Decentralization Fosters External Efficacy - an Overview
Responsiveness is one of the features of a sustainable political system. External efficacy - the perceived responsiveness of the political system - forms the input of citizens. This process is influenced by the extent of decentralization of the respective country. Decentralization, the transfer of policy-making power from a central government to different tiers of government, structures the perceptions and expectations of citizens and creates different forms of tiers of government that can be adjusted to the special needs of regions and their citizenry. Using data from a survey and the International Monetary Fund, this paper examines the effect of (fiscal) decentralization on perceived external efficacy while controlling for measures of trust, corruption and participation.
Organisational Structures and Feelings - About an Underlying Connection
Regardless what kind of political system it is that created them, institutions represent the political process of a state. For a functioning state, especially for a democracy, the attitudes of citizens towards its institutions and the whole system they constitute are therefore crucial. But where do these attitudes originate? External efficacy - the perceived responsiveness of the political system, or according to Campbell et al., the "feeling that individual political action does have, or can have, an impact upon the political process, that is, that it is worthwhile to perform one's civic duties” (Campbell, Gurin, and Miller 1954, p. 187) - is something that affects the foundation of a state. Because a state and its institutional structures are nothing without its citizens. Note here that the term external efficacy refers to the structures of the whole political system in general and not to respective incumbents. But external efficacy is also influenced by polity (Chamberlain, 2012). How are citizens represented? Are they able to identify with their representatives? How and how often do they communicate with each other? How can - and maybe even more important, empirically do - citizens influence the political process between elections? And, more basically, how many citizens are aware of their opportunities to participate? These perceptions and attitudes play a role in voting turnout, in participation in protests, in political movements, on every occasion when it comes to input from the side of citizens. External efficacy is a good example that not only institutional structures in a procedural sense matter, but that what counts for the relation between the state and its citizen are often feelings and perceptions and not rules. Those feelings about and perceptions of processes, single events and experiences with incumbents all together form attitudes over time. So, attitudes are not created in a vacuum, but in a political and personal context. One of the most basic contexts of the polity of a democratic state is its structure - centralized or decentralized. One might argue that the difference between federal or unitarian might be more obvious. But what does this distinction mean in practice? It often means that some scholars take a look on the constitution of a state and derive a dichotomous measure. This may fit procedural research questions. In contrast, this research is concerned with a ‘soft’ measure. It is about what citizens - who are at least voters and actors in the political process - feel, about their attitudes and perceptions. So what matters here are not the rules that are laid down in some documents but the work of institutions on a daily basis - the extent to which actual policy-making power lies with the central or regional governments. Different scholars have shown that de jure and de facto federalism and decentralization do not necessarily coincide (for example Clark, Golder and Golder, 2013; Lijphart, 1999). In contrast to (only) formal rules, the extent of decentralization has many direct implications for citizens. Some of them may affect external efficacy, for example the freedom of local administrations to start political experiments to meet the preferences of its regional electorate or competition among administrations of different states or regions (Weingast, 1995; Besley and Case, 1995). This paper seeks for a better understanding of the impact of decentralization on external efficacy.
Context matters - a Review
There is much literature about decentralization, though often in the context of federalism, and there is much literature about efficacy. But the relationship between decentralization and external efficacy has not been made the subject of research by many scholars so far. Federal countries do not have to be but often empirically are decentralized (Lijphart, 1999; Clark, Golder, and Golder, 2013). This is why this review rather focuses on the arguments and respective definitions different authors make than on the exact terms they used.
For example Stewart et al. (1992) provide a comprehensive work one can build on. In their case study about Canada in the 1980s, they found notable differences between external efficacy towards provincial and federal government.
