Measuring performance in terms of resource cost efficiency, we find Brazil and Argentina to be better than the Philippines in producing maintenance activities at the same level of fiscal decentralization. This may be due to the differential use of contracting out within these countries. A World Bank review of nine different countries found that roads under contract were well-maintained in at least seven of them (Harral and Faiz, 1988:19). The authors concluded that " By and large contract maintenance leads to be more cost -effective than maintenance by other methods." Evidence from Ponta Grossa in Brazil indicated that force account maintenance costs 60 percent more than that by contractors (Harral et al, 1986: 11-12). Humplick (1995) conducted an analysis of performance for maintenance in Argentina, showing that variations in performance may be determined by the level of competition, essentially the relative use of force account versus the private sector. Her study shows that "Provinces that use the private sector more substantially for maintenance works in Argentina are more efficient, allowing a large part of the network to be maintained with a fixed budget." (Humplick, 1995). Other experience with contracting in Latin American countries confirm Humplick's results. For example, Gyamfi and Ruan's review of the experience of Argentina and Brazil with private contracting, shows that private contracting in Brazil has brought about adequate levels of performance, and when private contracting was completely stopped in Argentina, performance suffered substantially. Gyamfi and Ruan (1992) note, however, that a clear government agency policy and support, the existence of a capable local construction industry with sufficient road maintenance capacity and the ability of road agencies to administer and manage have been important factors for the successful adoption of private contractor systems in Brazil.'<sup>8</sup> Moving further to the right, we see that Colombia at a decentralization category of [11-49] allows its local governments more expenditure decision-making power in maintenance of roads. The provision of maintenance is at a very high cost compared to the seven other countries with the exception of Indonesia which has similar unit costs of maintenance. Preference costs are lower than in the Philippines which is fiscally centralized with respect to maintenance, but are higher than all other remaining countries in the case study. This is quite surprising because with both fiscal and functional decentralization and ear-marking of funds, expenditure decisions should theoretically be tied closely to maintenance operations, producing better road quality.19 Starting in 1983, the government in Colombia introduced decentralization measures to increase local resource mobilization. But major expenditure authority still remains with the central government (FNCV is mainly financed through central government contributions, consisting of earmarked and quasi-earmarked funds). Since 1987, Colombia has

**18** The theoretical literature and practical experience with contracting is rich. For an overview of arguments for and against contracting, see Schroeder L. (1990), Managing and Financing Rural Road Maintenance in Developing Countries, Decentralization and Management Project, Associates in Rural Development.

19 This is essentially the public economics argument for earmarking, for a thorough discussion, see Mcleary, W., "Notes on the Principles and Practice of Earmarking", prepared for a seminar titled Earmarking: Road Funds and Toll Roads, The World Bank, INUTD-PERTM, November 21-22, 1988.

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