The Impact Of Ethnic Diversity On Local Public Goods Delivery In Underdeveloped Countries In The Context Of Decentralisation

This study focuses on the impact of ethnic diversity on public good delivery at the local level of developing countries under decentralisation and local democratisation reforms.On the one hand,decentralisation theories believe that bringing policy-makers(government)and public goods deliverers(e.g.,teachers,health extension workers,agricultural extension workers,road maintainers,etc.)closer to receivers(people)can strengthen the accountability mechanisms,thus promoting public goods delivery.On the other hand,some public choice models predict that decentralisation in ethnically diversified regions can intensify the divergence among interest(ethnic)groups and provoke low efficiency in public choice-makingEthiopia has 93 registered ethnicities.Since the Ethiopian People's Revolutionary Democratic Front took power in 1991,the new government gradually improved ethnic self-determination and decentralisation.Currently,tasks on public goods delivery are divided among woreda(local)governments,regional governments,and central ministries.The recruitment of public goods deliverers,which consists the largest part of the spending on public goods delivery,is fully taken charge of by woreda governments,capital expenditure at the local level is made by the regional government,while the other non-salary expenditures fall into the responsibility of respective ministries.Since 2006,Ethiopia,with the help of International development partners,initiated the Promoting Basic Services Programme(PBS),which has provided massive financial support and institutional guidance for local democratisation based on decentralisation,including Grievance Redress Mechanisms,Financial Transparency and Accountability,Social Accountability Activities,etc.,which strengthens citizens' ability to hold the government and providers accountable.This thesis,through analyses on the public good delivery data collected in the PBS programme,finds that(1)woredas more ethnically diversified are associated with higher agricultural expenditure,which conforms the Selfish Public Choice model in that interest group division increases public expenditure in more excludable goods.However,expenditures on public goods with higher spill-over effects,like education,health,and road,do not have a significant correlation with ethnic diversity,while according to the classic Selfish Public Choice model,their expenditure should be less in places more diversified in terms of ethnicity or interest groups.This thesis hypothesises that one of the reasons why this model does not fit with this finding is that local expenditure in Ethiopia is mainly financed by inter-governmental transfer from the regional government instead of local tax revenue.Furthermore,this thesis finds that in education,health,and road,fiscal surplus is strongly positively correlated with ethnic diversity.This thesis thus argues that the efficiency in budget execution reduces when ethnic diversity goes up.Therefore,this thesis suggests that the Selfish Pubic Choice model can explain at least in part how public goods are decided and delivered in local Ethiopia.(2)Local ethnic diversity is positively correlated with primary school number and safe water accessibility which are provided by the regional government through capital expenditure.This thesis infers that higher-level governments in Ethiopia give financial preferences to ethnically diversified woredas.(3)Woredas more ethnically diversified is correlated with lower poverty rate and poverty depth,thus higher development level,and this phenomenon mainly takes place in Oromia and Southern Nations,Nationalities,and Peoples' Region(SNNP)which are the two large regions with the highest ethnic diversity.Based on the presumption that in under-development places,development is much determined by the quality of public good delivery(education,health,road,etc.),this thesis infers that since a relatively long time before the PBS programmes,Ethiopian government disproportionately supports woredas more ethnically diversified,and provides them with more public expenditure.Based on these findings,this thesis argues that decentralisation and local democratisation are probable to reduce the scale and efficiency of public goods delivery at the local level of ethnicity-diversified places and thus holds a reservation altitude towards the argument that decentralisation improves public goods delivery in highly ethnically diversified places,not considering the effects of development funding that often comes with it.Rather,this thesis argues that in these places,higher-level governments should consider reserving a certain level of influence on local public goods delivery,through direct investment or indirect intergovernmental transfer,in order to ensure the abundant delivery of public goods.