Shine a (night)light: decentralisation and economic development in Burkina Faso

3rd February 2023

Shine a (night)light: decentralisation and economic development in Burkina Faso

Decentralisation has been one of the most prominent public sector reforms endorsed by international institutions. It has been initiated in a large number of developing economies, particularly in sub-Saharan Africa.

To date, few studies propose a quasi-experimental evaluation of its capacity to contribute to local development, or do so but only focus on specific components (e.g. decentralised programmes). We suggest a unique assessment of decentralisation in its essence by exploiting the progressive implementation of the decentralisation agenda at the commune level in Burkina Faso starting in 1995.

We use satellite information on night-time light density as a proxy for local development levels, which has the advantage of being measured and comparable over time and space. The communes that were decentralised first can be compared to the others after the reform relative to the pre-reform situation. The difference-in-difference approach includes commune fixed effects and inverse propensity score reweighting to account for time-varying differences across communes.

We find a positive impact of decentralisation on the nightlight intensity trends of the early-decentralised communes. We provide extensive checks regarding the possibility of confounding dynamics associated with the communes that were decentralised first. We also provide suggestive evidence that decentralisation did not lift all boats: heterogeneity analyses show that the gains from decentralisation depend more on the ability to generate local own-source revenues than on the capacity to attract state transfers.

Report by the Overseas Development Institute