Decentralization in Peru A Path to Growth and Development

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Decentralization in Peru A Path to Growth and
Development
CND National Decentralization Council of Peru
IDB Business Seminar Modernization of the
State Washington D.C. / November 7, 2003
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CND

• Peru, a Geography of the Future
• Center of the South American Pacific coast,
• Among the 20 largest nations on Earth
• 4 of the planets tropical rainforests
• One of the most biodiverse countries

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CND
Demographic, Economic and Political
Centralism A P e n d i n g I s
s u e
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CND

• Peculiarities of Decentralization in Peru
• An Emphasis on Development
• Decentralized Decision Making
• Territory-based Development Paradigm
• Equitable Development
• Sub-national Administrations as new Actors in
  Development
• Citizens participation

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CND

• A Long-term View
• Decentralization has improved the space
  distribution of the population, economic
  activities and Government decision-making, in
  the framework of a territory-based strategy for
  national development.
• Thus, it has made a critical contribution to
  economic growth, improved public services and
  rising well-being for Peruvians in every Region,
  Province and District around the nation.

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CNDs Coordinating Role in Development Planning
CND

• CND contributes in enhancing abilities among
  Regional and Local Governments, and the other
  economic and community players, as promoters of
  development, so that decentralization will
  translate into stronger institutions, citizenry,
  de-concentrated economic growth and ongoing
  increases in the quality of living.
• CND leads, coordinates and paves the road for
  decentralization, capitalizing on national
  contributions of ever-increasing quality,
  rationality and consistency to government
  decision-making, regardless of their hierarchy
  or territorial jurisdiction.

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CND Progress in Development Matters
CND

• National Decentralization Plan 2004-2006
• National Plan for Territorial Development
  2004-2013
• Inter-regional Coordination Boards
• Peace and Development Plan 2004-2006
• Regional Baseline 2003
• Perus Vice-chair for South America in RIAD

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A Conceptual and Strategic Framework for
DevelopmentT h e N a t i o n a l D e c e n t
r a l i z a t I o n P l a n
CND

• The National Decentralization Plan seeks to lay
  the structural foundations for Perus
  decentralization process by setting in motion a
  Territorial Strategy for National Development.
• This strategy should feed on local and regional
  initiatives and organize them around the major
  development objectives.
• It will thus help in increasing social well-being
  and in starting a pattern of growing regional
  contributions to national GDP.

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Territorial IntegrationT h r o u g h a N a t
i o n a l S t r a t e g y f o r D e v e l o
p m e n t
CND

• Organizing the peoples expectations around
  development strategies that will allow them to
  build wealth at the local level.
• Focusing on critical development projects
  consolidating integration and development
  circuits, corridors, and axes that will
  contribute to developing the territory as a
  whole.
• Promoting the future configuration of Regions
  with a larger jurisdiction than present Regional
  Governments (Macro-Regions) through
  Inter-regional Coordination Boards.
• Shaping together with the Local and Regional
  Governments a Territorial Strategy for National
  Development with a view at increasing societys
  well-being and launching a growth trend pattern
  in the Regions contributions to national GDP.

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A Historic Example Piura
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Corridors and Axes of Regional Integration
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NORTE AMERICA
ECUADOR Y COLOMBIA
BRASIL
ASIA PACIFICO
BRASIL Y BOLIVIA
ASIA PACIFICO
CHILE Y ARGENTINA
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Corridors
CND

• North-Eastern Bi-Oceanic Corridor
• Central Bi-Oceanic Corridor
• Central Peru Energy Corridor
• South-Eastern Bi-Oceanic Corridor

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North-Eastern Bi-Oceanic Corridor
Desarrollo agropecuario 240 mm US
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Integration and Development Axes
CND

• Northern Coast Agro-industrial Axis
• Sierra Verde Northern Axis
• High Jungle Alternative Development Axis
• Center-South Sierra Verde Axis
• South Coast Agro-Industry Axis
• Maritime Fisheries Axis

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Sierra Verde Northern Axis
Carretera Longitudinal de la Sierra
Norte Inversion 200 mm US
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Tourist Territorial Circuits
CND

• South High Plateau Circuit
• North-eastern Tourist Circuit
• Amazon Watershed River Circuit

