period in which the project was well established, had disbursed and was expected to have undertaken capacity building activities. The first survey was undertaken in February 2016, and the second in April 2018. The surveys included a variety of questions about the capacity of local government officials to plan, recruit personnel, manage public funds, raise revenues and deliver services, and the experience of citizens in receiving these services.

Across all the survey measures, we find no evidence of significant differences between the 18 project and 22 non-project LGAs over the two years during which the project disbursed its funds and enabled technical assistance to build local state capacity. Specifically, many indicators improved in project LGAs, but they improved at similar rates in non-project LGAs. Some of the estimates are precisely estimated at 0, based on the responses of government officials. For example, on questions of whether master urban plans have been updated (and can be verified by the interviewer), whether internal audits have been undertaken (and can be verified by the interviewer), whether budgets are executed in a timelier fashion, and efforts towards own revenue collection, there is similar improvement over time in both project and non-project LGAs. That is, non-project LGAs were able to make comparable improvements even in the absence of the incentives and training available under the project.

We discuss alternative explanations for our results, beyond the possibility of limited project impacts to the ongoing evolution of state capacity in Tanzania. Perhaps the two most important of these alternative possibilities are the following. First, the project’s effects might have been concentrated at the early stages of implementation, before the first survey we undertook in February 2016. Second, the project LGAs’ performance might have played the role of demonstrating to non-project LGAs the importance of investing in their own capacity or, more generally, copying project LGAs’ practices. Addressing the first point, we show that that the project’s own scoring of local government performance does not indicate that all improvement across the project life-cycle happened before our baseline survey. Furthermore, approximately half of the total disbursement of the project happened between baseline (or first round of survey) and endline (or second round), so the period between our surveys covers a substantial amount of the project cycle. Addressing the second point is more difficult–there may have been learning between LGAs that we cannot capture in our data. However, this interpretation would cast doubt on the incentive design of the project as the driver of improvements in state capacity, since the non-project LGAs did not receive these incentives but nevertheless improved over time.

These results raise further questions. What is driving the changes observed in state capacity in local governments that did not receive the project? What can we learn from this about how state capacity evolves over time? What is the role of external partners in the process? What can external partners do differently than the project we have evaluated to bring additional value to within-country processes of endogenous change? The rich survey data we gathered allows us to offer some answers to these questions, along with ideas for how external partners might innovate for greater impact.

Prior research steers us towards looking at the role of citizens for an explanation of how improvements came about in non-project local government areas. Available research has argued 3