Oliver D. Meza argues that greater attention needs to be given to existing institutional frameworks when planning reforms. Using Mexico as a case study, he highlights how attempts to improve local democracy through electoral reform have failed because the old institutional hierarchies have not been taken into account. Although well-meaning, the reforms have made decision-making costlier, less expeditious and more prone to gridlock or stalemate

Meza, Oliver D.

LSE Research Online

By Democratic Audit UK 2015-11-10Failure to take into account existing institutions risksjeopardising the success of new reformsdemocraticaudit.com /2015/11/10/failure-to-take-into-account-existing-institutions-risks-jeopardising-the-success-of-new-reforms/Oliver D. Meza argues that greater attention needs to be given to existing institutional frameworks when planningreforms. Using Mexico as a case study, he highlights how attempts to improve local democracy through electoralreform have failed because the old institutional hierarchies have not been taken into account. Although well-meaning, the reforms have made decision-making costlier, less expeditious and more prone to gridlock orstalemate.Legislative elections in Southern Mexico. Credit: Dimitri dF CC BY-NC 2.0A seemingly obvious, yet frequently overlooked, recommendation when planning reforms is to examine the currentinstitutional framework. Failure to do so results in good intentions translating into poor results. Furthermore, thepublic is getting tired of watching politicians implement unsound policies that cost money and effort, but whichultimately exacerbate problems. Of course there is no foolproof way to remedy this situation, but there are ways tomitigate negative collateral results. In this essay, I present the case of the recent reforms in Mexico undertaken byfederal legislators to correct what was viewed as a local democracy problem. The policy intervention has proved itslimitations, suggesting that new directions for reform should be considered.Local governments work in rich institutional environments, involving various layers of the state. When decisionshave to be made on policy matters, the political structure will often put great emphasis on local decision-making. Itshould be noted that there are important differences depending on the nature of the political system, for instancewhether it is a centralised unitary or decentralised, federal, polycentric system. Local policy-making variesconsiderably between these two, especially at the mid-table where combined features coexist, such as a highlycentralised federal system.Mexico has an unusual form of federalism because it is more centralised than many unitary countries, suggestingweak local democracy, low levels of public participation and ultimately policy-making that is heavily influenced fromabove. For many political authorities, this warped structure has not gone unnoticed and there are longstandingefforts in place to correct these “abnormalities”. Legislators, for instance, have relied on reforming the democratic1/4institutions that control local elections. The “theory of change” behind this move is that local citizenry will be betterrepresented and authorities would narrow the gap between themselves and citizens, resulting in better qualitypolicy-making. Local government would eventually become more proficient at tailoring policies which were sensitivelocal needs. They would improve their governing capacity and thus be able to make decisions with less upper tierintervention.Electoral reforms intended to solve the problem of governanceFixing local problems by reforming electoral rules in this way is the most common approach by legislators in Mexico.Independent candidates are now allowed to run for local congress and local executive positions (mayors andgovernors). There have already been a few examples of independent candidates taking office this year (El Broncoin Monterrey or Pedro Kumamoto in Jalisco). By 2018 re-election will also be possible for local offices. This hasbeen a major political battle. Re-election, in the minds of a large sector of the population is normally perceived as adangerous feature of democracy that enabled Porfirio Diaz, a late 19th century dictator, to hold power for over 40years. The situation has changed and is unlikely to be repeated especially among local mayors. However, let ustake the scepticism as a precautionary sign of how these reforms can quickly reach their limits and thus underdeliverthe promised benefits.The problem with focusing on electoral reform to enhance local government capacity is that the installed institutionalframework tends to be neglected. Rather than improving local decision-making -to have a more democratic policycycle- the net effect is additional gridlocks or stalemate. This is the main argument I defend in a recent publicationentitled Why Does More Pluralism Reduce Expenditure? The Case of how Mexico´s Old Institutions Affect Waves ofDemocratic Reform. This is not because expenditure matters per se, but because