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South High Plateau Circuit
Inversión en hoteles y servicios turísticos 1500
mm US
Desarrollo ganadero y textil 400 mm US
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The Local Dimension of DevelopmentS t r e n
g t h e n i n g I n t e r m e
d i a t e C i t i e s
CND

• Intermediate cities can provide the appropriate
  scale and growth dynamics, as well as a
  sufficient taxpayer roll and institutional
  strength, to power sustainable development of
  city circuits and their surrounding rural areas.
• The national and department road networks must be
  expanded, while consolidating intermediate
  cities as city axes to balance the preponderance
  of Metropolitan Lima as an engine for
  development.
• A way to achieve economic decentralization,
  develop regional clusters and increase
  competitiveness may be to shift from atomized
  expenditure to larger-scale investments aimed at
  increasing the residential and productive
  attractiveness of certain cities.

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CND
The Local Dimension of DevelopmentC r e a t
i n g M u n i c i p a l C o m
m o n w e a l t h s

• 1.829 municipalities represent a hurdle for
  creating economies of scale in sub-national
  administrative and fiscal management, a
  well-trained civil service and a tax base
  capable of providing funding for service
  rendering and investment, and therefore for
  successfully decentralizing government
  management.
• The CND seeks to create the incentives and
  promote initiatives to organize Municipal
  Commonwealths that could address the issue of
  the dispersal and small size of Peruvian Local
  Government jurisdictions in terms of an
  independent economic foundation and number of
  residents (on average under 15,000 people).

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CND
Advantages of Investing in PeruS e n d i n g O
u t t h e S i g n s N e e d e d to L u
r e In v e s t m e n t

• A long track record of macroeconomic and monetary
  stability backed by substantial foreign reserves,
  a fiscal deficit under control and inflation
  rates close to zero.
• Comparatively quick pace of economic growth
  despite recession in the most developed economies
  worldwide.
• A capacity to respond to financial, social and
  political crises that shocked most Latin American
  nations, which explains why Peru is increasingly
  viewed individually by international investors.
• A legal framework that promotes investment and
  generally comprises stable rules for investment,
  together with a significant portfolio of
  profitable projects.
• Trade and integration agreements that will have a
  major impact on competitiveness, and expanded
  infrastructure and exports (bilateral agreement
  signed with Brazil and the treatment granted by
  the United States ATPDEA.
• A plan for gradual and orderly decentralization
  as a critical component in building a modern
  state and enhancing the quality of management in
  the State apparatus, thus creating more growth
  and providing better services.

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CND
The Role of Private Investment in Development
A 20 billion dollar public infrastructure gap
must be closed. Broadening resources available
to Sub-national Governments by increasing
decentralized Budget (14 in 2002, 19 in 2003
and 23 in 2004) But also, promoting private
investment through creative funding alternatives
in order to increase public investment.
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CND
Investment / GDP (1992-2001)
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The Regions Development Potential
CND

• Peru stands out for the remarkable progress in
  large scale investment projects that are already
  bearing fruit and other that will soon
  materialize. But the future businesses the
  Regions open to private concerns also cover
  concessions to undertake infrastructure works
  and rendering of public services.
• Public infrastructure needs included in the
  National Plan for Territorial Development
  2004-2013 will require investments worth 11
  billion dollars in the next 10 years, 43 of
  which can be sourced from private sector
  concessions.
• Investment in production infrastructure is the
  missing element to create more competitive
  Regions, expand the domestic market and reduce
  disparities in growth rates and production
  levels amongst the countrys departments.

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Design of Decentralization P r o c e s
s S t a g e s
CND

• Because redistributing resources is not enough,
  the success of decentralization rests on a firm
  and long term commitment to create more resources
  for developing each department, province and
  district across the nation and enhancing the
  quality of management capacities.
• Perus Constitution mandates decentralization as
  an ongoing State policy that evolves in a gradual
  and orderly fashion. To this end, the
  Decentralization Base Law determined five stages
  for decentralization.
• What matters is an overall view of the new
  decentralized State that ensures the greatest
  efficiency in the use of public resources, and
  greater coverage and quality of public services.

