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Working Paper

Blending Top-Down Federalism with Bottom-Up Engagement to Reduce Inequality in Ethiopia

SANITATION PUBLIC OFFICIALS BASIC SERVICES ECONOMIC GROWTH CONTRACEPTION SKILLED HEALTH PERSONNEL POLITICS CIVIL SERVANTS INFORMATION SYSTEM ANTENATAL CARE LAWS GOVERNMENT LOCAL GOVERNMENTS STRATEGIES POLITICIANS ETHNIC GROUPS SERVICES FEDERAL GOVERNMENTS DEVELOPING COUNTRIES PUBLIC SERVICES HEALTH CARE GENDER PARITY POLICY DISCUSSIONS SOCIETAL GOALS NATIONAL GOVERNMENTS POLITICAL LEADERSHIP DEVELOPMENT GOALS SECONDARY ENROLMENT CORRUPTION SUSTAINABLE DEVELOPMENT NATIONAL LEVEL RURAL POPULATION PUBLIC HEALTH TELEVISION KNOWLEDGE MILITARY REGIME PUBLIC POLICY LABOR MARKET SOCIAL IMPACT MINISTRY OF HEALTH COLLUSION GRASS-ROOTS INCOME INEQUALITY DEVELOPMENT STRATEGIES DEMOCRACY CITIZEN HEALTH CARE SERVICES VIOLENCE MODERNIZATION ORGANIZATIONS CHRONIC POVERTY HOUSEHOLD SURVEYS SERVICE PROVISION MORTALITY RATE CULTURAL CHANGE PRIMARY SCHOOL GRASS- ROOTS SERVICE DELIVERY PLACE OF RESIDENCE STATE UNIVERSITY SOCIAL DEVELOPMENT MORTALITY RADIO MODERN CONTRACEPTIVE METHODS RESPECT PROGRESS GENDER PARITY INDEX HOUSEHOLD LEVEL INITIATIVES HUMAN CAPITAL INTEGRITY INVESTMENT IN EDUCATION MOTHER TONGUES RURAL COMMUNITIES ACCOUNTABILITY SOCIAL SECTOR POLICIES TRANSPARENCY DISCRETION MODERN CONTRACEPTIVE USE MATERNAL HEALTH SERVICES SCHOOL ATTENDANCE POLICY RESEARCH WORKING PAPER POLICY MAKERS BANK NATIONAL GOVERNMENT COLLAPSE PRIMARY SCHOOL AGE BASIC INFRASTRUCTURE ANTI-CORRUPTION URBAN AREAS SKILLED BIRTH ATTENDANTS CONTRACEPTIVE ACCEPTANCE SKILLED BIRTH ATTENDANCE GRAFT POLITICAL PARTY FEDERAL GOVERNMENT SERVICE QUALITY SOCIOECONOMIC FACTORS MOTHER POLICY CITIZENS POLITICAL PARTIES CONTRACEPTIVE USE DEMOCRACIES CHILD MORTALITY GOVERNANCE HUMAN RIGHTS RECIPIENT COUNTRIES MATERNAL HEALTH ETHICS CITIZENSHIP PUBLIC HEALTH SERVICES WARS COMPLAINTS LOCAL COMMUNITIES WAR MODERN CONTRACEPTION NATURAL RESOURCE ORGANIZATION PATRONAGE CONTRACEPTIVE METHODS RURAL AREAS NUMBER OF CHILDREN RULING PARTY REPRESSION BASIC SERVICE HUMAN WELFARE SOCIAL COHESION POPULATION LAW STUDENTS PRACTITIONERS LEADERSHIP MARRIED WOMEN POLICY RESEARCH STRATEGY PRIMARY EDUCATION WOMEN PUBLIC SERVICE GOVERNMENTS MILLENNIUM DEVELOPMENT GOALS HUMAN SETTLEMENTS POLITICAL LEADERS HEALTH SERVICES OFFICIAL POLICY SERVICE POLITICAL INSTABILITY RURAL WELFARE SKILLED ATTENDANTS SERVICE PROVIDERS SCHOOL AGE DEVELOPMENT POLICY HUMAN DEVELOPMENT
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World Bank, Washington, DC
Africa | Ethiopia
2015-12-22T16:25:26Z | 2015-12-22T16:25:26Z | 2015-12

Donors increasingly fund interventions to counteract inequality in developing countries, where they fear it can foment instability and undermine nation-building efforts. To succeed, aid relies on the principle of upward accountability to donors. But federalism shifts the accountability of subnational officials downward to regional and local voters. What happens when aid agencies fund anti-inequality programs in federal countries? Does federalism undermine aid? Does aid undermine federalism? Or can the political and fiscal relations that define a federal system resolve the contradiction internally? This study explores this paradox via the Promotion of Basic Services program in Ethiopia, the largest donor-financed investment program in the world. Using an original panel database comprising the universe of Ethiopian woredas (districts), the study finds that horizontal (geographic) inequality decreased substantially. Donor-financed block grants to woredas increased the availability of primary education and health care services in the bottom 20 percent of woredas. Weaker evidence from household surveys suggests that vertical inequality across wealth groups (within woredas) also declined, implying that individuals from the poorest households benefit disproportionately from increasing access to and utilization of such services. The evidence suggests that by combining strong upward accountability over public investment with extensive citizen engagement on local issues, Ethiopia’s federal system resolves the instrumental dissonance posed by aid-funded programs to combat inequality in a federation.

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