Decentralization and popular participation in Mexico´s public administration

UNITED NATIONS DEPARTMENT OF ECONOMIC AND SOCIAL AFFAIRS
DIVISION FOR PUBLIC ADMINISTRATION AND DEVELOPMENT MANAGEMENT

DECENTRALIZATION AND POPULAR PARTICIPATION
IN MEXICAN PUBLIC ADMINISTRATION:
SOME STYLIZED FACTS*

ROBERTO VILLARREAL
CHIEF, DEVELOPMENT MANAGEMENT BRANCH
AD HOC PRESENTATION FOR THE EXPERT GROUP MEETING
‘STRENGHTENING POPULAR PARTICIPATION AND GOOD GOVERNANCE IN AFRICA’
CO-ORGANIZED BY THE GOVERNANCE AND PUBLIC ADMINISTRATION DIVISION (UNITED NATIONS ECONOMIC AND SOCIAL COMMISSION FOR AFRICA)
AND THE UNITED NATIONS MILLENNIUM CAMPAIGN

ADDIS ABABA, ETHIOPIA, 28-29 SEPTEMBER 2010

* CONTENTS AND VIEWS REFLECTED IN THIS PRESENTATION ARE SOLELY THE AUTHOR’S RESPONSIBILTY BASED ON EXISTING ANALYTICAL LITERATURE AND DO NOT REPRESENT THE
OFFICIAL POSITION OF THE UNITED NATIONS.


CONTENTS
1. INTRODUCTION

2. CHRONOLOGY
– HISTORICAL ANTECEDENTS
– POST-REVOLUTIONARY PERIOD

3. TRENDS IN DECENTRALIZATION, POPULAR
PARTICIPATION AND ACCOUNTABILITY

4. CONCLUSSIONS
2


INTRODUCTION
• The purpose of this presentation is to provide a succinct overview of the
evolution of decentralization, popular participation and accountability in
Mexico in the last 25 years, as these relate to public management of
development policies and programs

• The presentation highlights only some stylized facts

• Rather than presenting a comprehensive description of a rather complex
system of political, administrative and budgetary arrangements, this
presentation offers some insights into some key elements of the system,
from which relevant policy considerations and conclusions can be reached

• References on-line are included at the end, for those interested to go into
further details

3

CHRONOLOGY (1): HISTORICAL ANTECEDENTS
• INDEPENDENCE FROM SPAIN
•DEBATE OVER CENTRALIZED / FEDERAL ORGANIZATION OF THE STATE
1810- • SINCE FIRST CONSTITUTION (1824): ADOPTION OF A FEDERATIVE REPUBLICAN MODEL (WITH SOVEREIGN STATES AND FEW
1824 TERRITORIES DEPENDING FROM CENTRAL GOVERNMENT*)

• ATTEMPTS TO DEVELOP THE NATION – STATE
• LACK OF AUTHENTIC DEMOCRACY
• POLITICALLY AND FINANCIALLY WEAK FEDERAL GOVERNMENT, OFTEN SUPPORTED BY MILITARY MEANS
• SPARSELY POPULATED TERRITORY WITH FEW LARGER CITIES IN THE GEOGRAPHICAL CENTER
1824- • LIMITED INFRASTRUCTURE AND POORLY CONNECTED GEOGRAPHY
• REGIONAL FACTUAL POWERS IN SOME STRONG STATE GOVERNORSHIPS, SEVERAL COUPS D’ETAT
1876 • ARISTOCRATIC SOCIETY INHERITED FROM COLONIAL PERIOD, INTERFERENCE FROM CATHOLIC CHURCH IN POLITICAL AFFAIRS
(UNTIL NEW CONSTITUTION IN 1856 SEPARATED STATE AND CHURCH)
• COUNTRY WAS INVADED SEVERAL TIMES BY SUPER-POWERS
• HALF OF THE COUNTRY’S ORIGINAL TERRITORY WAS TAKEN AWAY IN DIFFERENT WAYS AND BECAME PART OF THE USA

