World Development 133 (2020) 104996

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World Development
journal homepage: www.elsevier.com/locate/worlddev

Making social services work better for the poor: Evidence from a natural
experiment with health sector decentralization in Honduras
Alan Zarychta
School of Social Service Administration, University of Chicago, 969 East 60th Street, Chicago, IL 60637, United States

a r t i c l e i n f o a b s t r a c t

Article history: Governments in many less developed countries have decentralized their social support systems over the
Accepted 13 April 2020 last several decades. However, despite enthusiasm for these reforms, evidence remains limited and mixed
Available online 12 May 2020 as to whether they improve the delivery of basic social services. I take advantage of an unexpected pause
in reform implementation in Honduras due to the country’s 2009 coup to investigate the effects of decen-
Keywords: tralization on local health services. Drawing on administrative data, an original survey of health workers,
Decentralization and qualitative interviews, my analysis shows that decentralization is credibly associated with increases
Governance
in preventive care for women and that improved accountability and greater resilience to shocks are
Public Health
Latin America
important mechanisms for this change. Moreover, my analysis highlights how regional organizations
use decentralization to assert their own influence and deflect negative political consequences while pres-
suring for improvements in service delivery. These findings shed light both on the possibilities for
improving local social services through governance reform and how national-level reforms can be
leveraged by powerful actors at lower rungs of the governmental hierarchy.
Ó 2020 Elsevier Ltd. All rights reserved.

1. Introduction Traditional debates over decentralization reforms were often

Over the last three decades international donors have routinely
touted the decentralization of political power to subnational and
local governing units as a strategy for improving social services
in developing countries (Dillinger, 1994; World Bank, 2003;
Bossert, 2014). This is a major response to the fact that poor, rural
citizens in those countries have access to fewer services and expe-
rience worse outcomes than their richer, urban counterparts
(Braveman & Tarimo, 2002). Governance reforms like decentraliza-
tion aim to improve public services through changes in the vertical
distribution of power across levels of government and between the
public, private, or non-governmental sectors (Rondinelli,
McCullough, & Johnson, 1989; Herrera & Post, 2014; Viterna,
Clough, & Clarke, 2015). Decentralization has been particularly
popular in the public health arena, with numerous developing
countries transferring power and authority away from their
national ministries of health and toward municipal governments
and local, community-based organizations (Grindle, 2009; Faguet,
2012; Mitchell & Bossert, 2010). According to one analysis, nearly
all countries now include some degree of commitment to decen-
tralization in their national health plans (Bossert, 2014, p. 200).
E-mail address: azarychta@uchicago.edu
couched in terms of proponents and sketpics. Proponents of decen-
tralization argued that local actors are better positioned to make
decisions and implement policies because they have access to
superior information relative to their national counterparts and
because they are more directly accountable to local constituents
(Hayek, 1945; Oates, 1977; Diamond & Tsalik, 1999; Faguet,
2004). The causal logic here hinged on matching information and
accountability structures to the policy problem at the appropriate
level of authority (Rubinchik-Pessach, 2005). Thus, narrow or local
problems are best addressed by governance actors situated at that
local level who can be responsive and accountable to the individu-
als affected. The general conclusion among proponents was that
devolving decision-making to regional and local actors would ease
informational shortcomings, clarify accountability, and through
political competition ultimately lead to more appropriate decisions
with respect to the delivery of public services.
Skeptics of decentralization, on the other hand, highlighted the
fact that devolving political decision-making can reinforce and
entrench existing local power dynamics to the detriment of the
poor (Agrawal & Ribot, 1999; Galiani, Gertler, & Schargrodsky,
2008; Fan, Lin, & Treisman, 2009). This perspective focused on
the relative weakness of institutions generally, and local
institutions particularly, in many of the developing countries
where decentralization reforms were being implemented. Most

