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Political Variables and Governmental Decentralization in Peru, 1949-1988Author(s): Gregory D. SchmidtSource: Journal of Interamerican Studies and World Affairs, Vol. 31, No. 1/2, Special Issue:Latin America at the Crossroads: Major Public Policy Issues (Spring - Summer, 1989), pp. 193-232Published by: Center for Latin American Studies at the University of MiamiStable URL: http://www.jstor.org/stable/165917 .Accessed: 27/10/2014 11:02

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POLITICAL VARIABLES AND GOVERNMENTAL

DECENTRAIZATION IN PERU, 1949-1988*

by GREGORY D. SCHMIDT

ALTHOUGH DECENTRALIZATION is probably the institutional reform most frequently proposed for Third World countries, it has proven to be an elusive topic for both practitioners and analysts of development. Studies of centralization and decentralization are overwhelmingly descriptive, formalistic, or episodic. This article attempts to improve our understanding of how macro-political factors affect the adoption and implementation of decentralization policies in Latin America. Section I explains the dependent variable by distinguishing among various modes of decentralization. Section II extrapolates different predictions regarding relationships between macro-political variables and modes of

Gregory D. Schmidt is Assistant Professor of Political Science at Nor- thern Illinois University. He is the author of DONORS AND DECENTRALIZATION IN DEVELOPING COUNTRIES: INSIGHTS FROM AID EXPERIENCE IN PERU (Westview Press, 1989). His current research interest is in the implementation of regional government in Peru, a study which is being sponsored by the US Department of Education Fulbright- Hays Faculty Research Abroad Program.

* The author wishes to thank Ray Bromley, Baltazar Caravedo, Jose Garzon, David Hess, Michael Hirsh, and Henry Izquierdo for sharing useful insights and knowledge on regional development organizations in Peru; Martin Scurrah and Norman Uphoff for comments on earlier ver- sions of this work; Luis Quiroz, Maria Reynafarje, and Carol Wise for their help in securing access to investment data; and 71 Peruvian officials of central agencies and CORDES who were interviewed in 1985 and 1987. However, he is solely responsible for the contents of the article and the interpretations expressed.


194 JOURNAL OF INTERAMERICAN STUDIES AND WORLD AFFAIRS

governmental decentralization from three alternative paradigms for the study of public policy in Latin America. Informed by this theoretical discussion, Section III traces the evolution of regional development organizations in Peru since 1949. Section IV presents a general assessment of recent regional development organizations in Peru and their future prospects. Section V returns to the theoretical issues in light of the Peruvian case study. Section VI draws on the case study and analysis to address how political factors should be considered in the framing of decentralization policies.

I. THE DEPENDENT VARIABLE: MODES OF GOVERNMENTAL DECENTRALIZATION

SINCE DECENTRALIZATION IS actually an umbrella term for a number of distinct, even conflicting, concepts, the typology of decentralization chosen should depend on the task at hand (Leonard, 1982: 27-29). The most systematic research on decentralization in developing countries distinguishes four major modes of decentralization:

* Deconcentration is "the handing over of some administrative authority or responsibility to lower levels within central government ministries and agencies."

* Delegation "transfers managerial responsibility for specifically defined functions to [public] organizations outside the regular bureaucratic structure," such as public corporations, regional development agencies, and other parastatal organizations.

* Devolution is "the creation or strengthening, financially or legally, of sub-national units of government, whose activities are substantially outside the direct control of the central government."

* Privatization refers to the divestiture of governmental responsibility for functions "either by transferring them to voluntary organizations or by allowing them to be performed by private enterprises."

It should be emphasized that these four modes are ideal-types, which are often missed in practice.


SCHMIDT: POLITICAL VARIABLES IN PERU

Three additional sorts of distinctions are appropriate for the current analysis. First, the term governmental decentralization refers to deconcentration, delegation, and devolution - as opposed to privatization. This term is useful because this article focuses primarily on the three modes of governmental decentralization in Peru. Second, deconcentration and devolution both may be relatively general or specific (see Leonard, 1982: 29- 34). Third, in the Latin American context, it is useful to distinguish delegation to agencies dominated by interest groups or political parties from delegation to agencies that do not have interest groups or party representation and are not susceptible to direct influence from these societally rooted actors. These additional considerations allow specification of the following modes of governmental decentralization:

* General deconcentration (also called prefectorial deconcentration) occurs to the extent that a variety of tasks are deconcentrated to a horizontally-integrated administrative system.

* Functional deconcentration (also called ministerial deconcentration) occurs to the extent that specific tasks are deconcentrated to the field units of a particular ministry or agency.

* General devolution occurs to the extent that a variety of tasks are devolved to multipurpose representative bodies- generally speaking, local or regional governments.

* Functional devolution occurs to the extent that specific tasks are passed down to specialized representative organizations, such as school boards or water user associations.

*Political delegation occurs to the extent that interest groups or political parties have predominant representation or influence in public agencies outside of the regular bureaucratic structure.

* Bureaucratic delegation occurs to the extent that bureaucratic elites have predominant representation or influence in public agencies outside of the regular bureaucratic structure.

195



Once again, these sub-modes are ideal-types, which may be combined in actual decentralization policies.

II. ALTERNATIVE PARADIGMATIC PREDICTIONS

THREE MAJOR MODELS, or paradigms, - which might be labelled the regime variation approach, the authoritarian state approach, and the politicized state approach - have had great influence on the study of politics and public policy in Latin America. Each approach implies that a different macro-political variable - regime variation, patterns of bureaucratization, and alliance-formation - is the key determinant of the policy process and policy outputs. These approaches seldom, if ever, have been put into operation with respect to a common policy problem or issue in such a way as to permit rigorous comparison of alternative interpretations. This section extrapolates predictions from each approach regarding the methods of governmental decentralization discussed above.

The regime variation approach maintains that political parties or interest groups dominate the policy process under democratic regimes, whereas the state is relatively autonomous under authoritarian regimes.3 Under democratic regimes, various types of government decentralization are possible, depending on the locus of party or pressure group influence. The approach most consistent with democracy would be devolution to elected local or regional governments or political delegation to autonomous agencies subject to direct party or interest group influence. General (or functional) deconcentration is not precluded if parties or interest groups dominate the policy process at the national level through the legislature or lobbying activities. Similarly, bureaucratic delegation is not ruled out if the resulting autonomous agencies are accountable to representatives of political parties at the national level.

The regime variation approach would predict a narrower range of governmental decentralization under authoritarian regimes. General or functional deconcentration and bureaucratic delegation remain possible, but devolution and political delegation are ruled out.

Advocates of the authoritarian state approach argue that the dynamics of delayed development in Latin America have



produced weak, ambiguously-defined class and interest structures while reinforcing the dominant role of the state.4 Of particular importance for this study are the emphases placed on the timing of bureaucratization and resulting patterns of state organization. During most of Latin American history bureaucratic structures have developed more rapidly than arrangements for political representation, thus weakening the roles of legislatures, political parties, and interest groups. Since the 1930s, the state in most major Latin American countries has assumed many economic roles performed by private capital in most earlier mod- ernizers. Tensions between the highly centralized decision- making in traditional ministries and the new economic role of the state have led to a proliferation of powerful, autonomous agencies and public enterprises outside traditional ministerial structures.

This approach maintains that, typically, bureaucratic elites dominate the policy process and determine policy outputs, regardless of the kind of regime. Consequently, under both democratic and authoritarian regimes, initiatives for governmental decentralization will have a predominantly bureaucratic logic, although the particular mode may vary in accordance with specific circumstances or the phase of bureaucratic development. Most generally, each ministry or agency can be expected to develop patterns of functional deconcentration to cope with its particular needs. Bureaucratic delegation to autonomous agencies which are territorially defined, such as regional development or river- basin authorities, may also take place. Over time, the proliferation of field offices and territorially defined authorities leads to problems of overlapping jurisdictions and coordination. At some point, central bureaucratic elites may try to achieve greater administrative coherence through schemes of general deconcentration.

