Darwin Ugarte Ontiveros
Osmar Bolivar Rosales
This document aims to analyze empirically the effectiveness of decentralization in Bolivia. Effectiveness is understood as the capacity of local administration to cover its local needs. The research measures the effect of the central government’s local investment (the Bolivia Cambia program) on the local administration. For this purpose, we use panel data information at the municipal level during the 1987-2016 period. The research follows the methodological strategy proposed by Faguet (2004, 2013), and Faguet and Sánchez (2008). For the externality’s analysis, this methodology is adapted to be estimated with spatial econometrics techniques. The results suggest important changes in local investment patterns due to decentralization, most of them aligned with local needs. Likewise, significant effects are found in the behavior of local investment due to the implementation of the Bolivia Cambia program
Key words: decentralization, municipal investment, Bolivia Cambia program.
JEL Classification: D72, D73, H41, H72, O18.