From 1952 revolution, Bolivia evolved a highly centralized state aimed to create industrial and egalitarian society
Monopolized by the National Revolutionary Movement, a policy based on import substitution and industrialization had a little scope for local governance and inequality is high.
Lack of economic progress since late 1970s resulted in social unrest.
Ethnic based political parties began to challenge the ruling party in its key rural bases.
Decentralization law was developed in secrecy, and the object of ridicule and opposition throughout the country. But it had a dramatic effect on the pattern of governance and resource allocation. Devolution included fiscal measures (doubled local resources 10-20% of their spending, formula bound transfers)
Responsibilities for services in education, health, irrigation, roads, sports, and culture are transferred
Created oversight committees over local governments
Created large number of municipalities, and expanded the existing.
Shift of resources to poorer districts and investments more responsive to local needs.
Shift in public investment from production and infrastructure to social services and human-capital formation.
Different patterns of local governance observed due to dynamics between– local govt. institutions, civil society, and economic groups.
Good governance is the outcome when these three interactions counterbalance each other and none dominates the other.