In any case, the expansion of central government ministries, autonomous agencies, and public enterprises leaves little "institutional space" for devolution to elected units at the sub-national level. While regional or local governments may exist under democratic regimes, at best they will play only a marginal role in the development process. Neither is the authoritarian state approach consistent with political delegation to autonomous agencies dominated by interest groups or parties.

197



Where, on the one hand, proponents of the authoritarian state approach assume that bureaucratic actors will dominate the process, on the other hand scholars who focus on the policy process usually see a broader range of potential outcomes, depending upon such factors as (a) the players involved, (b) the resources at their disSosal, (c) the phase of the policy process, and (d) the issue at stake. Alliances among actors both inside and outside the bureaucracy are generally seen as key determinants of policy outcomes.

Within this broad tradition, Chalmers' depiction of the political state offers special insight into the relationship between the Latin American political environment and the dynamics of the policy process (Chalmers, 1977). He argues that Latin American politics is marked by the probability of regime variation, an instrumental view of institutions, and a very fluid, potentially open- ended policy process. The central role of the state in Latin American society and the lack of institutionalization mean that a premium is placed on control of the state apparatus and the cul- tivation and manipulation of support among a variety of hierarchies - including political parties, interest groups, administrative elites, and the military. Institutional arrangements, including modes of decentralization, generally reflect the interests, in either the short or medium term, of specific political actors, their relative political power at a given point in time, and patterns of alliance- formation. Therefore, the probability of institutionalizing any mode is low, due to the instrumental view of institutions and the pull and tug of contending political forces.

III. REGIONAL DEVELOPMENT ORGANIZATIONS IN PERU

DURING MOST OF PERUVIAN history, formal authority and state resources have been concentrated at the level of the central government, but since World War II several major trends - increasing spatial concentration of the economy, high rates of internal migration, politicization of the peasantry, and the state's growing role in the economy - have combined to make decentralization an enduring political and policy concern. Al- though municipal governments at the provincial and district



levels6 have been elected during recent periods of constitutional rule, they have played only a marginal role in development. Begin- ning in 1949, however, each successive presidential administration has established multisectoral public entities with major developmental responsibilities at the departmental or regional levels:

* Early departmental public works boards with varying names and organizational structures founded on an ad hoc basis beginning in 1949.

* Departmental public works boards (funtas departamentales de obras publicas or JDOPs) affiliated with the Fondo Nacional de Desarrollo Economico (National Fund for Economic Development or FNDE), which were founded in 1956.

* Early departmental development corporations (corpora- clones departamentales de desarrollo or CORDES, some-

times called rehabilitation and reconstruction boards, or- ganized on a department-by-department basis during the 1950s and 1960s, and often absorbing the JDOPs.

* The regional offices of the Sistema Nacional de Apoyo a la Movilizacion Social (National Support System for Social Mobilization or SINAMOS), a social mobilization agency that functioned from 1971 to 1978, absorbing the remaining JDOPs, the CORDES, and other organizations.

* Regional development committees founded during the 1972-1975 period in some regions.

* The Comision de Reconstruccion y Rehabilitacion de la ZonaAfectada(CRYRZA) and the Organismo Regionalpara el Desarrollo de la Zona Afectada (ORDEZA), earthquake relief and reconstruction agencies founded in 1970 and 1973.

* Departmental development committees (comites departamentales de desarrollo or CODES) established after 1976 with the restructuring of the regional development committees.

* Regional development organizations (organismos regionales de desarrollo or ORDES) formed during 1977-1979.

199



* Contemporary departmental development corporations (corporaciones departamentales de desarrollo or CORDES) re-established in 1981 as transitional organizations leading to regional governments.

* Regional governments mandated by the 1979 Constitution and the 1987 Basic Law for Regionalization (Law 24,650).

For the sake of simplicity, the term regional development organization is used in this article to refer to all of the multisectoral public entities listed above.

Figure 1 places regional development organizations in the overall scheme of Peru's public sector, abstracting from the many changes that have occurred during the 1949-1988 period. Natural disasters have often served as catalysts for the formation or expansion of regional development organizations, which have been, politically, the most obvious example of each government's approach to decentralization. Successive regional development organizations have consistently filled an organizational gap between the national and provincial/local levels, but their relationships with other public entities have varied, as indicated by the broken lines in Figure 1. There has, however, been considerable continuity in their personnel and their functions, with construction of public works being their primary activity.

The share of public investment channeled through regional development organizations has varied over time. Before 1965 consistent data are available only for departmental public works boards (JDOPs) affiliated with the Fondo Nacional de Desarrollo Econ6mico (FNDE), which were the most important type of regional development organization during the late 1950s and early 1960s (see Table I). Beginning in 1965, improvements in the for- mat and coverage of the accounting system make it possible to calculate a more comprehensive and consistent series of indicators. Table II provides two relevant indicators of the relative importance of regional development organizations. The first in- dicator, the percentage of gross public investment (GPI) through regional development organizations, provides the best measure of their overall role in public investment. Since regional development organizations have primarily built economic and social infrastructure, a second series measures only public investment in construction - excluding investment in machinery and equip-



Figure 1. Regional Development Organizations in the Peruvian Public Sector

N A T I

0 N A L

L E V E L

R E G L

I E

O v

N E

A L

L

L L O E CV A E L L

4- Constitutionally Defined Relationships Lines of Direct Authority Lines of Indirect Authority

- - - - - Varying Relationships Between Regional Development Organizations and Other Public Sector Entities

201



TABLE I Fercentage of Public Investment by National Fund for Economic Development and Affiliated Departmental Fiblic Works iBards

ment, which is undertaken disproportionately by public

ri ;57 6i::i4 . 9 ....... . ,,3

.:' i '7 ,,2

1.' .'::64 13 ,, 4

S' :' :: E;',:-?; ,.:R, . ' ::: .;::-,::: i i .:-.:: ,. . . i,: ..: e a: , 7' 964. ,,

ment, which is undertaken disproportionately by public enterprises. Thus, this second series provides the best basis for comparing the importance of regional development organizations vis-a-vis central government ministries and autonomous agencies undertaking similar tasks; it is cited in the following discussion.

Reviewing the evolution of Peruvian regional development organizations since 1949 provides a fertile field for comparing the alternative predictions discussed in the previous section. Com- pared to other major Latin American countries, Peru has developed an extensive public sector with an important entrepreneurial role relatively recently- largely since 1968. Thus, it is possible to compare the various types of decentralization both before and after its development of a sprawling public sector, with numerous autonomous agencies and significant public enterprises. Given the cycle of different regimes during this period, it is also possible to compare regional development organizations not only under authoritarian and democratic regimes, but before and after the rapid growth of the public sector as well. Severe limitations of space mean that the historical review below must be schematic; however, it is based on much more thorough analyses by the author (Schmidt, 1987, 1988, and 1989) and is also informed by other studies of Peruvian regional development organizations.8


203 SCHMIDT: POLITICAL VARIABLES IN PERU

TAELE II Ftublic Investmnt By Regional Development Organizations

Pi?erenitage of Gro'ss Public rinvestme t by IMinistries:.