https://doi.org/10.1016/j.worlddev.2020.104996
0305-750X/Ó 2020 Elsevier Ltd. All rights reserved.
2 A. Zarychta / World Development 133 (2020) 104996
importantly, skeptics posited that elites had the ability to capture
local institutions and avoid formal mechanisms of accountability
and competition (Bardhan & Mookherjee, 2000; Persha &
Andersson, 2014). Empowering local governing bodies therefore
allowed elites to further enrich themselves and target resources
in a particularistic fashion that strengthened their support while
being detrimental to broader interests. Institutional weakness
and corruption were likely to hinder rather than improve
decision-making at the local level, and thus skeptics expected
decentralization reforms to have negative consequences for public
services.
Increasingly, debates over decentralization have taken a condi-
tionalist tone, emphasizing the numerous ancillary factors that are
likely to moderate the effectiveness of these reforms, as well as
focusing closely on the social processes in the middle of the causal
chain linking particular reforms with specific outcomes (Ostrom,
Schroeder, & Wynne, 1993). Accordingly, there has been a strong
preference for conditional hypotheses about the effectiveness of
decentralization. Studies following this perspective have identified
several key factors that appear to moderate the relationship
between decentralization and key policy outcomes, including:
popular participation (e.g., Blair, 2000; Larson, 2002; Andersson
& van Laerhoven, 2007), downward accountability (e.g., Faguet,
2012; Smoke, 2003), technical capacity (e.g., Andersson, 2004),
stable resources (e.g., Andersson, 2004; Fiszbein, 1997), and the
quality of political leadership and local power relations (e.g.,
Grindle, 2009; Wilfahrt, 2018). Without some combination of these
conditions, scholars argue, it is unlikely that positive outcomes will
follow from decentralization reforms.
With respect to the relationship between decentralization and
health outcomes specifically, existing studies remain mixed in
their conclusions. Authors have argued that decentralization has
no significant effects on health services (Bossert, Chitah, &,
Bowser, 2003; Jeppsson & Okuonzi, 2000), negative consequences
for service delivery (Gonzalez-Block et al., 1989; Campos-Outcalt
et al., 1995), mixed results for medicine logistics systems
(Bossert, Bowser, & Amenyah, 2007), and positive impacts for
equity and infant mortality rates (Bossert, Larraaga, Giedion,
Arbelaez, & Bowser, 2003; Guanais & Macinko, 2009). These incon-
clusive findings stem from the important limitations of many stud-
ies on health sector decentralization: unaddressed selection and
endogenity issues related to the assignment of the intervention,
reliance on often-problematic national-level data sources, and
challenges in isolating social mechanisms (Bardhan, 2002;
Channa & Faguet, 2016). Given the immense popularity and contin-
ued implementation of decentralization reforms, and in spite of
notable methodological advances in more recent scholarship, these
limitations continue to hamper the accumulation of systematic
and rigorous evidence as to what makes decentralization reform
succeed or fail.
In this study I make two contributions to the ongoing debate
about the effectiveness of governance reforms generally, and health
sector decentralization policy specifically (Bardhan & Mookherjee,
2006; Treisman, 2007). First, I develop theoretically-grounded and
context-sensitive hypotheses about the effects of decentralized gov-
ernance on local health services in rural Honduras, placing this
large-N subnational case study within the landscape of competing
explanations identified in existing research (Faguet, 2014). Second,
I conduct extensive original data collection within a quasi-
experimental research design in order to evaluate the effects of
decentralization reform. The motivating questions for this study
are: (1) what are the effects of decentralized governance on the pro-
duction of local health services, and (2) what factors underlie the
effectiveness or ineffectiveness of this governance reform?
Empirically, I take advantage of a natural experiment with
decentralized health service delivery models in Honduras where
health administrators in the state of Intibucá began implementing
decentralization around 2007 but were forced to pause their roll-
out of the reform in 2009 following the forcible removal of the
country’s President, Manuel Zelaya, in June of that year (Ruhl,
2010). Prior to this political crisis, just about half of Intibucá’s
health centers were decentralized. As the coup effectively brought
the government to a standstill and health sector reforms were a
relatively low priority during and immediately after the crisis,
expansion of decentralization did not begin again in Intibucá until
2013. These circumstances left the balance of the state’s health
centers under centralized administration for over two years and
thus available to serve as a natural control group against which
to assess the effects of the decentralization reform.
I utilize a difference-in-differences approach in analyzing
administrative data from 2005 (two years prior to initial reform
implementation) through 2012 (three years after the crisis-
induced pause in implementation) to estimate the average effects
of decentralization reform on a range of different types of health
services (Kramon & Posner, 2013). This analysis shows that decen-
tralization is credibly associated with increases in health services
that are regional priorities, namely preventive care for women,
thereby highlighting the important role of the Regional Health
Authority in shaping how a national-level reform gets translated
to local health centers. In addition to this focus on health services
outputs, in the second component of the analysis I draw on data
from original surveys of local health staff and qualitative inter-
views with health administrators to assess potential mechanisms
underlying the effectiveness of decentralized governance. The evi-
dence from that analysis suggests that both improved accountabil-
ity and greater resilience to shocks under decentralized
governance are important drivers of the observed improvements
