Does decentralisation reduce poverty? A study of the impact of horizontal fragmentation on the incidence of poverty in Bangladesh

  • Amin Ali

Student thesis: Phd


The link between decentralisation and poverty is yet to be theoretically and empirically determined. As a case study, this thesis investigates the impact of horizontal fragmentation, a particular aspect of decentralisation, on income poverty at the subnational level of Bangladesh, a unitary developing country. The country has shown significant progress in reducing poverty and has also implemented local government fragmentation as a central part of its development policy. While investigating the theoretical linkage, the thesis finds that decentralisation is linked to poverty through political, fiscal, and administrative channels. The overall impact of decentralisation on poverty is, however, conditional upon fulfilling several programme-specific prerequisites and there being some favourable structural economic conditions. The thesis also suggests that conceptual and methodological limitations of the empirical studies have created inconsistency in the results regarding the overall relationship. Regarding the measurement issue, the thesis shows that Bangladesh had a mixed experience with decentralisation. The thesis finds, however, that the conventional indicators of decentralisation are inappropriate to capture the real transfer of authority. Moreover, lack of adequate information does not permit the construction of appropriate indicators at the subnational level of the country. As a solution, the thesis suggests that fragmentation indicators can be a useful tool as they can capture all the aspects of decentralisation simultaneously. Using multiple horizontal fragmentation indicators, the thesis shows that the country has drastically implemented decentralisation by increasing the number of local units at the lowest tier of its local government structure. There is, nonetheless, a wide variation in the level of fragmentation across the districts of Bangladesh. The thesis conducts a three-wave panel study (covering the period from 2001 to 2010) at the district level of Bangladesh to empirically investigate the relationship. Results confirm that horizontal fragmentation, measured by the number of local government units per land area of a district, has a robust significant impact on reducing the incidence of poverty (both moderate and extreme). The relationship is, however, non-linear and the level of fragmentation also determines the outcome. Results further confirm that increasing the number of units per capita or density does not have any significant impact on poverty. Finally, to investigate the resource allocation channel of fragmentation, the thesis conducts multiple static and dynamic panel estimations. Results show that local government fragmentation (either total, horizontal, or vertical) does not ensure higher development expenditure allocation at the district level. The allocation is, however, influenced by political preference, as results confirm that a district’s share of core vote for the ruling party, local representatives’ political alignment with the ruling party, and the raw number of ministers of a district positively and significantly influences the growth of development expenditure in the district, supporting the core voter and partisan alignment theories.
Date of Award1 Aug 2020
Original languageEnglish
Awarding Institution
  • The University of Manchester
SupervisorOsman Ouattara (Supervisor) & Antonio Savoia (Supervisor)

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