PubWlic: .4r.ercies, arid Pub. ic . tterprises

13,, 3 3,.9

rt?i a's ..eir'"nr".nd'ez

1t.'7'.;'

:i9 t:): s 1983@;f 1984-fe:. 1X ,-* .@

3.7 5.5 4.9 6.0

19.3

o;n ^8 4 te-.2

1.6.5

.t3.6, 11, 4

24.4

Perentage of Investment in Cronstructior

by tinistrtries and Public Alencies

Sc..1.trc::-.. : S t k.i:e !::'.te ... Pu l:.tl: i.c : IdVli'..f : t.it ors at e"'-id of te: fxt. . .:: :'.r. ,had a i::.enl ia. bdet (dt.itring 1.97.1.- 197'2, 1i.973- 1.974, arcnd 1.975-1976.

Ve l as~c o 1969

197. (:1-72* 93. 9.;-74 :

19.1 19.5 22.8

(_)f e

17.1 11.1 22.5 23.1 7.2

'7.2 6.5 5.3

11.7 42.5

31.6 1.7.6 32..s.5 24 3 23.8

:34.7

Pres.. i J den t ia :.I i str a t io.) ,"(Ye,>ar )



A. Patterns of Bureaucratization Before 1968 Although the pre-1968 Peruvian state was smaller and less dif-

ferentiated than those of other major Latin American nations during the 1950s and 1960s, it was characterized by severe fiscal and budgetary fragmentation. Various public and private entities collected taxes and paid out obligations with little or no central coordination. At the beginning of the 1960s, only about one-fifth of public investment was allocated through the regular budgetary process, as legally mandated special and administrative accounts channeled income from earmarked taxes to specific agencies, trust funds, jurisdictions, and projects.

Until the early 1960s, these patterns of fiscal and budgetary fragmentation were exacerbated by the weak constitutional position of the president under democratic regimes and by the absence of any significant mechanism for coordinating policy. The 1933 Constitution had stripped the president of effective veto power while including other provisions which strengthened Congress. The president, the cabinet, as well as individual ministers, all -lacked professional policy staffs. Ministers sometimes did not have clear legal authority to oversee autonomous agencies under their nominal jurisdiction. Most bureaus of the central government which were responsible for economic development were located in the unwieldy Ministry of Promotion and Public Works.

Efforts were made to reform the public administration under the military junta of 1962-1963 and during the first administration of Fernando Belauinde Terry (1963-1968), but these were largely unsuccessful.

B. 1948-1956: Limited Bureaucratic Delegation Under a Traditional Authoritarian Administration

Under the administration of General Manuel Odria (1948-1956) Peru's political regime approximated the pattern of traditional authoritarianism in which political power is concentrated in the hands of a single leader, rather than in the military as an institution. Beginning in 1949, Odria established public works boards on an ad hoc basis in the departments of Cuzco, Huancavelica,



Lambayeque, and Puno; in the constitutional province of Callao; and in the province of La Convenci6n. The exact names and organizational plans of these boards varied, but all were authorized to plan and build public works in response to diverse local problems. Since the boards operated outside of the regular bureaucratic structure, were supported by their own specially earmarked taxes, and were clearly dominated by centrally appointed members, the pattern of decentralization during this period most approximates bureaucratic delegation. However, central ministries, especially the Ministry of Promotion and Public Works, usually retained certain functions of supervision and review.

These early public works boards were always headed by a member appointed by the executive branch - a minister, prefect, or appointed mayor. In all cases, a majority of the members were centrally appointed - typically by ministries and the judicial branch - or else represented provincial councils, which were themselves centrally appointed bodies. Most boards also had some representation from interest groups - usually the Catholic Church, the chamber of commerce, civic clubs, and associations of white and blue collar workers. However, these representatives were in the minority, and the founding legislation often gave the government considerable discretion in designating the representatives of white and blue collar workers.

Since his economic policies encouraged export-led growth, and his political strategy was based primarily on selective coopta- tion among the urban masses, Odria had little reason to channel significant amounts of investment through decentralized agencies. The establishment of departmental public works boards dominated by the bureaucracy enabled him to address the needs of specific regional clienteles while, at the same time, avoiding the possibility of control by his political opponents - the APRA (Alianza Popular Revolucionario Americana) party in the north, small industrialists and the urban middle class in the south. Almost half of all income to decentralized public works boards went to the port city of Callao. The other major regional development organization, the Cuzco Junta de Reconstruccion y Fomento In- dustrial (Reconstruction and Promotion Board or JRYF), was established - at the urging of a United Nations (UN) technical assistance mission - to coordinate recovery efforts after the 1950 earthquake in that department. However, this Cuzco JRYF was

205



centrally administered and had its headquarters in Lima. Although originally it had been established as a regional development agency, almost all efforts of the board were concentrated in the city of Cuzco, where it facilitated reconstruction and helped to capitalize the tourist industry without threatening rural landowners.

C. 1956-1968: Political Delegation Under Democratic Administrations

During the 1956-1968 period, the growth and importance of partisan competition under a nominally democratic regime9 increased the political influence of the provinces, where unmobil- ized, non-committed, and floating groups held the balance of electoral power. Decentralization became an issue in the 1956 presidential campaign, second in importance only to restoration of constitutional democracy. By the time of the 1962-1963 presidential campaigns, Belaunde's Popular Action Party, the Christian Democrats, and APRA all had elaborate platforms which promised agrarian reform, governmental decentralization, and increased public investment in the provinces.

When Manuel Prado began his second administration (1956- 1962), the government's working majority in Congress, together with a broad provincial backlash against the economic policies of Odria, combined to favor a uniform, comprehensive approach to decentralization. In December 1956, public Law 12,676 was passed to create the Fondo Nacional de Desarrollo Economico (FNDE) and the departmental public works boards (JDOPs). Sup- ported by a series of old and new taxes earmarked for the purpose, the FNDE was established to finance public works of "reproductive character or social interest" throughout the country (Law 12,676, Article 2). Almost half (48%) of its funds were divided equally among the 23 departments then existing plus Callao, 500/o were allocated on the basis of population (with a special provision limiting Lima's share), and 2% covered administrative expenses.

The JDOPs combined features of both political and bureaucratic delegation, with increasing emphasis on the political in a system of representation which favored provincial elites and the urban middle class. At the departmental level, the respective JDOPs - made up of representatives from provincial coun-



cils and interest groups - controlled the selection of projects. The interest groups elected 6 representatives on the following basis: one from commerce and industry; one from agriculture, stock raising, and mining; one each from a white-collar and a blue- collar union; and two from professional organizations. Each provincial council elected one representative (with an average of 6 provinces in a department). Until 1963, provincial councils were appointed, usually from among local notables. When municipal elections were re-instated in 1963, the influence of political parties in the JDOPs rose. At the national level, a Superior Council of the FNDE (consisting of 4 JDOP representatives and 5 ministerial representatives, supported by a technical staff) had to approve all lists of department projects. In practice, the Superior Council tended to intervene at the departmental level only in such cases where local factionalism prevented the JDOP from operating.

Departmental development corporations (CORDES)i were a second and increasingly important type of regional development organization established during the 1956-1968 period. Indepen- dently funded by specific taxes earmarked for the purpose (levied at the national and regional levels), the corporations were more autonomous - and controlled more resources - than did the JDOPs. Although presidential appointees served on their governing boards, representatives from interest associations and provincial councils in the department formed a clear majority. Moreover, no central coordinating body oversaw their activities.

The first CORDE was established in Cuzco in 1957, fulfilling Prado's campaign promise to democratize the centrally-ad- ministeredJRYF established under Odria. After a 1958 earthquake in Arequipa, a second corporation was established in that department. During the early 1960s, two more important CORDES were founded to promote recovery from natural disasters - drought in Puno and floods in Ica. Once these recovery efforts were completed, however, the taxes earmarked for these various corporations did not revert to the central government. Indeed, the legislation which established the CORDES anticipated that these bodies would undertake development projects after rehabilitation and reconstruction was completed.