• THREE-DECADES NATIONAL DICTATORSHIP
• SUPER-CENTRALIZATION OF GOVERNMENT (POLITICAL, FINANCIAL)
• SIMULATED FORMAL DEMOCRACY (PRESIDENT WAS RE-ELECTED 6 TIMES, STATE GOVERNORS APPOINTED BY HIM), SUPPRESION OF
FACTUAL REGIONAL POWERS
1876- • RESTRICTED CONSTITUTIONAL RIGHTS AND FREEDOMS FOR THE PEOPLE
1910 • POLITICAL REPRESSION
• STRONG INVESTMENT IN INFRASTRUCTURE (RAILROADS, PORTS, ELECTRICITY)
• MARKED CONCENTRATION OF WEALTH (INCLUDING LAND), HIGH INEQUALITY

• REVOLUTION
• BEGAN AS DEMANDS FOR DEMOCRACY, FREE ELECTIONS AND PROHIBITION OF RE-ELECTION
• AS ARMED CONFLICT SPREAD THROUGHOUT THE TERRITORY, DIVERSE DEMANDS WERE ADDED INTO THE REVOLUTIONARY
1910- AGENDA
1917 • URBAN MIDDLE CLASSES: CONSTITUTIONAL RIGHTS (PRESS, ASSOCIATION AND STRIKE FREEDOMS)
• RURAL POPULATION (PEASANTRY): AGRARIAN REFORM
• NEW CONSTITUTION ADOPTED IN 1917 MAINTAINED FEDERAL REPUBLIC, POSITIVELY INCORPORATED THE REVOLUTIONARY
AGENDA AND IN A NOVEL MANNER INTRODUCED STATE OWNERSHIP OVER UNDER-GROUND NATURAL RESOURCES
4
* At present there are 32 States. Territories have been converted into States. The capital city is located in a Federal District with special status and legislation.

CHRONOLOGY (2): POST-REVOLUTIONARY PERIOD
• FIRST REVOLUTIONARY GOVERNMENTS
•SUCESIVE PRESIDENTS WERE REVOLUTIONARY GENERALS FROM SAME POLITICAL GROUP
• FACTUAL REGIONAL POWERES RE-APPEARED, REPEATED REGIONAL REVOLTS, POLITICAL ASSASINATIONS FROM CENTRAL ORDERS
• ATTEMPT FOR RE-ELECTION RESULTED IN ASSASINATION OF FORMER PRESIDENT AND THEN PRESIDENTIAL CANDIDATE
• MULTI-CONSTITUENCY OFFICIAL POLITICAL PARTY CREATED IN 1929 BY PRESIDENTIAL LEADERSHIP AND OFFICIAL CALL FOR END OF FORCE
1917-1929 ACTIONS AND BEGINNING OF INSTITUTIONAL POLITICS
• CREATION OF KEY NATIONAL INSTITUTIONS: CENTRAL BANK, AGRARIAN AND WATER COMMISSIONS, MINISTRY OF PUBLIC EDUCATION AND
NATIONAL UNIVERSITY

