Jean-Paul Faguet's ambitious book tackles one of the most puzzling aspects of decentralization: Does this reform improve government responsiveness? Faguet correctly notes that policymakers and theorists commonly assert that bringing government closer to the people ensures more responsive public policies. However, the extensive scholarship analyzing this link is inconclusive. The author seeks to better understand the relationship between decentralization and democracy by exploring public spending patterns in Bolivia over a period of 21 years.

As the book describes, Bolivia's decentralization reform, called the Law of Popular Participation (LPP), is interesting for many reasons. Previous to the 1994 reform, only the largest urban areas held municipal status; within months after the reform, 315 local governments were up and running around the country with money to spend. Illustrated by its name, the reform also codified participatory planning at the local level to introduce mechanisms of accountability as spending took place. Faguet analyzes this spending to determine if local governments respond to the communities' needs better than the central government did.

The author is uniquely qualified to explore this case. His work at the World Bank and as a scholar doing extensive fieldwork around the country—not an easy task—allowed him to spend years documenting the reform. He traveled to nine municipalities around Bolivia's expansive countryside in both 1997 and 2007. He interviewed more than three hundred people. His access to high-level officials allowed him to compile an extensive database of statistics that are rarely available in developing countries. His data collection efforts are both comprehensive and commendable.

Much of the book “telescopes” from the national to the local level. Faguet first presents a series of descriptive statistics that capture public investment spending before and after the reform. One of his impressive data-collection efforts lies in grouping public investment spending in all municipalities over time in four categories: 1) human capital spending (primary services like education, health, and water and sanitation); infrastructure (like transportation and urban development projects), environment and water management; and production (agriculture, energy, hydrocarbons, mining, industry, and tourism). The data offer two findings. After an initial rise in infrastructure projects (especially urban development projects), this category of spending plunges. At the same time, we observe a steady rise in human capital spending. He controls for municipal size and finds that this change is not driven by the largest cities; rather, it is taking place in smaller and poorer municipalities as well. Finally, he clearly documents that this change takes place after the 1994 reform.

To some, these results will not seem incredibly surprising. Those familiar with Bolivia recognize that the central government was entirely absent from three-quarters of the country before the reform. The LPP literally brought state services to the majority of the people, especially in the countryside. This is exactly why the reform was needed in the first place. And, the spending patterns are not counterintuitive. Most local government officials will want to build schools and health clinics for their populations. But, at a minimum, the analysis shows that the reform succeeded in its goal to bring government to the people and provide some basic services.

When we dig more deeply into this analysis, however, there are some important nuggets of information that go against common wisdom about local government spending. First, scholars of this topic often hear in our interviews that local governments finance mostly “gray” or “concrete” projects, like roads, wells, and dams (i.e., basic infrastructure). We also hear grumblings that urban areas get most of these projects. The author debunks both of these assumptions in his analysis.

After laying out the descriptive statistics, Faguet explores the relationship of spending to local need. He correlates public investment to six “objective indicators” of local need: education, agriculture, water and sanitation, health, urban development, and transport. The exercise attempts to discern whether spending priorities are in line with the local needs. For example, are educational projects funded in the areas with the highest illiteracy rates? Are water and sanitation projects approved in areas that have high proportions of people with inadequate access to clean water? Again, the analysis shows that local spending does correlate to local needs and that this happened only after decentralization.

In this part of the book, Faguet is asking very important questions. Are local officials prioritizing spending based on their citizens' real needs? It is exciting to think that we might put aside concerns about corruption and clientelism and regain faith in local politicians. His findings are optimistic, but I am not entirely convinced.

The operationalization of local need through these objective indicators needs to be qualified. How can we be sure that they effectively capture need? First, some scholars would worry that no indicators are entirely objective. The development establishment uses these indicators to measure “progress,” mostly in a neoliberal framework, which is not objective. Second, by using “objective” indicators, we miss the most subjective, and valuable, viewpoint of all—that of the citizens. If the governments are so responsive, why did Bolivia undergo years of political instability, numerous violent protests, and the collapse of political parties during these same years? Crowds took to the streets on a regular basis, complaining that the government was not responding to their needs. While it is not possible to capture citizen preferences over time in 311 municipalities, it is important to acknowledge these measurement problems and qualify the findings.

Moving on, Faguet then explores local-level dynamics. In the remainder of the book, he is interested in documenting variation in local government performance to understand “Why are the good good and the bad bad?” (p. 193). He begins by describing two case studies, one successful and one not. In 1997 Viacha, local government is ineffective, clientelistic, and corrupt. In 1997 Charagua, local government is working well and listening to its citizens. Why?

Faguet takes a circuitous route to this response. We move through the national-level econometric analysis, confirming the findings already discussed here, and the extensive literature on decentralization. He then presents a model of local government responsiveness that explains performance. He argues that the “quality of a municipality's politics” emerges as “the joint product of the lobbying and political engagement of its firms and other economic actors, and the organizational density and ability of its civil society” (p. 237). A trip back to his two cases shows how local government has changed over time, improving significantly in Viacha, and, not surprisingly, confirming this argument.

Again, Faguet is taking on a significant issue. He wants us to think about why, if decentralization is so popular among policymakers, the results of these efforts are not more robust. He tells us that complex and context-specific processes are “unleashed” by these reforms. Local factors interact with the process to condition policy outcomes. While this may not be the most satisfying response, it is most certainly accurate and serves as an important reminder that context and process do matter.

One strength of Decentralization and Popular Democracy is the author's willingness to grapple with big-picture questions about the nature of the state and of public policy. He has observed some positive outcomes going on at the local level. His extensive data allow him to show why this is the case. One limitation is the Bolivian case itself. It may not lend itself to generalized conclusions. Bolivia's reform is atypical in that it included participatory institutions that engage citizens in decision making in ways that few countries have. Thus, if the analysis is correct, the reform design—which is not discussed in much depth—probably plays a large role in explaining this outcome as well.

In sum, the book is an important addition to the expansive literature on decentralization. It is a must-read for all scholars of decentralization and local government. It provides optimistic and intuitive responses to questions that have puzzled these scholars for decades.