Not surprisingly, departments which had not suffered natural disasters soon began to demand their "fair share" of funds for regional development. Consequently, new CORDES began to be

207



established in response to these demands, a process which ac- celerated during the first Belaunde administration. By 1968, some 15 departments had acquired their own corporations. In most cases, the departmental CORDES absorbed the JDOPs, ad- ministering both the FNDE quota of the department as well as their own earmarked taxes.

The weakness of national administrative structures and the limited presence of the central government in the provinces gave JDOPs and CORDES a considerable amount of institutional space in which to develop. In many areas, these regional development organizations were the most important public agencies during the late 1950s and early 1960s, a time when only the ministries of agriculture, education, and health had field offices throughout the republic. During the 1956-1968 period, JDOPs and CORDES accounted for most of the investment in local roads, sewers, drink- ing water, electricity, and small-scale irrigation. In 1968 they administered 30% of the public investment in construction. In the south, some corporations played important roles in providing credit and in operating public enterprises within their jurisdictions.

In theory, the central government was empowered to exercise a number of controls, but it seldom did so. During the mid-1960s, JDOPs and CORDES successfully resisted early efforts by the new Instituto Nacional de Planificacion (National Planning Institute or INP) to bring them under its control. Although, during times of fiscal austerity, the FNDE and the corporations had to sacrifice a fixed percentage of their earmarked taxes, they generally suffered less than central government agencies.

D. 1968-1975: Centralization and Sectoralization Under a Strong Authoritarian Administration

During the 1968-1980 period, regime norms approximated the bureaucratic-authoritarian, or institutional military, pattern. During most of the administration of General Juan Velasco (1968- 1975), a relatively cohesive alliance of "radicals" and "develop- mentalists" in the military governed from a position of strength vis-a-vis the opposition. This alliance initiated most of the structural reforms that attracted international attention to the so-called



Peruvian Revolution: redistributing land, expropriating foreign firms, initiating profit-sharing and co-management schemes in the private sector, overhauling the public administration, and establishing a system of coiporatist interest associations. The public sector expanded rapidly during this period. Its share of the gross domestic product (GDP) increased from 11.4% in 1970 to 21.4% in 1975 (Fitzgerald, 1979: 184) as the number of public enterprises grew from 18 in 1968 to 174 in 1977 (Ortiz de Zevallos, 1985: 166).

Within the military, there was general agreement on the need for administrative reform, so that when the generals assumed power, they rapidly set about restructuring the public sector. Min- istries and autonomous agencies were reorganized into more clearly defined sectors headed by more powerful ministers. Fiscal administration was centralized in the new Ministerio deEconomfa y Finanzas (Ministry of Economics and Finance or MEF), and all earmarked taxes, except those earmarked for the military, were eliminated. The planning system was greatly strengthened by general administrative reorganization, the INP's privileged access to the cabinet, and its new authority at various stages of the budgetary and implementation processes. New systems for personnel, statistics, supplies, and administrative rationalization were created and placed under the jurisdiction of the prime minister.

JDOPs and CORDES were quickly brought under control through direct military supervision, elimination of their earmarked taxes, absorption of their enterprises by central ministries and firms, and the expanded powers of the INP. Their share of public investment in construction plummeted from 30%/ in 1968 to 11.1% in 1970. In 1971 the FNDE, JDOPs, and CORDES - along with some other agencies - were incorporated into the regional offices of the Sistema Nacional de Apoyo a la Movilizacion Social (National Support System for Social Mobilization or SINAMOS), a government agency, which accounted for only about 60/o of public construction investment during the 1971-1974 period. After SINAMOS was liquidated in the mid-1970s, its personnel and activities were absorbed by the central ministries. The Velasco government did not promote a system of alternative regional development organizations because it viewed sectoralization as critical to rapid completion of the structural reforms and a new strategy of public investment in areas selected for growth. The ministries created by sectoralization - transport, industry and

209



tourism, energy and mines, fishing, and housing - opened up field offices in the provinces, but deconcentration was basically functional, with minimum horizontal coordination through inter- sectoral regional development committees and regional offices of the INP.

The major exception to this sectoral orientation was prompted by a disastrous earthquake, in May 1970, which was centered in the north-central department of Ancash. In its wake, an intersec- toral coordinating agency, the Comision de Reconstruccion y Rehabiltacion de la Zona Afectada (Commission for the Reconstruction and Rehabilitation of the Affected Zone or CRYR- ZA), was established later the same year to oversee efforts of relief and reconstruction. In May 1973, this commission was converted into the Organismo Regionalpara el Desarrollo de la Zona Afec- tada (Regional Organization for the Development of the Affected Zone or ORDEZA), an autonomous agency for reconstruction based on the principle of general deconcentration. Incorporating the field offices of the various ministries in the earthquake area, ORDEZA was headed by a general with ministerial rank and was given independent budgetary authority.

During the 1971-74 period, CRYRZA and ORDEZA accounted for about 15% of public investment in construction. Unlike the regional development organizations prior to 1969, however, CRYRZA and ORDEZA did not have funds earmarked especially to their use, and the military resisted the pressure to maintain a high level of support once reconstruction was completed or to ex- pand the program to other departments. As reconstruction wound down, ORDEZA's share of construction fell to 5.7% in the 1975- 1976 biennial budget-cycle, and to 3.9% in 1977, its last year of operation.

E. 1975-1980: Abortive General Deconcentration Under a Weak Authoritarian Administration

As the so-called structural reforms were completed during the mid-1970s, the government turned its attention to the re-organization of the state. In 1974-1975, General Francisco Morales Bermuidez, the prime minister, directed that a comprehensive plan be drafted to provide for a general deconcentration to the regional



level. Following the general outline of ORDEZA, planning, budgeting, and personnel were to be deconcentrated through a new system of multi-departmental regional development organizations (ORDES) which would integrate the bureaucracy horizontally. Eventually, this system would be extended down to the departmental, and even sub-departmental, levels.

In order to link the allocation of resources to regional planning, and to overcome the compartmentalization of regional administration which was a by-product of sectoralization, each ORDE would incorporate the regional INP planning office and ministerial field offices under a regional director with ministerial rank. Not only were ORDES given authority over their own budgets, but they were also given responsibility to plan and implement projects not considered to be of national or inter-regional scale. Field offices were to be primarily responsible to the ORDE director, subject to the regional plans formulated by their respective ORDE, and dependent upon the ORDES for supplies and equipment. They would, however, continue to be responsible to their ministries on technical issues and matters of sectoral policy. Field offices were to implement both the projects which fell within the ORDE budget as well as those remaining in the budgets of their respective ministries. Consultative councils, composed of representatives from various interest groups in the region, would have a purely advisory role.

Several months after Morales Bermudez assumed the presidency, in November 1975, he invited public comment on the proposed Law of Administrative Regionalization which outlined the ORDE system. Most of the debate focussed on issues of jurisdiction - especially the drawing of regional boundaries and the selection of regional capitals - rather than on the merits of the proposed ORDES. A variety of bureaucratic interests resisted implementation of the ORDE system or attempted to shape regional reform to suit their organizational goals. Although the Velasco government had been able to overcome much stronger opposition towards its agrarian, and other, reforms, the Morales Bermudez government dealt from a position of declining strength, colored by increasingly severe economic crisis. Moreover, the issue was further complicated by the often overlapping jurisdictions of the various ministerial field offices.

