Decentralization and poverty reduction: Exploring the linkages and the impacts

This paper is an attempt to assess how different forms of decentralization might relate to and significantly affect different dimensions of poverty. In so doing, the major emphasis was on identifying the potential links between specific forms of decentralization (Political, Administrative and Fiscal) and three specified dimensions of poverty i.e. poverty as lack of income, poverty as relative deprivation and poverty as capabilities deprivation. The possible links between different forms of decentralization and different dimensions of poverty were identified by developing a conceptual framework. The possible links between the two phenomenon were then supported through the use of relevant literature. According to the theoretical framework decentralization through regional targeting and economic efficiency might lead to improvements in economic growth, which in turn may have significant impact on income poverty (1st link). Similarly, both regional targeting and economic efficiency may at the same time also result in improved provision of public services, which in turn might reduce (the prevailing extent of) relative deprivation (2nd link). In a similar vein, through increased participation and representation, decentralization might empower the poor and give them a voice in the decision-making processes, which might reduce deprivation of certain capabilities (e.g. political, economic and socio-cultural capabilities) (3rd link). It was also interesting to note that the various benefits accruing from different forms of decentralization were not only directly related to a specific dimension of poverty but were at the same time also indirectly correlated positively to other dimensions as well. The theoretical framework supported by relevant literature shows that decentralization may have immense potential for poverty reduction. What makes it distinct from other poverty reduction approaches may be attributed to its immense potential to relate to and positively affect numerous dimensions of poverty. In case, the process does not yield any positive outcomes, this may largely be due to the failure of the authorities at the upper level to fulfill certain conditions (while undertaking the decentralization reforms) that are often deemed necessary for a successful decentralization process.