THIS BOOK DOCUMENTS two dramatic, but largely unheralded, revolutionary trends in Latin America – decentralization and democratization – and argues that policy responses to them by national and international institutions may be smothering the embers of reform at the local level, which are vital to long-term sustainability of growth in the region. Both trends, unconceivable three decades ago, emerged in the last decade or so and reshaped the very nature of governance without a single drop of blood being shed anywhere in the hemisphere. While this restructuring of power is not as radical as some earlier revolutionary struggles for social change, it goes far beyond the changes envisioned by reform-minded public sector officials and policy analysts in the 1970s and 1980s. These revolutionary trends were calmly and quietly carried out, partly because they filled a need for systemic reform shared widely in the region, and also because reforms were implemented by government leaders acting in collaboration with their constituents.

These trends of decentralization and democratization transformed the entire face of government, and have triggered the revival of popular participation at the local level and the rise in importance of local governments in national affairs. These changes, in turn, introduced new challenges regarding political control, coordination, and formulation of public policy and implementation of public programmes, and much depends on how they are met by political leaders, as well as by policy makers, voter-taxpayers and international lending and technical assistance organizations.
During the “quiet revolution”, however, countervailing efforts were also mounted. Though it was neither articulated explicitly nor conceived as a master plan of response, the strategic reactions of national and international authorities in the 1990s were, above all, geared to maintaining fiscal stability in national affairs. The focus of policy makers was on stability rather than on responsible local governance. As a consequence, the remarkable impetus for change, seen all across the hemisphere, was dampened, and the full benefits of decentralization have not been realized. Although the international community began to gear up support for local institutional capacity and democratic choice making, agencies were unclear about the pathway to take and unprepared for the scale of effort needed.

Nevertheless, many lessons can be learned from the Latin American experience, and this book outlines recommendations for cities and nations in Latin America, as well as for those in newly decentralizing regions, to capitalize on the amazing social energies unleashed by decentralization.
The book consists of four parts, the first of which sets the historical context and the policy framework within which decentralization strategies were developed, and from which it is possible to gauge both the meaning and import of decentralization as a cultural phenomenon. The second part covers the varieties of decentralization strategies in the region, including the means of sharing economic and decision-making power along levels of government. These political arrangements are compared to those in other parts of the world, which are traced in detail in the specific cases of Chile and Mexico. The third part of the book dissects key dimensions of decentralization strategies. Models of political participation are still emerging in the region, and city priorities change as leaders focus on issues of poverty, violence, social development and environmental quality. These issues inform the day-to-day struggles of local populations, and participatory democracy has helped bring them squarely into the local political arena. At the local level, a new fiscal bargain is being forged, breaking an impasse over local taxation following years of mistrust. The final part presents the similarities in the operating styles of leading local governments, and describes a new model of g