211



Under these circumstances, Morales Bermudez withdrew his proposal early in 1976 and pursued two less ambitious policies. First, in 1976, regional development committees were restruc- tured along departmental lines: each of these departmental development committees (CODE) was subordinated to a super- vising ministry and advised by an INP departmental office. In 1977, these committees assumed the community development functions formerly exercised by SINAMOS. Second, in 1977 the administration proceeded to establish ORDES on an ad hoc basis, starting in those areas where there was the least intra-military and intra-bureaucratic conflict over regional boundaries. Of the first 6 ORDES to be established, 5 were in frontier regions, reflecting the concern of the military for national security and the political muscle of frontier commanders. Later, ORDES were generally established on a departmental, rather than a regional, basis.11

By 1980, at tie end of the Morales Bermuidez administration, the ORDE system covered 15 departments, although only 2 were multidepartmental. ORDES were never established in Lima or in the departments of the central and northern sierra, which continued under the CODE system. In all but one of the ORDES, the regional director was also the region's ranking military com- mander. Consultative councils were never established, or else ex- isted in name only.

Ministries learned to circumvent ORDES in various ways: by using the broadest possible definition of sectoral policy, by creat- ing special projects to be administered by the central government, or by grouping small projects together to create a "national" program. Moreover, the ORDE system was carried out in a period of fiscal austerity, with most of the available public investment funds already claimed by ongoing projects. As new ORDES were formed in the late 1970s, the share of public investment in construction undertaken by regional development organizations increased to 11.7% (in 1979), but remained well below the level attained by the JDOPs and CORDES in the 1960s, or by CRYRZA and ORDEZA in the early 1970s. Subsequently, the nominal share of ORDES public investment in construction swelled to 42.5% (1980) and 31.6% (1981) respectively, an increase which was -largely illusory since it was based upon the temporary inclusion of large-scale irrigation and colonization projects in ORDE budgets,



even though these were administered by the sectoral ministries (see INP-DGPI, 1981 and 1982; Garz6n, 1986:179-181).

F. 1980-1985: Delegation from a Centralized State Under a Democratic Administration

In 1980, Peru returned to a democratic regime under the 1979 Constitution which provided a stronger role for the executive vis- a-vis the Congress, and which left intact the major structural reforms of the military. Written in the context of major strikes and demonstrations, by regionally-based popular movements, which erupted in the late 1970s, the Constitution also created a system of autonomous regional and municipal governments with broad responsibilities for economic development.

Late in 1981, CORDES were re-established to serve as transitional organizations which would lead to regional government. The contemporary CORDES are governed by a uniform national law (especially Law 23,339) which combines attributes of both political and bureaucratic delegation. All CORDES have an assembly, a directorate, a president, and a general manager. The assembly is made up of equal numbers of(1) provincial majors, who are elected to office; (2) representatives of private-sector professional and economic organizations; and (3) heads of ministerial field offices, autonomous agencies, and public enterprises in the department. The assembly elects 3 of its 5 directors from among its own members: one from the provincial mayors, one from the professional and economic organizations, and one from the state agencies. The mayor of the departmental capital is a 4th member of the directorate, and the president of the corporation, who is appointed by the President of Peru, is the 5th member. This directorate is responsible for, and selects the general manager of, the CORDE organization. The president of the corporation selects key staff.

During the first two years of the second Balaunde administration (1980-1985), and in marked contrast to his first administration, Accion Popular(AP) and its coalition partner had majorities in both houses of Congress. Although there was considerable struggle going on between factions within AP, both of these factions sought to control CORDES from the central government. As

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the corporations became re-established, selection of representatives to the assembly from private organizations and public agencies was manipulated to favor the governing party, which already controlled a majority of provincial mayors after its victory in the 1980 municipal elections. As a result, most members of COR- DES assemblies owed their positions to actors in the central government. During this period, assemblies played largely pas- sive roles, and real power rested with the centrally-appointed president, the directorate, and the general manager.

Not only was CORDE leadership largely determined from above, but, once selected, it lacked autonomy in decision-making. CORDES were placed under the supervision of the Office of the Prime Minister. Without an independent and predictable financial base, the corporations found their investment policies especially vulnerable to adverse decisions by central institutions. Some departments found that as much as 60% of their CORDE budget was changed by Congress. Moreover, the MEF used its disbursement procedures to limit, or delay, authorized revenues, a practice which resulted in very unpredictable revenue flows to the corporations. Also contributing to long delay was the need to secure approval of budgetary modifications from the MEF and Congress. Officials from a variety of central government agencies attempted to enforce complex, constantly changing regulations which were often constricting, inappropriate, and even contradic- tory.

Although CORDES have broad developmental responsibilities in principle, in practice it often works the other way, as the sectoral orientation of much of the national legislation, and the turf- protective behavior of ministerial and agency field offices, have operated together to limit the CORDES to a traditional public works orientation. During 1982, their first year, the corporations accounted for 17.6% of public investment in construction. When the CORDES led recovery efforts from the ElNino-related disasters of 1983, their share of the public construction budget increased to 32.5%. However, after the crushing defeat of the AP in the Novem- ber 1983 municipal elections, which increased the representation of the opposition in the CORDES, its budget declined to 24.3% in 1984.



G. The Garcia Administration: General Devolution through Regional Governments?

Strengthening regional development organizations has been an important part of the economic and political strategy of Presi- dent Alan Garcia's (1985-1990) to re-activate long-neglected peasant agriculture.

During his first two years in office, President Garcia attempted to strengthen and increase the autonomy of the CORDES while, at the same time, maintaining ultimate control. On the one hand, he placed the corporations under supervision of a new Ministry of the Presidency and continued to appoint the CORDE presidents. His government gained effective working majorities in the corporations by means of its ability to appoint the public sector representatives, to influence the composition (and selection) of interest-group representatives, as well as by means of the majority which APRA gained among provincial mayors after the 1986 municipal elections. On the other hand, the president loosened some of the more onerous constraints on CORDES from the central government. Centralized programming and disbursement procedures were modified to enable them to estimate better, and depend upon receiving, their funding. Although the corporations must abide by certain centrally-determined programming procedures and follow general priorities established by the INP, they are now able to select specific projects of their own.

President Garcia has also encouraged greater cooperation between CORDES and the field offices of central ministries and agencies, although the subservience of the latter to the hierarchies of the vertical ministries has continued to be a major obstacle to effective horizontal coordination. Between 1984 - the last full year of the Belaunde administration - and 1986 - the first full year of the Garcia administration - the share of construction investment undertaken by the corporations and their micro-regional offices increased from 24.3% to 34.7%.

In the second Balauinde administration, jurisdictional disputes stymied efforts to establish regional government, despite a provision regarding such a transition in the 1979 Constitution which strengthened the hand of the executive in this matter. The Garcia administration both drafted and enacted the Basic Law of

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Regionalization (Law 24,650), which outlines regional governments which are much stronger, and more representative, than CORDES, but which does not specify regional jurisdictions. Each regional government is to be created by a separate law which will also specify its capitals and boundaries. By the time of the annual presidential address, on 28July 1988, the Congress had approved, and the president signed, legislation for 3 of the regions, and the lower house had passed laws for 6 more. Despite inevitable con- flicts over boundaries, it appears likely that regional governments for most, if not all, of the rest of the country will have been approved by the end of 1988.

The regional governments outlined in Law 24,650 approximate general devolution, although the president of the republic retains ultimate veto power. Regional assemblies will be composed of representatives elected by direct suffrage, as well as indirectly through municipal elections, and by interest associations. In a major departure from previous departmental organizations (whose membership was biased in favor of urban areas), the weight of rural interest associations in the assembly is to reflect the percentage of the rural population in the region - a measure that complements the Garcia administration's alliance strategy. The assembly will elect the executive body, the Regional Council.

