Those Who Collect Taxes Use Transfers Better: Evidence of Decentralization Design and Service Outcomes in Bolivia

Gover Barja Daza

doi:10.35319/lajed.202645610

Authors

Gover Barja Daza Universidad Católica Boliviana San Pablo https://orcid.org/0000-0002-1195-9423

DOI:

https://doi.org/10.35319/lajed.202645610

Keywords:

Decentralization design, Own-source revenue, intergovernmental transfers, operations and maintenance (O&M), capital investment (capex), service delivery, structural equation modeling, flypaper effect, municipal finance, Bolivia

Abstract

This paper examines whether decentralization’s design elements—own-revenue effort, operations and maintenance (opex), investment (capex), and total execution—help explain municipal differences in poverty-relevant service conditions and their downstream influence on human capital and the local economy. A recursive SEM is estimated within departments, with services defined as an SDG1-based composite; robustness replaces the mediator with a basic-infrastructure services composite (biservices1) and re-parameterizes execution as total executed expenditure per capita. Three results stand out: (i) own-revenue effort is the strongest predictor of services, while execution scale is positive but smaller; in composition, opex—not capex—supports services; (ii) capex influences the economy directly, consistent with an investment pass-through; and (iii) higher services raise the predicted level of human-capital and economic outcomes in the model, with the former path larger. The pattern is consistent with a flypaper-with-effort interpretation: where fiscal effort and O&M discipline are present, available resources—including transfers—translate more effectively into poverty-relevant service conditions, while investment primarily influences the economy directly. Estimates are directed influences within the maintained model, not counterfactual causal effects.

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Author Biography

Gover Barja Daza, Universidad Católica Boliviana San Pablo

Doctor en economía y Máster en estadística de la Utah State University, Estados Unidos. Fue investigador, consultor y profesor a tiempo completo de Maestrías para el Desarrollo (MpD) de la Universidad Católica Boliviana (UCB-La Paz) de 1996 a 2023. Fue director de la Maestría en Gestión y Políticas Públicas (GPP) de MpD-UCB de 2004 a 2023 y director de MpD en 1999. Nombrado Profesor al Mérito de la UCB-La Paz en 2017 y Académico Número 11 de la Academia Boliviana de Ciencias Económicas (ABCE, La Paz) en 2004. Su área de interés general siempre fue el desarrollo económico

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