Three-Level Games:.

Are federalism and decentralization similar phenomena? Do they necessarily correlate? Do they have an “elective affinity”? Or can they work in opposition to one another? Specifically, does decentralization to any level of subnational government favor all levels of subnational government, or do municipalities differ from higher levels of subnational government (usually “federal” entities such as states or provinces) in meaningful ways? In this paper, I argue that central governments often use the rhetoric and practice of municipal decentralization as a way to weaken federal units at the intermediate level of government. In a “three-level game”, central governments decentralize to the local level in order to strengthen the center’s position in negotiations with the states/regions/provinces. I demonstrate this by examining three case studies: Brazil, South Africa, and Peru. The causes of such occurrences are eminently political: increases in the electoral strength of opposition parties at the intermediate level are the triggers for municipalization. The paper focuses on an important political point too often overlooked in the literature on intergovernmental relations: most countries of interest have not two, but three interacting levels of government. The salience of each of the three levels of government – central, local, and an intermediate tier alternately called state, provincial, or regional – varies from country to country. Most academic studies of intergovernmental relations, federalism, and decentralization focus on dynamics between two layers of government, a dyadic set of political interactions. These approaches, however much they may simplify certain issues and make certain questions more tractable, often miss out on the crucial ways in which the three levels of government can interact. In particular, scholars have a tendency to lump local governments together with other subnational governments. Implicit assumptions are that what is good for one level of subnational government is good for the other. In fact, however, the preferences of municipalities may conflict with those of intermediate levels of government. Central governments, in many circumstances, find allies in the form of local governments. Decentralization to municipalities may actually run counter to some of the central principles of federalism. This paper will examine this possibility, using three quite different polities as case studies. In examining federal Brazil, quasi-federal South Africa, and unitary Peru, I will show that center-local political links can lead to an “hourglass” structure of government with a missing middle (as argued by Junaid Ahmad), reinforcing the center and localities at the expense of the intermediate layer of government. This case selection demonstrates that the strategic choices made by the center can have effects that are robust across different points on the federal-unitary spectrum. [ABSTRACT FROM AUTHOR]