Incorporating the field offices of most central ministries and agencies, regional governments will have primary responsibility for economic development and social services in their jurisdictions. Each regional government may pass laws on matters outlined in its founding legislation or specifically delegated to it by Congress. While regional governments are supposed to adhere to sectoral policies set by the ministries, compliance is compulsory only when so specified in a national law or presidential decree. The system of micro-regions initiated by the Garcia administration is codified in the law. Local governments are to play a strong role through the regional assemblies and the micro-regions.

The Constitution and Law 24,650 provide for a number of possible sources of finance, which include: (1) progressively increasing transfers from the national goverment, (2) taxes on natural resources in the region, (3) regional taxes, (4) proceeds from services, (5) recuperation from investment and assessments on improvements, (6) internal credit, and (7) the profits from affiliated public firms. Transfers from the central government and 20% of



the taxes on natural resources will be channeled through a Regional Compensation Fund modeled on the FNDE and designed to ameliorate inter-regional disparities. The law specifies that regional governments will have autonomy over their budgets, except for those transfers which are earmarked for a specific purpose and for those projects of national importance which have been delegated to them. The national Congress may change amounts transferred, but not line items.

Only relatively small, regionally-based public enterprises will come under the jurisdiction of regional government, which will also have the authority to create firms within their regions.13 Given the weakness of the provincial private sector in non-agricultural activities, many officials in the INP and the CORDES argue that regional governments should (1) promote public or mixed enterprises in critical bottleneck activities, whose development would open up opportunities for the private sector; and (2) become involved in securing or providing finance for private firms. In making their case, these officials argue that the corporations would support firms that would be small-scale, labor-intensive, and linked to the regional economies - and thus would be different, both qualitatively and quantitatively, from those in Peru's inefficient parastatal sector.

Whatever the merits of these arguments, there is little reason to believe that the regional governments will assume more than a very modest entrepreneurial role that essentially complements private enterprise. Initially, the CORDES - which specialize in public works (rather than in direct production) and which con- tract out many of their projects to private firms - will form the organizational cores for the regional governments. Moreover, at the time of this writing (in late 1988) the Garcia administration is pur- suing renewed concertacion with the private sector and more or- thodox economic policies. But even if overtly statist policies were preferred, there are few major private firms in the provinces that could be taken over, and the creation of major new state firms - in the context of Peru's current economic crisis - is out of the question. Although recent legislation outlines the decentralization of the country's nationalized banking system, this is to be accomplished primarily through deconcentration within each financial institution, rather than through incorporation into regional governments.

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In attempting to establish regional governments in a generally unfavorable climate (of economic crisis and guerrilla insurgency), President Garcia will face two specific challenges. First, as indicated by the ORDE experience under Morales Bermufdez, central ministries and agencies will tenaciously oppose efforts to decentralize authority and scarce resources. Second, to the extent that regional governments have real autonomy, the president risks losing control of important governmental units to dissident factions in the APRA and/or to opposition parties.

IV. REGIONAL DEVELOPMENT ORGANIZATIONS: PERFORMANCE AND PROSPECTS

IT IS EXTREMELY DIFFICULT to arrive at any general assessment of regional development organizations in Peru, given their variability over time and space and the sparse data on their developmental impacts. Nevertheless, four generalizations about recent regional development organizations can be posited.'4

First, although many observers consider CORDES and other recent regional development organizations to be undemocratic and inefficient, their major shortcomings are closely related to, if not determined by, national policies or processes. Direct political interference from the center has distorted organizational dynamics within the corporations and undermined their autonomy, reducing incentives for meaningful negotiation at the departmental level because any decision reached can be over- turned. Indeed, groups in the minority on a given decision have sometimes appealed to central actors or organizations, thereby further undermining the CORDES' organizational integrity. Regulations imposed by the central government have stifled initiative in regional development organizations, much as the economic regulations and policies of the Peruvian government have undercut private initiative in the "formal" economy and con- tributed to the development of a huge "informal" economy (De- Soto, 1987). For example, under the second Belaunde administration the corporations often received the bulk of their funds at the end of the calendar and fiscal year, when efficient use is hindered by insufficient time and the rainy season in the sierra.



Another illustration is that national laws and regulations have frustrated the efforts of some CORDES to charge capital improvement assessments and user fees.15

Second, although CORDES and other recent regional development organizations have some major internal deficiencies - weak planning capabilities, featherbedding, low salaries, corruption- they appear to be at least as viable, on average, as national-level agencies. Indeed, comparisons of donor-assisted projects suggest that the corporations are more efficient than national agencies. Responding to the El Nino-related drought and flood disasters of 1983, CORDES rapidly and efficiently implemented $50.3-million of works financed by the Disaster Relief, Rehabilitation, and Reconstruction (DRR) Project -the largest project ever undertaken in Peru by the US Agency for International Development (US-AID) - while completing an additional $100-million of reconstruction efforts funded by the Peruvian government. The DRR project alone supported 113 sub-projects, 572 components, and 3,000 activities in 15 departments. In contrast, similar donor- assisted projects undertaken by central agencies in Peru suffered serious shortcomings in implementation, hampered by the slow movement of funds through the central bureaucracy, excessive red tape, and overcentralization of authority. For example, also in the aftermath of the El Nino-related disasters, Peru lost some $30- million in funding from the Inter-American Development Bank (IDB) and the World Bank as the result of inadequate coordination among central agencies in the allocation of counterpart funds and the failure of some central ministries to satisfy certain conditions as precedent requirements (see Checchi, 1987:23-24 and 47).

Third, improving the revenue-generating capability of the decentralized organizations is essential for the viability of future efforts. Indeed, initiatives in that direction have emphasized financial transfers from the central government over mobilization of resources by the organizations themselves. Although the FNDE and the early CORDES achieved a high degree of autonomy over their budgets, this was accomplished primarily through the "cap- ture" of special taxes, earmarked for the purpose and administered nationally, instead of through the generation of resources in the areas affected, such as the provinces.17 Lacking the power to tax and the authority to recover costs, ORDES - and recent CORDES - have been almost totally dependent on transfers from the

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central government.18 As long as the central government and agencies retain major control over resources, citizens in the provinces will continue to direct their demands to those central ministries and agencies instead of choosing to interact with one another through their decentralized organizations. Not only does this pattern lead to an overload of demand at the center, but it further undermines the development of responsible bargaining: the spirit of give-and-take so crucial to democratic institutions.

Fourth, the conversion of CORDES into regional governments should serve to improve this situation: to facilitate decentralized generation of revenues, to provide a stronger legal base with which to overcome external constraints, as well as to help the corporations overcome internal weaknesses. Regional governments will have some authority to tax, will receive other income from nationally-determined taxes and transfers, and will be able to retain proceeds from assessments on improvements, user fees, and services. As regional governments become established, it will be more difficult for the central government to control regional assemblies, since they will have a large block of representatives elected by direct suffrage - as opposed to having a substantial number designated by the bureaucracy. Similarly, the enhanced legal status of regional governments (plus safeguards provided in Law 24,650) should put them in a better position to resist counter- productive regulations emanating from central agencies. The greater representativeness of regional governments, their increased insulation from central interference, and their enhanced authority over resources should all work to improve prospects for development of responsible democratic bargaining.

V. POLITICAL VARIABLES AND GOVERNMENTAL DECENTRALIZATION

THE FOREGOING REVIEW provides some illustration of each of the three paradigms discussed in Section II. While it is tempting to use this as evidence for selecting the best theory, it is more useful to note that the key variables suggested by the three approaches - regime-variation, patterns ofbureaucratization, and alliance-formation - each explain a different aspect or dimen- sion of decentralization policy.



