introduced also functional decentralization, granting local governments increasing responsibility for planning and budgeting of roads. This negative outcome may reflect a problem that many developing countries face with ear-marking of road user charges. Especially for maintenance, Harral and Faiz (1988) find ear-marking rarely finds its way where it is supposed to and it is used inefficiently and for purposes other than maintenance. But more importantly, Colombia's poor performance may be attributed to the fact that despite the introduction of functional decentralization, municipalities remain weak institutionally and financially to carry out the assigned road maintenance operations. An alternative explanation may be that when people have the autonomy to choose both the quality and resource expenditure levels, as in Colombia, they choose lower levels of quality, preferring to expend resources for other needs. A recent World Bank local government capacity study confirms that local governments in Colombia are, in fact, facing difficulties in carrying out their new functions due to inadequate administrative or technical capacities (World Bank, 1990).

Although resource costs are high, Colombia's performance in time is improving. This is understandable when we look at Colombia's experience with production of maintenance. Throughout the 1 980s Colombia provided increasing opportunities to private contractors for conducting maintenance works. In 1984, it started the microempresas initiative with UNDP's assistance and a review of Colombia's experience indicates that the use of micro-empresas have led to reductions in unit of maintenance by half (Gyamfi and Ruan, 1992:22). This trend is positive but better resource cost efficiency gains can be made if more contractors would be involved.

At [50-69] percent decentralization, in Germany the responsibility for road maintenance operations rests entirely with local governments. Financing comes, however, partially from the state governments government. There is no ear-marking of revenues for maintenance and expenditures are allocated from general local and state government appropriations. This means that local governments are autonomous and quite flexible in their expenditure decision-making. Considering local demands, they may see spending on road maintenance as more prestigious than new construction or spending on other services. This may explain why preference costs are far below all the other countries in the case study, reflecting, in effect, the preference expressed for higher levels of road service quality to meet the demand for other services. Such high quality levels of maintenance are achieved at a reasonable resource costs. It seems that are more incentives to operate efficiently with respect to maintenance than with respect to construction in Germany, possibly because there is no earmarking of maintenance funds and local governments finance their expenditures from state grants at their discretion.

In Indonesia, road maintenance operations are functionally and fiscally decentralized at [70-90] percent decentralization. Although the central government's share in financing of operations is high, local governments have real control over maintenance delivery, allocating expenditures independently from the central government and also financing maintenance from own-source revenues. The performance of Indonesia, while worse than that of Argentina and Brazil after 20