• INSTITUTIONAL CONTINUITY AND STABILITY, WITHOUT DEMOCRACY
• HEGEMONIC OFFICIAL PARTY, WITH LIMITED TIME-VARYING AND SOMETIMES REGIONAL OPPOSITION, LACK OF DEMOCRACY, REPEATED
FRAUDULENT ELECTIONS AT NATIONAL, STATE AND MUNICIPAL LEVELS; DISCRETIONARY USE OF GOVERNMENT PROGRAMS TO BUY VOTES
• RESTRICTIONS ON CONSTITUTIONAL RIGHTS AND FREEDOMS, AND CONTROLS OVER THE MEDIA, DEPENDING ON PRESIDENTIAL ‘STYLES’
• FACTUAL SUBORDINATION OF JUDICIARY AND LEGISLATIVE POWERS TO THE EXECUTIVE
• OVERWHELMING FEDERAL EXECUTIVE, GOVERNORS APPOINTED BY PRESIDENT (INFORMAL CONSULTATIONS WITH DIVERSE
STAKEHOLDERS)
• STRONG CORPORATIVIZATION OF CIVIL SOCIETY UP TO MID-NINETIES, INCORPORATING WORKERS, PEASANTS , URBAN PROFESSIONALS
AND THE YOUTH INTO MAJOR SECTORS WITHIN THE OFFICIAL PARTY
• SUCCESIVE POLITICAL REFORMS IN LATE SEVENTIES, EIGHTIES AND NINETIES (TO INTRODUCE GRADUALLY PLURALITY IN CONGRESS,
ELECTORAL INSTITUTIONS, EQUITABLE AND TRANSPARENT FINANCING OF POLITICAL PARTIES, FORMAL EQUITABLE AND TRANSPARENT
REGULATIONS ON USE OF MEDIA FOR POLITICAL CAMPAIGNS)
1929-2000 • GRADUAL NEGOTIATED OPENING TO OPPOSITION IN MUNICIPAL AND STATE GOVERNMENTS (BEGINNING EARLY NINETIES)
• STATE-LED DEVELOPMENT UP TO THE MID-EIGHTIES; AFTERWARDS, DEEP ECONOMIC REFORMS (INTERNATIONALIZATION,
PRIVATIZATION)
• RAISING LEVELS OF EDUCATION AND PER CAPITA INCOME, RAPID URBANIZATION (FROM 25% TO MORE THAN 80%) OF TOTAL
POPULATION
• HIGHLY CENTRALIZED PUBLIC FINANCES AND DEVELOPMENT POLICIES (DECENTRALIZATION BEGINNING IN THE EIGHTIES, SEE NEXT SLIDE)
• INCREASING CONTRADICTIONS BETWEEN ECONOMIC REFORMS AND POLITICAL SYSTEM (PARTICULARLY AFTER INTERNATIONAL OPENING
OF THE ECONOMY TO TRADE, DIRECT INVESTMENT AND FINANCIAL FLOWS), GENERATED SHADOW COST AGAINST ATTRACTING FOREIGN
INVESTMENT DUE TO DISCRETIONARY POLITICAL DECISIONS GROUNDED ON CONCENTRATED POLITICAL POWER AND INSUFFICIENT
INTITUTIONAL AND REGULATORY MEANS TO SECURE TRANSPARENCY AND LIMIT CORRUPTION

5


CHRONOLOGY (3): NEW DEMOCRACY
• BEGINING OF DEMOCRACY
• FIRST PRESIDENT FROM A DIFFERENT PARTY ELECTED IN 2000, SECOND PRESIDENT FROM THAT PARTY ELECTED IN 2006 (IN A
STRONGLY CONTESTED ELECTION)
• EXECUTIVE LED REFORMS TO CONSOLIDATE DEMOCRATIC INSTITUTIONS
• TO WARRANTY TRANSPARENCY, AUTONOMY OF ELECTORAL INSTITUTIONS, ACCOUNTABILITY OF FEDERAL PROGRAMS, CITIZENS
ENGAGEMENT AND PARTICIPATION IN DEVELOPMENT AFFAIRS
•GRADUAL DEEPENING OF DECENTRALIZATION (SEE FOLLOWING SLIDES)
• GROWING (ALTHOUGH VARYING) DIVERSITY OF PARTY AFFILIATION OF ELECTED OFFICIALS AT NATIONAL, STATE AND MUNICIPAL
GOVERNMENTS, MOSAIC OF PARTY AFFILIATIONS OF ELECTED PUBLIC OFFICIALS IN MOST PARTS OF THE COUNTRY, FEW REGIONAL
BASTIONS OF DETERMINED PARTIES
• INCREASING FREQUENCY OF DIVIDED GOVERNMENTS (EXECUTIVE AND LEGISLATIVE DOMINATED BY DIFFERENT PARTIES, AT
NATIONAL AND STATE LEVELS); GRADUAL DISAPPERARENCE OF ABSOLUTE MAJORITIES IN NATIONAL AND STATE LEGISLATURES

