Publication

This paper examines the implications of decentralization for the institutional design of the originally highly centralized social funds. The author argues that a social fund can increase its effectiveness and the sustainability of its investments by reorganizing internal processes to take advantage of the political and civic institutions that decentralization creates. He proposes a system by which funds can conduct routine project appraisals, which can in turn inform staff performance evaluations, improve internal procedures, and even permit a performance ranking of local governments. Social funds according to the author should thus be used to strengthen local governments, not central institutions.