The most closely related research to the question examined here is the one by Ligthart and van Oudheusden (2015). They investigate if the perceived improved responsiveness of governments to their citizens as a result of fiscal decentralization is associated with higher “trust” of citizens in government related institutions. Important here is that they use the definition of trust in government related institutions by Miller and Listhaug: “judgment of the citizenry that the system and the political incumbents are responsive, and will do what is right even in the absence of constant scrutiny” (Miller and Listhaug, 1990, p. 358 via Ligthart and van Oudheusden, 2015). As defined before, external efficacy is the perceived responsiveness of the political system. So, the definition they use is a kind of mixture with external efficacy (“judgment of the citizenry that the system and the political incumbents are responsive”) and trust (“[incumbents] will do what is right even in the absence of constant scrutiny”) (Miller and Listhaug, 1990, p. 358 via Ligthart and van Oudheusden, 2015). The authors claim to “find a positive relationship between fiscal decentralization and trust in government related institutions” (Ligthart and van Oudheusden, 2015, p.117). Furthermore, they find a positive relationship between trust in other persons and trust in government related institutions. A drawback of the article is that its authors not only assume that fiscal decentralization automatically increases responsiveness without delivering a comprehensive theoretical explanation for this assumption but also that fiscal decentralization makes citizens perceive government and related institutions to be more responsible. Their reference to Oates (1999) is the only obvious justification for that. This article, however, examines exactly the causal relationship Ligthart and van Oudheusden assume - (fiscal) decentralization leads to an increased perceived level of responsiveness. Is their assumption right?
Another variable of interest for this paper fostered many controversies: corruption in federal and decentralized states. Some do see a causal relationship. Treisman, for example, shows not only an empirical relationship but also delivers a theoretical explanation: “Federal states were robustly perceived to be more corrupt than unitary ones [...] I attribute this to the collective action problem for semi-autonomous central and subnational officials in deciding how much to extract in bribes from businesses that both levels have the power to regulate. Restraint by one level merely increases the pickings for the other. The likely result is suboptimally high demands for bribes that end up driving many private actors out of the market.” (Treisman, 2000, p.440). He conceptualized federal states according to Riker: “(1) [at least] two levels of government rule the same land and people, (2) each level has at least one area of action in which it is autonomous, and (3) there is some guarantee (even though merely a statement in the constitution) of the autonomy of each government in its own sphere ” (Riker, 1964, p. 11 via Treisman, 2000). So his inferences apply mainly to federal states. But as I pointed out earlier, federal countries do not have to but empirically are often decentralized. This is why this important line of thought is a good starting point for further research on the possible causal relationship between decentralization and corruption.
Shleifer and Vishny (1993) also see corruption as a phenomenon that depends on the structure of institutions and the political process. And similar to Treisman, they see an ‘overgrazing’ of ‘bribe bases’ due to shared rule over those ‘bases’ in decentralized countries.
Other scholars argue that decentralization increases the efficiency of the government by fostering competition between subjurisdictions in providing public services for which officials could demand bribes (Weingast, 1995). The concepts of decentralization, external efficacy, trust, accountability and corruption seem to be empirically and theoretically closely linked.
Decentralization, Trust and Participation - Many Influences, One Concept
So does the extent of decentralization in a country have a positive effect on the external efficacy of its citizens? Decentralization has a variety of impacts on the political system, its administrations and the citizens of a state. Local officials have more detailed information about the issues they have to decide on, possible implications, and about their electorate and its preferences. This enhances efficiency and approval of outcomes because officials in a decentralized system can respond better to the heterogenous preferences of the citizens of one area (Oates, 1972 and 1999). Additionally, for citizens it is easier to evaluate the performance of officials, especially in the case of dual federalism. But this also applies to cooperative and unitary systems since it is more likely that citizens are directly or indirectly affected by implications of that performance. So, using the terms of the principal-agent model, the agency loss gets smaller (Besley and Case, 1995) and citizens have enough information to “vote with their feet” (Tiebout, 1956) - a mechanism that creates competition among administrations (Weingast, 1995; Besley and Case, 1995). These are factors that should influence external efficacy in a positive way.