2000-2010 • CERTAIN POPULAR DISILLUSIONMENT WITH DEMOCRACY AND CHALLENGES OF POLITICAL REGRESSION
• DIVIDED GOVERNMENTS AND INSUFFICIENT CO-OPERATION AMONG PARTIES HAVE SLOWED ECONOMIC REFORMS
• COINCIDENT GLOBAL ECONOMIC AND FINANCIAL CRISES IN THESE PERIOD HAVE NEGATIVELY AFFECTED INCOME LEVELS,
UNEMPLOYMENT, LIVING CONDITIONS, REVERTING EARLIER ACHIEVEMENTS IN POVERTY REDUCTION
• SOME HIGHLY VISIBLE ACTORS IN THE POLITICAL SYSTEM HAVE PLACED PERSONAL INTERESTS BEFORE KEY DEVELOPMENT ISSUES
IN THE OVERALL POLITICAL AGENDA AND ADOPTED POPULIST DISCOURSES
• MANAGEMENT TEAMS OF THESE TWO PRESIDENT HAVE OFTEN BEEN PERCEIVED AS LACKING NECESSARY SKILLS AND
COORDINATION, NEW FORMS OF NEPOTISM SEEM TO NEGATIVELY AFFECT CAPACITY AND PERFORMANCE OF THE FEDEWRAL
GOVERNMENT
• PARTY OF THESE TWO PRESIDENTS HAS NOT FULFILLED POPULAR EXPECTATIONS IN TERMS OF REDUCING OR ELLIMINATING
CORRUPTION
• FEDERAL POLICIES ON PUBLIC SECURITY AND COMBAT OF DRUG CARTELS HAVE NOTORIOUSLY FAILED AND VIOLENCE HAS
SPREAD WIDELY AFFECTING ALL REGIONS OF THE COUNTRY AND ALL SEGMENTS OF THE POPULATION

6

TRENDS IN DECENTRALIZATION, POPULAR
PARTICIPATION AND ACCOUNTABILITY (1)
• Decentralization, popular participation and accountability are all means, not
end in themselves. The end is to attain better development, that is, to
improve the living conditions and the enjoyment of rights and liberties for
all. Thus, these three means are framed in a general context of designing
adequate development strategies.
• In the case of Mexico, the entry point for national development strategies is
the National Development Plan, which must be designed, followed and
evaluated in every Presidential Administration, as established in the
Constitution and in the national Planning Law.
• Since 1983, the legal framework applicable in this matter establishes the
fundamental guiding principles
– All federal expenditures must follow well determined programs, to secure rationality and
orderly continuity of expenditures, and to provide adequate bases for auditing
– The National Development Plan must be elaborated by the Ministry of Finance, based on
an ample consultation to the population to establish development priorities and general
strategies. Thus, popular participation underlies the basic foundations of planning and
7
programming.


TRENDS… (2)
• As part of the system of public administration in the country,
delegation of federal programs has been applied for decades
(roads and highways, support to agriculture and industry,
energy, education and health services, environment, etc.)
– A delegate appointed by each ministry to each state managed the
corresponding federal programs in the respective state, often in
informal consultation or negotiation with state governor
– Said consultations often influenced the inter-state allocation of national
program budgets, and the selection within each state of the localities or
social-political groups to be benefited most from each program
– Delegates from different federal ministries in each state rarely
coordinated decisions regarding the different programs, this function
being in practice exerted by the governor and his state cabinet, and
implying multiple, complex and time-consuming negotiations 8


TRENDS… (3)
• Overall, the system of delegation doesn’t show maximum efficiency in
terms of public resources allocation throughout the country
– For administrative reasons
• The number of delegation offices in the country exceeded 300 and the
bureaucracy involved was considerable, implying:
– High administrative costs
– Slow decision making and implementation
– Noticeable constraints on overall coordination and, therefore, limited efficiency in the
allocation of public resources throughout the country
– For political reasons
• Federal ministers would sometimes personally abuse this system to
strengthen their networks of political supporters in states with different
sizes and characteristics of the electorate, aiming to influence their
future political careers
• As political party affiliations of federal and state public officials has
become more diverse after 2000, political negotiations between
ministers, delegates and governors have become more sensitive to
political considerations
9


TRENDS… (4)
• Fiscal decentralization started in the late eighties and followed
several stages and paths
A. Initially, tax reforms eliminated Sales Taxes previously applied and
collected by the states, substituting these by a Value Added Tax
applied and collected by the federal government
• Thus, a mechanism was created to redistribute federal tax income to the
states, based on determined formulae to take explicitly into consideration
inter-state disparities (population, per capita income, economic structure,
etc.)
– Occasionally, but not often, discussions arise as to whether applicable formulae are
optimal or need to be revisited; these discussions tend to be avoided because of the
extreme difficulties of reaching alternative equilibrium distributions and consensus
among all states and the federal government
• States receive their corresponding participation in the aggregate tax income
through an ad hoc fund, subject to auditing and transparency rules
• Each state can contract debt, according to certain laws and regulations,
warranting its service with future tax participations, which are predictable to a
limited extent as these are determined by fixed formulae, although there
remain macroeconomic uncertainties about aggregate tax revenues
10


