Governance in the Americas: Decentralization, Democracy, and Subnational Government in Brazil, Mexico, and the USA

4. Intergovernmental Relations and the Subnational State: The Decentralization of Public Policy Making

C H A P T E R F O U R Intergovernmental Relations and the Subnational State The Decentralization of Public Policy Making Marta Ferreira Santos Farah, Pedro Jacobi,Victoria E. Rodríguez, Peter M.Ward, and Robert H.Wilson The relationship of decentralization and intergovernmental relations to policy making is the focus of this chapter. Federalist systems are considered centralized when the national government has greater weight in the formation and implementation of public policy and in decisions concerning resource allocation than subnational governments. In a decentralized federal system, subnational governments have some degree of autonomy or discretion over policy and resource allocation. And even though national and subnational governments share responsibilities for policy making and implementation, the relative autonomy or independence of action among subnational governments is an important element of the policy-making context. Our goal in this chapter, therefore, is to explore the effectiveness of subnational governments in rising to the new challenges that they face. Specifically we ask: What is the impact of decentralization and changes in shaping and recasting intergovernmental relations both vertically (between the different levels) and horizontally (between governments at the same level)? 145 146 FARAH, JACOBI, RODRÍGUEZ, WARD, WILSON This chapter is organized into five sections. The first discusses the effects of reform on federal-subnational relations in terms of policy making. This discussion is then extended in the next section to changes in fiscal federalism—two topics amply addressed in academic and policy literature , although the contrasts that we draw across the three countries make a novel contribution. Third, we assess the performance of these decentralized systems, with particular attention devoted to tensions and conflicts that arise between the federal and subnational governments. The fourth section addresses relationships among state governments and among local governments. Here our focus is upon the reasons why these levels of governments compete and/or collaborate in the three countries, to date a relatively understudied feature of decentralization. The chapter concludes with the findings concerning the performance and challenges of the subnational state in the context of evolving intergovernmental relations and decentralized policy systems. We will show that decentralization and democratic consolidation do indeed affect capacity but that overall federalism appears to work best when the institutional elements at all levels are stronger and more stable . Counterintuitively, perhaps, we find that competition and vying for resources do not appear to lead to a race to the bottom as local governments seek to outbid each other; rather, there is a consolidation and filling out of the subnational space that creates opportunities for interdependence and co-responsibility between actors and institutions. By and large we find considerable vibrancy of governance at the local level, as well as collaboration between local and state governments—at least in certain policy-making arenas. Sometimes, though, states do pose obstructions and difficulties both up and down the intergovernmental relations system, resisting local government initiatives and making problematic federal-to-local linkages. Federal roles have also changed markedly, and while the situation varies for different policy areas, generally the federal government is becoming more engaged in regulation and less engaged operationally in direct service delivery (J. Zimmerman 2005). Finally, we argue that there is a growing need to consider new institutional arrangements to accommodate new scales of population centers within the architecture of federal arrangements, namely large metropolitan areas that often comprise a raft of lower-level governments. Our comparative analysis confirms that the policy-making systems have become more decentralized, itself a well-established finding, but we Intergovernmental Relations and the Subnational State 147 also show how the performance of these systems is subject to inherent federal-subnational tensions that relate to resources, institutions, bureaucratic behavior, and politics. Substantial transfer of authority and responsibility in some policy areas from federal government to state and local governments appears in each of the three countries. In most instances, however, policy making and implementation remain shared responsibilities of federal and subnational governments. In broad terms, in Brazil and Mexico, overall policy formulation remains largely a federal government prerogative but with important roles of implementation in state (Mexico) and especially municipal governments. In the USA, state and local governments tend to have a more significant role in formulation of policy and certainly in implementation. In the three countries, the decentralized systems reflect substantial heterogeneity in the subnational role within each country. The level of resources and capacity available greatly affects the ability...