Can subnational autonomy strengthen democracy in Bolivia?

Bolivia is one of the most radical and sincere of decentralization reformers. It recently implemented new reforms granting autonomy to departmental, regional, municipal, and indigenous and rural governments. What effects might these have on public investment patterns, government responsiveness, intergovernmental fiscal relations, the sustainability of public finances, and political accountability? I examine autonomies in light of both fiscal federalism theory and evidence on the effects of Bolivia's 1994 decentralization. By submitting new reforms to the dual rigors of theory and evidence, we can arrive at contingent projections of their likely effects. I identify adjustments to improve efficiency and sustainability in intergovernmental relations, and reduce horizontal imbalances. In sum, the reform has the potential to improve citizen participation, make government more accountable, and deepen Bolivian democracy.