The Impact of Political Variables on Budgets and Social Outcomes in a Context of Decentralization : The Case of Colombia

We examine the case of decentralization in Colombia in order to explore its effects on poverty indicators, and on public sector responsiveness to real local demands. We first summarize economic data on the effects of decentralization. Colombian municipalities increased investment significantly as decentralization deepened, while running costs fell. Investment shifted from economic production and infrastructure to social services and human capital formation. We then explore the determinants of local public investment via a series of econometric models. Political and electoral variables prove to be decisively important