TRENDS… (5)
B. Later on, federal expenditures on determined education levels were
decentralized in the early nineties to state governments
• The motives were mostly political, although indirectly connected with
efficiency factors: the national teachers union had acquired excessive
power, creating difficulties for the federal government to influence the
quality and costs of federal public education programs. Thus, decentralizing
the corresponding federal education budget to the states, created more
favorable conditions for the overall public administration (federal cum
states) to enhance management of these programs
• A special mechanism to account for this decentralized public expenditure in
education was created, consisting in a determined section of the federal
budget which is determined according to specific rules, again based on
appropriate formulae
• Auditing of this section of the federal budget is performed in the same way
as for the general budget, first by the Federal Executive (through the Office
of Public Accounting, in the Ministry of Finance), and successively by the
Supreme Auditing Institution reporting directly to the Chamber of
Representatives in the Federal Congress.
• Mechanisms for social participation in the management of basic education
were initiated after year 2000, involving parents and teachers in every
school, although their scope is not predominantly on budgetary matters but
in overall performance at the school level 11


TRENDS… (6)
B. In parallel, federal expenditures on different types of public infrastructure
were also decentralized during the nineties, to state and municipal
governments
• The motives were different than in the case of decentralization of education
expenditures. Regarding decentralization of infrastructure expenditures:
– Decentralization to the states was mostly guided to increase efficiency in public investments (for
example, state roads and highways better reflect local conditions than federally decided local roads;
this is true both about new roads, as about maintenance of existing ones)
– Decentralization to municipal governments was circumscribed to social infrastructure, guided both
by similar efficiency reasons, as well as to strengthen local governments with the aim to consolidate
an authentic federalism
• These decentralized public expenditures are reflected in separate sections of the
federal and local public budgets, and audited in the same manner described
before for education expenditures:
– An ah hoc fund was created to secure accountability of public expenditures decentralized to
municipal governments for investment in social infrastructure
• Initially, the guiding principles for municipal governments to decide on social
infrastructure investments were not well defined, and resulted in inadequate local
investment decisions (typically, investments with marginal impact on overall social
development, or investments in geographical zones determined more by political
considerations than targeted to the poor)
– Corrective adjustments were introduced later on, as explained in the following slide
12


TRENDS… (7)
– To reduce the undesired initially poor results in the allocation of
public resources to municipal social infrastructure, it proved more
convenient to add later on incentives to enhance said investments,
rather than altering the established rules for decentralizing these
federal expenditures to municipalities
• A new federal program for poverty alleviation was created in 2003, which is
included in the social development section of the federal budget and audited
in the manners explained before
• This new program offers additional federal resources to municipal
governments, under more elaborated conditionality:
– the types of acceptable social investments are more precisely defined
– the specific geographical zones where these investments are to take place must be zones of
high incidence of poverty, as determined by the Federal Ministry for Social Development
– to receive these additional federal funds for municipal social infrastructure, municipalities
which voluntarily apply are required to complement these additional federal funds with an
equal amount of municipal resources, in a pari passu fashion. Thus, federal resources that
were originally granted without adequate conditionality, are attracted back by this rule,
enhancing their social impact.
– community participation was introduced after 2005 in the operation of the program, to
enhance determination and prioritization of local social investments with the views and
proposals of the population in the targeted poor zones 13


TRENDS… (7)
C. Furthermore, as a significant proportion of total federal income comes
from taxes and special duties applicable to the oil industry*, one more
ad hoc fund** was created in the late nineties, as a means to account
in the federal budget for the decentralization of government revenues
from the oil industry, from the federal governments to the states

• The total amount of resources decentralized to the states through
this other channel varies from year to year, as a result of changes in
international oil prices
• The amounts decentralized to each and every state are also
determined according to special formulae, to eliminate
discretionality

* As mentioned before, the Constitution of 1917 defined all natural resources in the underground as national property.
** Two other different funds are also connected to federal oil revenues, although with purposes different from
decentralization. One is devoted to provide certain stability for public finances in the context of uncertain oil prices. The
other serves as a reserve fund to finance extraordinary expenditures required in case of natural disasters. 14


