Is Fiscal Decentralisation Good for Maternal and Child Care?: A Comparative Study of Latin American Countries

Over the last two decades, health sector decentralisation policies have been implemented on a broad scale throughout the developing countries. The decentralisation has been a key element in the delivery of primary health services. Transferring fiscal and decision making powers to local authorities should lead to responsive governance meeting the local needs and to an improvement of the delivery performance.

 Inadequate institutional capacities, ie local expertise in management, do not allow authorities to effectively respond to local priorities. Additionally, the provision of some health services, such as health prevention services, will actually lead to an undersupply of health services due to the presence of market failures. In this study, we examine the hypothesis that shifts towards more fiscal decentralisation would be accompanied by improvements of maternal and child care.

Based on an index of degree of fiscal decentralisation, we classify the countries into degrees of decentralisation. Subsequently, we match a subset of regions in the panel of countries by degrees of decentralisation and group those together that are demographically and socioeconomic similar. These pairs of regions are then used as a fixed effect in linear regression of access to maternal and child care.  This allows us to take into consideration the influence of the local region type on the health service delivery and to remove of the influence of these contextual characteristics from the estimated country effects.  

The results show that fiscal decentralisation has a positive effect on service delivery: high-decentralised countries showed better indicators for maternal and child care delivery than low-decentralised ones.  However, the regional differences of those health indicators are lower in low-decentralised countries.  Therefore, even when local authorities know the local priorities, the local context is a key condition for achieving better results in the delivery of maternal and child services