Radical Decentralization: Does Community-Driven Development Work?

Abstract

Classic arguments for decentralization, augmented by ideas about how participation empowers the poor, motivate the widely used approach in foreign aid called community-driven development (CDD). CDD devolves control over the selection, implementation, and financial management of public goods to communities. Until recently, policy enthusiasm has outstripped the evidence. I synthesize findings from randomized controlled trials and find that CDD effectively delivers public goods and modest economic returns at low cost in difficult environments. There is little evidence, however, that CDD transforms local decision making or empowers the poor in any enduring way. Part of this failure may be because some constraints believed to be important—like insufficient social capital—appear not to bind. Others, like exclusive local institutions, are a problem, although not one that CDD remedies. These results present a conundrum: How much participation is enough to safeguard the gains of such extreme decentralization while minimizing the opportunity costs imposed on poor people's time?