World Bank2013-03-252013-03-252010-06-07https://hdl.handle.net/10986/12894Decentralization in Peru is an ongoing process that is in its infancy and faces key challenges. This study aims to take stock of the process and identify these challenges. The main goal of the report is to help think through these issues with a view of identifying priorities and opportunities for fruitful engagement in this area. Much of the stock-taking serves as an introduction to the topic for the general reader and draws on what has become by now extensive secondary literature. The report distils the key challenges of the decentralization process and adds value in three specific areas. A first distinct contribution of this report is to highlight the importance of political economy factors in explaining the ebbs and flows of the decentralization process. Second, the report provides new data on truly decentralized spending as opposed to deconcentrated as well as on public spending per capita across districts. Third, this report provides a novel analysis of the efficiency of public spending across departments in Peru. The report compiles measures of public sector performance and efficiency for education, health, and transport across all departments. The overall institutional framework provides enough reasons for reconsideration an area where the Bank could add value. To be clear, this report does not call for new rushed legislative initiatives to address the perceived shortcomings in the institutional set up. What is called for is the creation of spaces for inter-institutional and inclusive dialogue to help establish a consensus on some basic principles. Only then will changes to the current institutional framework be appropriate. The mechanism to share natural resource revenues among levels of government has contributed to obfuscate the decentralization process.en-USCC BY 3.0 IGOACCOUNTABILITYADMINISTRATIVE COSTSADMINISTRATIVE DECENTRALIZATIONALLOCATIONALLOCATION OF RESPONSIBILITIESAMALGAMATIONANNUAL BUDGETANNUAL PLANSARTICLEASSETSASSIGNMENT OF EXPENDITURESASSIGNMENT OF RESPONSIBILITIESAUTONOMYAUTONOMY OF SUB-NATIONAL GOVERNMENTSBUDGETARY RESOURCESCANDIDATESCAPACITY BUILDINGCAPACITY BUILDING ACTIVITIESCAPACITY CONSTRAINTSCAPITA INCOMECAPITAL EXPENDITURESCAPITALSCENTRAL AUTHORITIESCENTRAL GOVERNMENTCENTRAL GOVERNMENTSCENTRALIZINGCITIESCIVIL SOCIETYCIVIL SOCIETY ORGANIZATIONSCIVIL SOCIETY PARTICIPATIONCOMMODITY PRICESCOMMUNITY PARTICIPATIONCONSTITUENTCONSTITUTIONAL AMENDMENTCONSTITUTIONAL REFORMCORPORATE INCOMECORPORATE INCOME TAXCURRENT EXPENDITURESDEBTDECENTRALIZATIONDECENTRALIZATION PROCESSDECISION-MAKERSDECONCENTRATIONDISCRETIONARY APPROACHDISTRICTDISTRICT MUNICIPALITIESDISTRICTSDIVISION OF LABORDIVISION OF RESPONSIBILITIESECONOMIC POLICYECONOMIC STABILITYECONOMIES OF SCALEEFFICIENCY IN PUBLIC SPENDINGEFFICIENCY OF PUBLIC SPENDINGEFFICIENT REGIONSEFFICIENT USEELECTIONELECTIONSENTITLEMENTSEXCESSIVE FRAGMENTATIONEXECUTIVE BRANCHEXPENDITURE EFFICIENCYEXPENDITURE PER CAPITAEXPENDITURE RESPONSIBILITIESFEDERAL COUNTRIESFINANCIAL SYSTEMFISCAL DECENTRALIZATIONFISCAL INCENTIVESFISCAL NEUTRALITYFISCAL RESPONSIBILITYFISCAL RULESFISCAL STABILITYFISCAL TRANSFERSGOVERNMENT TRANSFERSHEALTH ASSISTANCEHORIZONTAL EQUITYINCOME LEVELSINCOME TAXINTERGOVERNMENTAL COORDINATIONINTERGOVERNMENTAL FISCAL RELATIONSINTERNATIONAL DEVELOPMENTINVESTMENT BUDGETLAWSLEGAL FRAMEWORKLEGISLATIONLEGISLATIVE POWERLEGISLATORSLEVEL OF GOVERNMENTLEVELS OF EFFICIENCYLEVELS OF GOVERNMENTLEVELS OF PUBLIC SPENDINGLOCAL AUTHORITIESLOCAL DEVELOPMENTLOCAL GOVERNMENTLOCAL GOVERNMENTSLOCAL MANAGEMENTLOCAL POLITICIANSLOCAL POPULATIONSLOCAL PROPERTY TAXESLOCAL PUBLIC EXPENDITURESLOCAL TAXMAYORMINISTRY OF ECONOMYMINISTRY OF EDUCATIONMUNICIPALMUNICIPAL GOVERNMENTSMUNICIPAL LEVELMUNICIPALITIESNATIONAL DEVELOPMENTNATIONAL PARTIESNATIONAL SERVICE PROVIDERSNATIONAL TAXESNATURAL RESOURCESOBJECTIVES OF DECENTRALIZATIONORGANIZATIONAL STRUCTUREPARTISAN REASONSPERSONAL INCOMEPERSONAL INCOME TAXPOLICY MAKINGPOLICY-MAKERSPOLITICAL DECENTRALIZATIONPOLITICAL PARTIESPOLITICAL PARTYPOLITICIANSPORK-BARRELPOVERTY REDUCTIONPRIME MINISTERPRODUCTIVITYPROGRAMSPROVINCEPROVINCESPUBLIC CAPITALPUBLIC EXPENDITUREPUBLIC EXPENDITURE DATAPUBLIC EXPENDITURE EFFICIENCYPUBLIC FINANCIAL MANAGEMENTPUBLIC FUNDSPUBLIC GOODSPUBLIC HEALTHPUBLIC INVESTMENTPUBLIC MANAGEMENTPUBLIC RESOURCESPUBLIC REVENUESPUBLIC SECTORPUBLIC SECTOR EFFICIENCYPUBLIC SECTOR MANAGEMENTPUBLIC SECTOR PERFORMANCEPUBLIC SERVICEPUBLIC SERVICE DELIVERYPUBLIC SERVICESPUBLIC SPENDINGREDISTRIBUTIONREGIONAL ADMINISTRATIONREGIONAL DISPARITIESREGIONAL ECONOMIESREGIONAL GOVERNMENTREGIONAL GOVERNMENTSREPRESENTATIVESREVENUE SHARINGREVENUE SOURCEREVENUE SOURCESSALES TAXSECTORAL POLICIESSECTORAL POLICYSERVICE DELIVERYSOCIAL POLICYSOCIAL PROGRAMSSOURCES OF FINANCESOURCES OF REVENUESTRUCTURAL ADJUSTMENTSUB-NATIONALSUB-NATIONAL AUTHORITIESSUB-NATIONAL EXPENDITURESSUB-NATIONAL GOVERNMENTSUB-NATIONAL GOVERNMENTSSUB-NATIONAL UNITSTAXTAX BASESTAX REVENUESTECHNICAL ASSISTANCETOTAL PUBLIC SPENDINGTOTAL SPENDINGTRANSFER OF RESOURCESTRANSFER OF RESPONSIBILITIESTRANSPORTUNINTENDED CONSEQUENCESUNITARY SYSTEMSWorld Bank10.1596/12894