The effects of grant competition on Chilean municipalities

Moller Dominguez, Francisco (2019). The effects of grant competition on Chilean municipalities. University of Birmingham. Ph.D.

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This thesis explores the effects of grant competition in Chilean Municipalities. I select a mixed method approach to assess this phenomenon from a top-down and bottom-up perspective. The research carries out a statistical analysis of the Fondo Nacional de Desarrollo Regional (FNDR) grant and also collects the views of 21 Chilean local, regional and municipal officers. I establish New Public Management (NPM) as my theoretical lens from which I problematise the formulation, evaluation and final allocation of grants. To integrate my different sources of data I link my quantitative and qualitative data with the contextual particularities of the Chilean institutions to form a synthesis of interconnected findings that shed light onto a relevant but understudied phenomenon in public administration. The first part of this thesis describes and assesses the FNDR, scrutinising the accomplishment of its goals and testing the impact of a municipality’s capacity on its success in bidding for funds. With the records of allocation obtained in the quantitative analysis I selected my purposive sample of municipalities and officers to be interviewed. Finally, I have integrated both sources of data, drawing conclusions and establishing an overarching perspective on the effect of grant competition.

The study finds that the FNDR grant has a regressive pattern of allocation in which better-off and more populated municipalities are favoured. Success in bidding for FNDR is positively associated with municipal capacity and this effect gets stronger for municipalities located further from the capital Santiago. This pattern reinforces municipal inequalities, widening the gap between high capacity and low capacity authorities and acting against the goals of the FNDR. This is acknowledged by local officers in poorly-resourced municipalities who feel handicapped in bidding for funds by the high fixed cost of making bids. Central officers exercise their power when evaluating and prioritising bids. The research found that contrary to what the existing theoretical analysis of competitive grants suggests, grant competition in Chile favours central government agendas instead of being driven by local needs. This situation works against the efficiency of the competitive scheme, fostering the shaping of bids to meet central agenda rather than local needs. This centralised orientation of grant allocation is facilitated by a lack of regional and national service standards, together these elements lead to a patchwork of isolated and uneven municipalities unable to set up cooperative agreements to tackle social issues. This study finds that, due to the historical circumstances of the introduction of FNDR, competition has been established among municipalities as the predominant theme of intergovernmental relations. This hampers local collaboration and makes it difficult to respond to regional challenges. The situation has a deep impact on local officers’ motivation, leading to frustration and feeling of hopelessness. In their view, competition is seen as being more than just a system to allocate grants and instead reflects a centralists’ conception of local government action, where municipalities are passive agents competing for the chance to improve their territories.

This thesis provides a relevant contribution to public administration theory and policy practice by showing the complexities of adopting quasi-market strategies in underdeveloped and unequal contexts. The establishment of NPM reforms in Chile had profound consequences and although more scholarly effort has gone into exploring collaborative forms of governance, in Chile inter-municipal competition is still very much alive. These findings may be informative in considering other countries in similar situations and might contribute to improving the structure of incentives set up in intergovernmental competitions for goods or services. In addition, using a mixed method approach to assess both extremes of the competitive exchange allowed me to better understand the processes involved and arrive at more robust findings.

Type of Work: Thesis (Doctorates > Ph.D.)
Award Type: Doctorates > Ph.D.
Licence: All rights reserved
College/Faculty: Colleges (2008 onwards) > College of Social Sciences
School or Department: Institute of Local Government Studies
Funders: Other
Other Funders: CONICYT “Becas Chile” Doctoral Fellowship program
Subjects: J Political Science > JS Local government Municipal government


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