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CND
Process Stages
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CND
Design Instruments

• National System for Competency Accreditation
• Ranking State Assets
• Decentralization Information System
• Citizen Participation
• Regional and Local Coordination Boards
• Capacity Building

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CND
National System for Competency Accreditation D
e s i g n I n s t r u m e n t s
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CND
Ranking State Assets D e s i g n I n s
t r u m e n t s
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Decentralization Information System D e s i
g n I n s t r u m e n t s
CND
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CND
Department Development Index (IDD)
Development Levels
High Mid-High Medium Low Very Low
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Citizen ParticipationD e s i g n I n
s t r u m e n t s
CND
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Capacity BuildingD e s i g n I n s t
r u m e n t s
CND
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CND
Fiscal Debt and Macroeconomic Stability T o o l
s f o r S u b N a t i o n a l F i n a
n c i n g
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CND
Decentralizing and Modernizing the State C h a n
g e s at t h e T h r e e L e v e l s o
f G o v e r n m e n t
Resource transfers in particular and
decentralization in general will not only change
the face of Regional and Local Governments but
also National Government.
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CND Progress in Implementing Decentralization (I)
CND

• Transfer of resources and competencies to the now
  defunct Transitory Regional Administration
  Councils that opened the way to the historical
  introduction of elected Regional Governments in
  Peru.
• Elections to choose Regional, Provincial and
  District Representatives to the CND, thus
  formalizing the decisive involvement of the three
  levels of government in its Directive Council.
• Preparing the General Guidelines for Public
  Contests to appoint Sector Regional Directors by
  the Regional Presidents. Sectors (regional
  ministry branches) now report to Regional
  Governments.
• Identifying the Social Funds and Projects,
  Poverty Fight Programs, and Regional Scope
  Productive Infrastructure Projects in the
  National Development Institute (INADE) portfolio
  that will be transferred in 2003.
• Transfer of 7 out of 9 special projects scheduled
  by INADE representing assets worth over three
  billion dollars to seven Regional Governments, as
  well as projects from the Ministry of Energy and
  Mines to another six and from the Ministry of
  Transport and Communications (MTC) to four more.
• Approval of verification schemes filed by 241
  district and 67 province municipalities for the
  transfer of resources for projects and programs
  in the Womens and Social Development Ministry
  portfolio, the Ministry of Housing and
  Construction to 29 provincial municipalities and
  the MTC to another 12.

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CND Progress in Implementing Decentralization (II)
CND

• Involvement in developing the laws and
  regulations the Executive and Legislative
  Branches have enacted to date for the launching
  of decentralization, and. in issuing the
  directives and decisions required for achieving
  this goal.
• Provision of unlimited, open access to e-mail
  accounts to the 26 Regional and 1,828 Local
  Governments, as part of the National Connectivity
  Plan underway with the Regional and Local
  Governments.
• Advise in the design and implementation of
  regulations for electing Regional Coordination
  Councils, setting in motion these collegiate
  bodies as citizen based schemes for participation
  in and oversight of regional-level government
  administration.
• Design of the National Training and Technical
  Assistance Plan for Local and Regional
  Governments, aimed at reducing differences in
  management skills, lifting the quality of the
  services they render and promoting sub-national
  independence, in particular through institutional
  strengthening that will lead to certification
  from the National System for Competency
  Accreditation.
• Government management training as well as
  technical assistance to prepare Regional
  Development Plans and investment projects for all
  Regional Governments.
• Technical assistance to authorities of over 650
  provincial and district municipalities, through
  workshops that dealt with the regulatory
  framework, preparing Participatory Budgets and
  the transfer of social programs.

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The Promise of Decentralization
CND

• ... a physically well-organized and easy-to-reach
  territory, with living borders, and fully
  interconnected to allow fluid circulation.
• ... a decentralized and competitive economy with
  healthy cities and efficient services.
• ... a society with narrower human development
  and wealth distribution gaps.
• ... a country that makes optimum use of its
  natural and energy resource base, protects the
  quality of its environment and preserves nature.

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National Decentralization Council of PeruLos
Incas 172, 4º PisoSan Isidro, LimaTel. (511)
616-3000Website. http//www.cnd.gob.pe
CND