the pattern behind its movementsreveals a story of complexity and increasing difficulties in decision-making  within the most important authoritativecollegiate organ in Mexican municipalities: the Ayuntamiento.Expenditure used as a proxy for local decision-makingThe research is based on a natural experiment. The 1983 constitution allowed localities to use a PR formula. Statesmodified their constitutions, producing two kinds of localities, some operating under PR and others using majorityrule. A major decentralisation reform was subsequently enacted in 1999. Municipalities were then able to spendmore but the electoral rule was able to account for variations in spending patterns between those using a PR versusan MR formula. That is the empirical aim of the study.Figure 1 explores the difference in expenditure between local governments with majority rule and those with aproportional representation rule. As I mentioned before, expenditure is only important for seeing how greater politicalparticipation in the Ayuntamiento (Town Hall) affects decision-making. It makes it tougher, with greater associatedtransaction costs, and most importantly in the context of this discussion, it is not necessarily better for citizens .Figure 1 shows that PR municipalities spend less than MR municipalities over a period of 10 years. This period iskey because significant changes occurred in the legal framework that make it easier to  identify the effects of thetype of electoral rule.Figure 1. Total Government Expenditure (per capita) by type of electoral rule (Majority Rule vs. ProportionalRepresentation)2/4Source: Author’s calculations based on data from INEGIThere are a number of issues the strategy must resolve before assigning a causal effect to a particular variable. Thepaper attempts to resolve some of them. Contrary to what the literature suggestions, PR municipalities spendnoticeably less than those using an Majority Rule formula. This spending pattern is confirmed using totalgovernment expenditure and bureaucratic expenditure, but not when using public goods expenditure. In order toexplain the latter, it is important to know more about local budgets. Budgets require the approval of theAyuntamiento; the collegiate governing body. Total and bureaucratic expenditure is assigned by combining a mix ofsources (own and transferred) while public goods, in this case, are mostly pre-assigned by earmarked federaltransfers. The Ayuntamiento has a no leeway for making local changes in this last item. The effect of the electoralrule, in combination with other governing rules within the Ayuntamiento, is felt in the total and bureaucraticexpenditure but not in the pre-assigned public goods expenditure. Why is this so?There are limits to changing the status quo exclusively by reforming formal institutionsBefore attempting to change the way the Ayuntamiento works, it is important to understand how it does so atpresent. In the study, I showed that Ayuntamientos in Mexico, despite being a collegiate body, are surprisinglyhierarchical. Some scholars regard the Ayuntamiento as a small decision-making bodies where executives are atbest primus inter pares (first among equals), but a subtle difference challenges this notion. Briefly, presidents haveasymmetric powers with regards to other council members. They control commissions, they are the main agendasetters and gate-keepers. As a result they completely control the executive body, and are free to appoint generaldirectors (or local ministers/secretariats) as they please. Council members, on the other hand, have little to noexecutive power; they only discuss and vote on local legislation. They are subject to presidents’ agenda setting andgate-keeping arrangements. Their only power relies on informal pressure, and often illegal negotiations with themayors. These practices are well documented, but highlight how the electoral reforms make decision-makingcostlier, less expeditious and more prone to gridlock or stalemate. This is an iterative game which, without thesupport of accompanying institutions, affects local government capacity.So what can one expect when more parties enter the game? Better citizen representation, or a more expensivegame? With only three years in power with no re-election and with national parties, this is current reality of decision-making in Mexican local government. Under these circumstances, more pluralism simply increases transaction3/4costs, so well-meaning reforms have failed to strengthen decentralised and responsive policy-making.—This blog represents the views of the author and not those of Democratic Audit UK, or the LSE. Please read ourcomments policy before posting. —Oliver D. Meza is Research Professor of the Public Administration Division at Centro deInvestigación y Docencia Económica (CIDE), Center for Research and Economic Training, RegiónCentro in Aguascalientes, México.4/4

Failure to take into account existing institutions risks jeopardising the success of new reforms

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