governments are more likely to provide more of all three public goods, but the largest effect is for irrigation, as calculated at the sample average, which is the service most likely to benefit the rural elite. However, in villages with a very high proportion of landless (much above the sample average) public investment shifts from irrigation to road construction (rather than education, which is unaffected by proportion landless), which suggests that capture by elites can be ameliorated when the numerical strength of the poor increases, but in a manner that might not be the most efficient for extending benefits to the poor. Roads built by village governments primarily benefit the poor, but largely by raising their (short-term) wages, as local road construction and improvement initiatives in India serve as employment programs for the landless poor. Education, which one expects to have the most profound effect on poverty over the medium and long-term, seems least affected by decentralization.

In a similar vein, in a study of villages in the states of West Bengal and Rajasthan, Chattopadhyay and Duflo (2003) find that villages with women leaders, elected as a consequence of mandated political reservations for women in village governing bodies, are more likely to invest in public goods that are revealed preferred by women during interviews—water, fuel and roads (as it provides employment) and less likely to invest in education. Their findings do not necessarily reflect the success of decentralization, _per se_ , but rather of political reservations at any level of government in environments where there are substantial social pressures operating against the political participation of particular groups.

Taken together, the work on political reservations and village decentralization in India suggests that traditionally disadvantaged groups that receive new democratic privileges tend to exert pressure to shift public resources _out_ of education and _into_ other targeted public goods that provide immediate benefit specifically to their group. While this suggests that political decentralization coupled with political reservations indeed succeeds in giving greater voice to these disadvantaged groups, it is also indicative of problems in the public provision of education services. Mandated reservations might worsen overall public service performance by strengthening clientelist relations and reducing incentives of political competitors to invest in broad policy reputations across the electorate.<sup>5</sup>

# **3.4 Political Parties and Electoral Rules**

A problem with large, centralized governments is that resources might be distributed across regions and groups with the purpose of winning only 50 percent of votes, or the required votes from only 50 percent of electoral districts (depending on the nature of electoral laws). Many regions with voters that are not the pivotal or “swing” voters can get systematically and pointedly neglected. Bolivia provides the most dramatic example of this. In 1994, Bolivia created 198 new municipalities where previously none

> 5 The shift away from education may be just a short-term effect of decentralization reforms. The immediate concern of new women political leaders, for example, may be to provide those essential public goods that disproportionately benefit women and have been historically underprovided. Demand for public resources in education may increase with time, as women are better situated to take advantage of improved opportunities. A full analysis of the dynamic impact of political decentralization in India, as the institutions stabilize over time, remains to be undertaken.

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