Focus on Corruption: How to Secure the Aims of Decentralization in Peru by Improving Good Governance at the Regional Level

Corruption threatens to undermine the whole point of decentralization in Peru, which is to facilitate the political and economic development of the country by improving democratic participation and public service delivery.

Although the global trend is a positive association between decentralization and corruption,the relationship reverses itself within two key subsets. Both poor countries and Latin American countries tend to have worse corruption levels associated with greater degrees of decentralization. This should be doubly worrisome for Peruvian policymakers responsible for designing and leading its new decentralization process.

Why the difference? The key variable for corruption in a decentralized context is effective institutions of good governance. It is likely that it is the improved institutional context that does most of the work of reducing corruption in rich nations. We thus draw policymakers’ attention to the relationship between good governance and corruption in Peru. Specifically, we demonstrate a significant causal relationship between good regional governance, as measured by the Good Governance Index (GGI) of the Office of the Public Defender, and levels of regional corruption, as measured by Proética’s Everyday Corruption Index. Controlling for a number of relevant variables, and with few statistical degrees of freedom, we show that regions that do better on the Good Governance Index have significantly lower levels of corruption.

From these results and the literature we develop four recommendations to push the good governance agenda in order to combat corruption at the lower levels of government. To the National Council of Decentralization we recommend that they 1) strengthen the institutions of good governance proposed by the Office of the Public Defender 2) design a proposal to create a regional tax revenue system to create stronger incentives for good governance. To the Office of the Public Defender we recommend that they 1) improve their measurement of good governance, considering the trade-off between the technical requirements and the political relevance of the index and 2) co-develop with civil society groups an adapted version of the GGI for use at the municipal-level of government.

Our aim is to see decentralized institutions of government strengthened so that the institutional context into which resources, power and responsibility are decentralized is capable of delivering on the promises of decentralization. While our recommendations are directed at two governmental organizations, they also assign a key role to civil society, which participates in and monitors the process of governance and censures corrupt behavior.