Holding government office cannot be translated into the power to change social outcomes without administrative and fiscal resources. Capacity—fiscal and administrative— is a crucial link between policies and outcomes in society. For actors committed to
equity, a residual state will not do and capacity can be increased with time. Actors who are not committed to equity need less social provision by the government— they and their constituents are more capable of meeting their needs through private channels. Therefore, committed actors have stronger incentives to increase fiscal and administrative capacity.
In the city of Porto Alegre, Brazil (in the state of Rio Grande do Sul), decentral- ization allowed a committed local governing party to mobilize community members for direct democratic decision making over a small range of local budget priorities (or¸camento participativo, participatory budgeting). Though limited and difficult be- cause of low capacity, this process improved social outcomes and the quality of gover- nance, which in turn increased capacity over time. But Rio Grande do Sul is a fairly high capacity state where GDP per capita is 1.6 times the national average and the population is 84 per cent white (one of the whitest states in the country).
In Brazil’s poor and highly unequal Northeast where slavery was deeply rooted and oligarchic family rule has only been challenged in the past decade, decentral- ization placed inhabitants more thoroughly under the control of the entrenched elite interests that dominated the region. In those communities, there was little incentive for increased capacity and the possibilities for equity-enhancing reform decreased even further. In the state of Bahia, only when committed actors were able to win election to state government in 2007 were improvements in capacity prioritized, a slow and frustrating process for those trying to implement the equity-enhancing policy reforms they had promised voters.
While the importance of administrative and fiscal capacity for effective policy implementation are rarely questioned, their distributive impact has not often been studied, particularly at the regional level. In fact, few characteristics of regional ca- pacity have been systematically studied at all because of the enormity of the empirical
challenges. Most of the quantitative measures used in the cross-national literature are either rough proxies or are based on data that rarely exists at the regional level. Concepts such as human capital or the Human Development Index are generally op- erationalized using income, education, and health in ways that make them impossible to use to test a theory such as mine, since those individual measures are all mean- ingful indicators of other important parts of the model. The level of education in the population will certainly be associated with the administrative capacity of the bureaucratic corps, but is not available in many countries at the regional level and is generally too highly correlated with GDP per capita.
Corruption is commonly used as a proxy for capacity, but the relationship between corruption and bureaucratic capacity is not completely clear (Schilde and Tubin 2009). This is neatly summed up by the old Brazilian adage about politicians who “rouba mas faz” (steal but get things done). Further illustrating these idiosyncrasies, while regional respondents to an EU Quality of Governance survey in Spain believed their public services were among the fairest and most equitable in Europe, they think levels of corruption in the regional administration of those services is higher than in Europe (Charron, et al 2012: 18).
Likely, the type of corruption matters for its impact on capacity to produce equity- enhancing reforms: we should expect forms of corruption that siphon off public re- sources into private hands, compromise public agencies that provide important ser- vices, or require payment of bribes for receipt of services to be most problematic. However, as with high levels of conflict over the rules of the game, administrative ca- pacity can also be diminished when corruption scandals take center stage and require major investments of time and energy by parties, or the resignation of agency man- agers and policy makers. The current state of the data requires that such indicators be assessed qualitatively in the case studies, as they are not available systematically
across regions.
Charron, et al (2012) regionally disaggregate the EU Quality of Governance data to produce indicators below the level of the country. These data are imperfect because they combine answers on questions about corruption, the quality of public services, and the fairness of access to those services, along with questions about process and the rule of law. The findings across the Spanish regions are mostly consistent with the case study evidence of administrative capacity I present in the chapters to come. Variation is high, with the Basque Country at the top and Catalonia at the bottom. Some high-income regions like Madrid or Valencia perform as poorly as low-income regions like Andalusia, and the poorest region of all—Extremadura—performs better than all three. The reliance on survey data with few time points and on a topic sensitive to framing, social values, and the salience of the topic hamper reliability. Yet this study and the data on which it relies are an important part of incremental progress in measuring important concepts such as these. Overall, capacity measures are highly contested and some scholars argue that good measures of quality of public administration simply do not exist (van de Walle 2005: 2) .
Finally, under conditions of high poverty and inequality we might expect a “U- curve” in the level of capacity necessary to implement public policy given the size of the community. The smallest villages and townships are likely to have very low capacity, which may make reform difficult. As the size of a city increases, adminis- trative capacity will likely increase and this could yield substantive improvements in public service provision and generate economies of scale. Yet beyond a certain point, mega-cities may require much higher levels of commitment and capacity to produce the same level of reform because of the complexities of service provision in large urban
areas18. In poor countries with high inequality, these often include daunting prob-
lems of service provision in slums, high levels of violence, and large cities with only minimal levels of urban planning.
Capacity is necessary but not sufficient for equity-enhancing reform. While gov- ernment capacity is not required for the health outcomes of any given individual, it is necessary for addressing inequality in health. Some types of corruption, persistent high levels of intergovernmental conflict, high turnover in leadership of important state agencies, and persistent low levels of economic development can limit capacity. Globalization, demographic transition, and the decline of industry and manufactur- ing in favor of services broadly constrain the fiscal capacity of governments of all ideological stripes by reducing the potential base for revenue generation and narrow- ing the set of macroeconomic policy making tools available to governments. The revenue-generating system and the economic reality in the country and regions di- rectly influence the availability of resources.