242 Sarney, José, 152, 169, 170, 176 Schneider, Ben R., 6, 153 self-reinforcing effect, 16, 121, 142, 162, 163, 167, 203, 205, 234, See also self-reinforcing mechanism self-reinforcing mechanism , 19, 53, 57, 78, 187, 190, 248, See also coordination; demonstration effect; incrementalism; policy ratchet effect; reproduction of power; self-reinforcing effect

Index SEP, 200, 201, 203, 209, 199, 7, 194, 195, 197, 198, 199 sequential theory of decentralization. 232, 4, 29, 32, 60 domain, 59–60 Sikkink, Kathryn, 6 Silva, Ignacio “Lula” da, 187 situado fiscal (Colombia), 144, 140, 141 Skowronek, Stephen, 53 SNCF, 221, 222 SNTE , 7, 41, 191, 194, 195, 196–97, 199, 201, 202, 203, 206 Solana Morales, Fernando, 197, 198 Souza, Celina, 163, 170 SR-NO coalition, 49, 51, 241 Stephens, John D., 21, 55 subnational coalition, 48, 50, 79, 102, 119, 178, 239, 242 in Brazil, 153, 154, 178, 182 in Colombia, 125, 140, 148 subnational dominance path (to decentralization), 19, 244 subnational response path (to decentralization), 19 SUS , 171, 175, 176, 180, 181, 182, 185 Tarrow, Sidney, 3, 32, 40 temporal analysis, 30, See also temporal approach temporal approach, 248, 247, See also timing temporal context, 202 territorial interests, 3, 4, 9, 10, 13, 17, 23, 24, 30, 31, 32, 39, 40, 41, 42, 48, 49, 50, 51, 52, 63, 72, 78, 79, 81, 91, 100, 107, 110, 111, 115, 121, 126, 130, 133, 139, 144, 151, 154, 178, 186, 188, 223, 230, 232, 236, 237, 238, 239, 240, 243, 244, 245, 246, 247 territorial politics, 32, 232, 247, 32, 3, 31, 32 Thelen, Kathleen, 3 theory of games, 22

285

Index Tiebout, Charles, 5 timing, 102, 119, 162, 186, 193, 211, 217, 221, 243, 100, 13, 21, 25, 33, 37, 53, 54, 57, 59, 75, 77, 80, 89 Tocqueville, Alexis de, 1, 5, 244 Turbay Ayala, Julio César, 124 UCEDE , 92, 116 UCR , 81, 89, 103, 104, 110, 111, 112, 113, 114, 115, 116, 117 unified government, 77, 78, 91, 92, See also divided government

urbanization, 11, 12 Uruguay, 11, 27, 157 USEDES , 200, 205, 235 Vasconcelos, José, 195 Venezuela, 12, 122 Videla, Jorge R., 26, 78 Wibbels, Erik, 38, 121 Willis, Eliza, 40, 45, 77 Zedillo, Ernesto, 7, 202, 205, 218, 220, 222, 224, 225 Zenteno, Giovanni, 38, 46