The regime-type approach has set broad limits for selection of appropriate modes of governmental decentralization over the course of the period examined. The authoritarian administrations of Odria, Velasco, and Morales Bermiudez have consistently rejected devolution and political delegation, preferring the greater control of deconcentration and bureaucratic delegation. The democratic administrations of Prado, Belaunde, and Garcia emphasized political delegation at the regional level, although some elements of bureaucratic delegation were also present. The Garcia administration has been attempting to implement a sweeping program of general devolution to the regional, microregional, and local levels.

While regime-type has strongly influenced the mode of decentralization selected, patterns of bureaucratization have shaped the institutional space available for the various modes. Before 1968 the existence of a small, fragmented state, concentrated in Lima, left considerable room for delegation to multisectoral regional development organizations. As the state became more integrated and sectoralized after 1968, functional deconcentration and delegation to public firms became dominant. Given the expansion, centralization, and sectoralization of the state during the 1968-1975 period, contemporary CORDES have had to deal with constraints imposed by central agencies and bureaucracies much more severe than those encountered by the pre-1968 corporations. Changes in the scale and structure of the central government also make general deconcentration and general devolution - attempted, respectively, by the Morales Bermuidez and Garcia administrations - extremely difficult, especially when in jurisdictions that cut across existing territorial boundaries.

Despite these factors, however, there has been a strong cor- relation between the strength and programmatic unity of the governing alliance and its ability to implement decentralization policies. Establishment of the FNDE system at the very beginning of the Prado administration and the restructuring of the state under the Velasco administration occurred when these respective governments were relatively strong and united by consensus on these issues. Absent this situation, the influence of pressure groups or bureaucratic agencies rises, and they are much more able to shape - or to undermine - any reform. The best ex-

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amples of this are the ad hoc formation of CORDES during most of the 1956-1968 period and the inability of the Morales Bermidez administration to implement ORDES in accordance with a comprehensive plan.

The objectives of the governing alliance and the dynamics of alliance-formation also influence the type of decentralization preferred. Alliance strategies favored general modes of decentralization to the departmental or regional levels under the second Prado administration, the first Belaunde administration, and the governments of Morales Bermuidez and Garcia -but they worked against regional organizations under the Odria, Velasco, and second Belauinde administrations. Alliance strategies have often influenced specific features of the regional organizations as well: for example, elite and middle-sector domination of JDOPs and early CORDES, absorption of the pre-1968 regional development organizations by SINAMOS under Velasco, appointment of corporation presidents from above since 1982, and strong peasant representation in the system of regional governments now being implemented.

The arguments developed here should help move the literature on decentralization in Latin America beyond descriptive or formalistic studies, but they need to be examined critically and refined in light of the experiences of other Latin American countries with different regime cycles, different patterns of bureaucratization, and different alliance dynamics.

VI. SOME IMPLICATIONS FOR POLICY

DURING THE 1980s, a new wave of comparative research on decentralization in developing countries made considerable progress in advancing the state-of-the-literature by distinguishing among alternative modes of decentralization and improving our understanding of how decentralization policies can be better designed and implemented (see especially Cheema and Rondinel- li, 1983; Leonard and Marshall, 1982; Rondinelli and Nellis, 1986; and Rondinelli, Nellis, and Cheema, 1984). However, this literature does not attempt to explain why a particular mode of decentralization is adopted in the first place, and it seldom dif- ferentiates among the various modes when analyzing the factors which affect success. While failure to implement decentralization



is frequently attributed to insufficient political commitment or political support, the comparative literature sheds little light on how such political obstacles to decentralization might be addressed or overcome (Rondinelli and Nellis, 1986: 15; Rondinelli, Nellis and Cheema, 1984: 47-51).

Although questions of policy design and evaluation are largely beyond the scope of this analysis, it does provide 5 important insights into the impact of political factors on the framing of decentralization policies.

First, the Peruvian case demonstrates that the institutional context must be considered in the formulation and implementation of decentralization policies. For example, to the extent that the patterns identified in this article have general validity for Latin America and the developing world, it makes little sense for international donor agencies to advocate devolution in countries under authoritarian regimes. Similarly, in highly centralized political systems, such as Peru's, efforts to increase the technical capabilities of decentralized organizations will sooner or later confront constraints related to centrally-determined policies. In such a context, proponents of decentralization must devise strategies for achiev- ing necessary political and administrative reforms at the center.

A second important insight from the Peruvian case is that the calculations of key political actors must be taken into account in designing any decentralization program. Most analysis of the potential benefits and costs of decentralization (e.g. Rondinelli, 1981) is cast at the level of the political system. Such an approach is useful in assessing the comparative advantages of the various means of decentralization, but it is inappropriate for understanding patterns of support of, opposition to, and ambivalence towards decentralization. Indeed, although decentralization is usually justified in terms of managerial efficiency, in fact, most decentralization initiatives are motivated by political considerations (Rondinelli, Nellis, and Cheema, 1984: 27). The preceding analysis implies that any decentralization program must make sense not only for the system as a whole, but also in terms of the objectives of the governing alliance.

Third, the Peruvian case suggests that the major institutional reforms needed to push decentralization through are most likely to be accomplished during "windows of opportunity," when ex- traordinary events or factors alter the normal calculations ofpoliti-

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cal actors in a direction favorable to decentralization. In Peru, as elsewhere, collective action is usually much easier for opponents of decentralization - such as central bureaucratic elites - than for its potential beneficiaries.20 Nevertheless, two principal factors - natural disasters, and transitions from authoritarian to democratic regimes - have periodically opened just such windows of opportunity for this to happen. Natural disasters in the provinces increased the comparative advantages of decentralization (from the perspectives of various actors) and lessened the costs of implementation because organizational change is a necessary concomitant to the operation of programs created to deal with situations of great urgency. In addition, the availability of foreign assistance earmarked to the affected region has often provided an additional incentive.

In transitions from authoritarian to democratic regimes, governmental decentralization has been addressed primarily as part of the larger process of redefining institutional relationships; thus, the costs of establishing decentralized organizations in the public sector are lowered. Furthermore, in Peru, the potential benefits of governmental decentralization have been most ap- parent to provincial actors when policies of the previous regime were viewed as having been detrimental to their interests (in the periphery). As noted above, provincial backlashes to the Odria administration and to the military governments of the 1970s played an important role in placing decentralization on the political agenda. An earlier provincial reaction to the centralization policies of the second Leguia administration (1919-1930) had stimulated a similar movement toward decentralization in the 1930s. Further research in other contexts may identify additional factors which have opened or closed windows of opportunity for decentralization in the past.

Fourth, since a presidential administration is likely to be strongest and most united at the beginning of its tenure, ambitious decentralization schemes, like other major reforms, should take into consideration the peaks and valleys of support likely to occur during presidential cycles. It is no accident that the most significant policies affecting decentralization in Peru were enacted during the first year or two of a presidential administration. This historical pattern does not bode well for President Garcia's present attempt



to form regional governments from a political position that is so much weaker than during the first two years of his presidency.

