employ the above introduced double-cost approach, adapted to capture the some of the country-specificity's as weights attached to resource and preference costs to provide a discussion of the decentralization experience in the eight countries mentioned above. These countries were selected because of their diverse decentralization experience in the road sector. Road financing and delivery remains centralized in some of these countries, whereas, in others, the functional and fiscal responsibility is decentralized.

Employing the estimated results from a cross-country panel data (taken from Humplick and Moini-Araghi, 1995) we can get the average relationship between decentralization and performance by road activity. Further, overlaying simply the country specific data obtained from the cross country sample to the general graph allows us to conduct a comparative study of proper levels of decentralization and performance for the above mentioned countries. We obtain two points for each country, one reflecting resource costs and the other preference costs; each of the points represents country specific levels of performance and decentralization. For each country, our inquiry looks into the following issues: i) what is the level of decentralization and performance? ii) what is the variation in performance, measured in terms of deviation of preference and resource costs from the estimated value and what are the factors driving cross country variations in observed levels of effort? iii) for those countries where the level of variation is high, what would be required to minimize resource and preference costs?

The expended level of effort varies from country to country depending on the weight attached to preference and resource costs in that country. The weighting procedure is driven by the objective to operate efficiently and to satisfy beneficiaries' demand. Moreover, the ability and willingness of govemments to fulfill the desired standards and objectives that are demanded from the road network is a function of the available resources, financial and institutional arrangements (whether expenditures are financed from own-source revenues or from transfers, whether these are ear-marked or not), implementation capacity, as well as fiscal and political attitudes in a given country. Actual levels of effort expended to maximize performance can thus be viewed as the result of the above factors, which by no means are independent of each other.

Quite broadly, the interdependence of these factors can be shown through the following examples. In a country where road operations are fiscally decentralized and there is no ear-marking of transfers, beneficiaries are not very clear about the opportunity cost of production of road quality since spending is not tied to road works. There is essentially only a loose link between quality of road services and its price. The extent to which preference and/or resource costs are minimized is dependent on local factors such as the incentive structure provided to local govemments, degree of accountability and involvement of beneficiaries, system of preferences and values, etc. In fact, this is why we see that decentralization is good for maintenance activities; when people jointly determine their preference and resource costs. A country that is decentralized functionally but not fiscally focuses primarily on minimization of preference costs. The beneficiaries are unaware and do not care about efficiency objectives. In contrast, a country that is both functionally and fiscally decentralized and uses ear-marking of road 12