TRENDS… (8)
D. As the overall system of decentralizing income and expenditures is
complex to certain extent, and unforeseen special circumstances need to
be looked at, complementary institutions have been created within the
Federal Government over the last 15 years, to enhance the performance
of the system

• Within the Ministry of Finance, a special Unit is in charge of coordinating the
aggregate fiscal relationship between the Federal Government and each and
every state, and thus must solve particular problems as they arise
• Within the Ministry of the Interior, a special Institute is entrusted with
responsibilities for capacity building in municipal governments
• Within the Ministry of Social Development, a special Institute looks after
building capacities in civil society, to improve its participation in public
development affairs, specially in matters connected with social development
(poverty, vulnerable groups, gender issues, etc.)

* As mentioned before, the Constitution of 1917 defined all natural resources in the underground as national property. 15


TRENDS… (9)
E. Besides the professional auditing and social auditing
mechanisms mentioned in the preceding slides, a Federal
Law for Transparency and Access to Public Information was
adopted in 2004, thus permitting any interested person to
request information on decisions made by government
officials, budgetary and financial matters, performance of
public programs, etc.

• This law reinforces the possibilities for individuals and civil society
organizations to oversee the functioning of the Federal Government
in the widest possible sense
• Accountability is therefore strongly underlined, beyond the specific
avenues highlighted before

* As mentioned before, the Constitution of 1917 defined all natural resources in the underground as national property. 16


TRENDS 10
F. Finally, from 2007 onwards, the Ministry of Public
Administration has actively promoted the engagement of
civil society and citizens, in different ways, to enhance
accountability, auditing and transparency about many
relevant programs of the federal government.

• To this aim, the Ministry has produced and disseminated online,
plus through many capacity building activities:

• Guidelines
• Manuals
• Tools


CONCLUSSIONS (1)
• Democracy is not a fundamental necessity for early stages
of development, but eventually it becomes indispensable
as the Nation-State evolves
– Education, urbanization and internationalization are key
processes in fostering demands for political openness and
democratization
– Equally important democratic foundations are found in the
effective enforcement of basic constitutional rights and
freedoms: expression, media, association, strike, etc.
– Democracy can not be sustained only on popular political
demands, but requires adequate institutions (well functioning
political parties, trustworthy electoral system, non-political
allocation of public budgets, etc.)
– Beyond its intrinsic merits in terms of political philosophy,
democracy and popular participation in development
management help improve coherence of economic, social and
political reforms and policies 18


CONCLUSSIONS (2)
• Decentralization serves different important purposes
– Political:
• To attain certain reasonable balance of powers in the political
system
• To induce negotiations for harmonizing diverse regional demands
• And, through these, to enhance political stability in the country
– Economic:
• To better identify investment needs and priorities in the diverse
parts of the country (investment in infrastructure and public goods,
investment in education and health, investment in the natural
environment, etc.)
• To improve the regional distribution and allocation of public funds
– Social:
• To empower regional populations and increase their awareness and
responsibility about the efficient utilization of public resources 19


CONCLUSSIONS (3)

• Fiscal decentralization of public resources
– Occurs through different channels
– Not all of these need to be developed simultaneously
– Thus, decentralization can proceed gradually
– A grand design seems impractical, as considerations
that need to be made are numerous and complex
– Errors can occur along the process and flexibility to
correct them must be assumed in planning

20


CONCLUSSIONS (4)
• Accountability over public resources
– Is always a fundamental issue, whatever the extent of
decentralization
– Must be established by Law to be orderly enforceable, but must also
be rooted in general political and social values to be effectively
pursued
– No single means suffices to warranty accountability, and several
ones need to be used complementing and reinforcing each other :
• Professional auditing
• Social or civic auditing
• In general, transparency
– May be best accomplished through diverse combinations of means,
best suited to each channel by which resources are decentralized
• In the Mexican experience, initial steps have relied in auditing by official
professional bodies, and only later on has social auditing been introduced
gradually
21


• For more information and additional details,
see:
http://www.shcp.gob.mx (Ministry of Finance,
Federal Government of Mexico)
http://www.funcionpublica.gob.mx/index.php/c
ontraloria-social (Ministry of Public
Administration, Federal Government of Mexico)

THANKS
END OF PRESENTATION
22

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