Fifth, and most broadly, the Peruvian case demonstrates that distinguishing among the different modes of decentralization is a pre-requisite for effective discussion of decentralization issues among political actors. Since the term decentralizationhas many dimensions, it can mean different things to different people, who may, in turn, support different modes for different reasons. For example, some Peruvian officials fear that decentralization, as used by officials of international donor agencies, might be a conceptual Trojan horse for indiscriminate privatization. In turn, some officials of international donor agencies fear that decentralization could serve as a vehicle for further expansion of Peru's parastatal sector. Both fears are largely unfounded, but indiscriminate use of the term can confuse and, indeed, may serve more to obscure than to clarify areas of policy convergence. Some recent Peruvian experimental efforts - to increase the revenue-generation capabilities of CORDES and municipal governments and to en- hance local-level responsibilities for maintenance - are very similar to policies advocated by the World Bank.21 Regional governments offer a new opportunity to accelerate efforts in this direction. It would be a pity if officials of international donor agencies were to overlook the possibilities for collaboration with the new regional governments due to a misplaced fear of renewed parastatism.

NOTE ON PUBLIC INVESTMENT INDICATORS SCHOLARS INTERESTED in institutional dynamics in Peru and other

Latin American countries face the challenge of finding indicators that are both sufficiently disaggregated and consistent over time. Three principal series were used in constructing Table II: (1) the official record of public expenditures for the 1964-1983 period published in the Cuenta General de la Republica (Peru-Cuenta General, 1957-1983; exact name and institutional author vary); (2) computerized data on projects for the 1969- 1980 period compiled by the Information Office of the Ministry of Economics and Finance (Peru-MEF-ODIN (1980); and (3) yearly evalua- tions of public investment for the 1980-1986 period undertaken by the Public Investment Bureau of the National Planning Institute (Perui-INP- DGPI) (1987-81).

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MEF-OFIN project data measure gross public investment (see BCRP, 1985: 1.10 and 1.18), while the Cuenta General (after 1964) permits cal- culation of investments in construction. The disaggregated presentation in the INP-DGPI series allows calculations of ratios for both gross public investment and investment in construction.

The gross public investment series uses MEF-OFIN data for 1971-1979 and the INP-DGPI series for 1980-1986. The construction investment series uses data from the Cuenta General from 1965 through 1983 (the date of the last published volume) and INP-DGPI data from 1984 through 1986.

ACRONYMS CODES ...............comites departamentales de desarrollo CORDES ............ corporaciones departamentales de desarrollo CRYRZA.............Comision de Reconstruccion de la Zona Afectada DRR .................... Disaster Relief, Rehabilitation and Reconstruction FNDE ................. Fondo Nacional de Desarrollo Econ6mico INP ..................Instituto Nacional de Planificaci6n JDOP .................juntas departamentales de obras publicas JRYF ...................Junta de Reconstruccion y Fomento Industrial del

Cuzco MEF ................... Ministerio de Economia y Finanzas ORDES ............... organismos regionales de desarrollo ORDEZA ........ Organismo Regional para el Desarrollo de la Zona

Afectada SINAMOS...........Sistema Nacional de Apoyo a la Movilizacion Social

NOTES 1. For useful assessments of the literature, see Beyna et al. (1977);

Fesler (1968: 376); Leonard and Marshall (1982: xi); and Rondinelli, Nel- lis, and Cheema (1984: 70).

2. The definitions below have been extracted from Rondinelli and Nellis (1986: 6-9). It should be noted that decentralization terminology is somewhat different in English and Spanish. In English, "decentralization" is a blanket term, covering various modes, but its cognate in Spanish, descentralizaci6n, means approximately the same thing as devolution in English. The Spanish term desconcentraci6n is similar to its English cognate, deconcentration.

3. Cardoso (1979) and Kenworthy (1970) provide explicit variations on this line of argument, which is implicitly used by scholars and practitioners of diverse ideological persuasions. Attempts to demonstrate em- pirically relationships between regime-type and policy outcomes



generally have been unsuccessful, although there is considerable evidence that the state of the literature is more a reflection of conceptual and methodological shortcomings than the irrelevance of regime variation to policy. For pertinent reviews of the literature, see in particular Ayres (1975), Bossert (1983), and Remmer (1978).

4. Schmitter (1971: Chapter 14; and 1972) provides classic summaries of the authoritarian state approach. Harris (1983) implicitly employs this approach in his survey of decentralization in Latin America.

5. For example, see Cleaves (1974), Cleaves and Scurrah (1980), and Grindle (1977 and 1980).

6. In the Peruvian scheme of territorial organization, departments are made up of provinces, and the latter, in turn, are composed of districts. In 1986 there were 24 departments; the Constitutional Province of Cal- lao, which has quasi-departmental status; 179 provinces; and 1,747 districts (Peru-INE, 1986). Multidepartmental regions functioned briefly under the Morales Bermudez administration (1975-1980) and are now being implemented under the current Garcia administration. Microregions, which are also being emphasized by the current government, are subordinate to departmental bodies or regional governments; they sometimes cut across provincial lines but respect the boundaries of districts, whose elected officials double as representatives to microregional assemblies.

7. In six CORDES visited by the author in 1985, many informants had worked for SINAMOS during the 1970s, and a few had begun their careers with the pre-1968 CORDES andJDOPs.

8. See especially Caravedo (1983) and Garzon (1986); other relevant studies are listed in the bibliographies of Schmidt (1987 and 1988).

9. Although the second Prado administration (1956-1962) and the first Belaunde administration (1963-1968) came to power by winning com- petitive elections, the military exercised an important veto power over presidential succession. A caretaker military junta also governed the country for 12 months during 1962 and 1963.

10. The names of these organizations varied from department to department, although most had "corporation" in their official title. In several departments, they were called rehabilitation and development boards. For the sake of simplicity, the current article refers to all of these organizations as "corporations" or CORDES, using the acronym coined in the 1980s.

11. These were called departmental development organizations, but they shared the same ORDE acronym.

12. These three regions are Amazonia (the department of Loreto), Grau (the departments of Piura and Tumbes), and Nor-Marafion (the departments of Amazonas, Cajamarca, and Lambayeque).

13. Only state firms that undertake activities "exclusively or fun- damentally" within a given region can be regionalized and then only if they are not of strategic or national importance (Law 24,650, Second Transitional Disposition). Almost all major state firms operate in more

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than one region, or in Lima, and geographically-concentrated mining and petroleum activities clearly have national importance. Regional firms providing electricity distribution and water service appear to be the major candidates for inclusion in the regional governments.

14. For further discussion of these points see Schmidt (1989, especially Chapters 3, 6, and 7).

15. Most major infrastructure constructed by CORDES must be turned over to a national agency upon completion. Moreover, in those activities in which cost recovery through improvement assessments or user fees is possible - street paving, markets, slaughterhouses, industrial parks, and similar works - any sums generated, but not spent, during the fiscal year revert to the national treasury.

16. "Sub-projects" grouped all similar components, such as roads or irrigation works, in a given department. In turn, some components, especially in community development, were broken down into numerous "activities".

17. This pattern can be traced back to a vertical brokerage system linking national and local power that emerged in the 19th-century (see Schmidt, 1989: Chapter 2).

18. The exceptions are four CORDES that receive earmarked taxes on petroleum produced in their department and the corporation in the port city of Callao, which enjoys some customs revenues.

19. Schmidt (1989, Chapters 8 and 9) discusses insights on design issues from AID experience in supporting Peruvian decentralization initiatives.

20. See Schmidt (1989, Chapter 4) for discussion of the disparate costs of collective action by adversaries and potential beneficiaries of decentralization.

21. Compare the policy experiments analyzed in Schmidt (1989, Chapter 7) with the policy prescriptions suggested in Gray and Linn (1988) andJimenez (1988).

REFERENCES AYRES, R. (1975) "Political Regimes, Explanatory Variables, and Public

Policy in Latin America." Journal of Developing Areas, 10 (October): 15-36.

Banco Central de Reserva del Peru (BCRP) (1985) Perui: Compendio Estadistico del Sector Puiblico No Financiero 1968-1984. Lima, Peru: BCRP.

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