in local health services.
2. Decentralized health service delivery in Honduras
Decentralized health service delivery models are the type of
governance reform implemented at the local and regional levels
by the Honduran Ministry of Health (MOH). This reform involves
two institutional changes: (1) the delegation of operational, plan-
ning, and supervisory functions for health centers from Regional
Health Authorities to decentralized managing organizations using
performance-based contracts, and (2) the deconcentration of over-
sight from the national-level MOH to the Regional Health Author-
ities over the managing organizations and their health centers
(Rondinelli et al., 1989; MOH, 2009; MOH, 2010). While a common
template is used for the decentralization contract across all set-
tings, three different types of organizations can manage decentral-
ized local health systems under the reform: single municipal
governments, associations of municipalities (akin to regional gov-
erning councils), and non-governmental organizations. The MOH,
which retains responsibility for all of the public’s health centers,
is using this version of decentralization in an effort to achieve
two specific goals: (1) increasing access to health services for
underserved populations and, (2) improving the efficacy and effi-
ciency of those services. The main idea for decentralized gover-
nance in the Honduran health sector is that health services
provided to the country’s population can be increased and
improved through the involvement of local public and non-state
organizations, and that this will lead to healthier communities
(MOH, 2009; MOH, 2010).1
As of 2011, over 200 health centers, or about 15% of the coun-
try’s health units, were managed by municipalities, municipal
1
For additional details about health sector decentralization in Honduras, please see
the supplementary material for Zarychta et al. (2019).
 A. Zarychta / World Development 133 (2020) 104996
associations, or non-governmental organizations. These decentral-
ized systems operated in over 70 municipalities and provided
health services to approximately one million Hondurans. I choose
to focus this study on the state of Intibucá because it provides
the unique opportunity of a natural experiment for comparing
decentralized and centrally-administered health centers within a
largely homogenous setting, this latter point being particularly
important to guard against selection bias given the limited avail-
ability of pre-intervention data on health center characteristics in
Honduras. Regional Health Authority 10, the state health depart-
ment for Intibucá, has supported and implemented the decentral-
ized governance reform since 2007–2008 (see map in Fig. 1 below).
At the time of my data collection in 2012, twenty-two of the state’s
fifty primary care health centers belonged to one of three decen-
tralized health systems – under a management contract led by a
rural cooperative, an association of municipalities, and a non-
governmental organization, respectively – and the remaining
twenty-eight were under centralized administration.2 Outside of
one urban center, the municipalities in this state are uniformly rural,
culturally homogenous, largely poor, and among the most disadvan-
taged in Honduras (Instituto Nacional de Estadistica Honduras;
Rodriguez & Peterson, 2016, p. 3).
3. Theorizing the effects of health sector decentralization in
Honduras
Governance is usefully conceptualized as the process of defining
and enforcing institutional arrangements, the formal and informal
rules that shape human interactions (Andersson, Gordillo, &
Laerhoven, 2009; North, 1991; Ostrom, 2005). Governance systems
then include not only the formal institutions of the state (e.g., gov-
ernment), but also other organizations and groups that are active
in a particular policy arena. As such, these systems are populated
by multiple principals and multiple agents jointly contributing to
some collective outcome. In the health sector context, numerous
scholars have emphasized the importance of complex accountabil-
ity relationships among these principals and agents in shaping
their incentives, positively or negatively, for delivering local health
services (Bossert, 1998; Bardhan, 2002; Brinkerhoff, 2004).
Responding to the perception of inadequate or suboptimal incen-
tive structures, health sector decentralization is a governance
reform in that it attempts change the institutional arrangements
of accountability across jurisdictions or functions of service deliv-
ery. Short of very strong assumptions within quite basic social set-
tings, a prescriptive view on the ‘‘right” structure of accountability
linkages remains untenable (Brinkerhoff, 2004). Instead, scholars
generally aligned with what I have called the conditionalist group
emphasize the strengths of context-sensitive theorizing, using the
cases of reform at hand to build up insights that can then accumu-
late into more general findings over time (Brinkerhoff, 2004;
Ostrom, 2005). In the remainder of this section I utilize such an
approach, placing this case within the theoretical landscape of
existing research, and drawing out the characteristics of decentral-
ized health service delivery models in Honduras and conditions
within the state of Intibucá that make this a most-likely case for
observing the positive effects of decentralization on local health
services.
Proponents of decentralization argue that local administration
of health systems enables clearer accountability structures and
better access to relevant information, thereby promoting better
overall performance. In the case of Intibucá, improved accountabil-
2
The state of Intibucá had 56 total public health units at time of data collection, 51
of which were primary care facilities. One of these primary care health centers was
newly opened in late 2011 and is excluded for a lack of data.
3
ity, and the local control that allows, manifests in four distinct
ways through the local managing organizations under the reform.
First and foremost, the MOH uses performance-based contracts as
a way to incentivize local managing organizations to meet speci-
fied goals, imposing financial penalties if those goals are not met.
Second, the contracts give these organizations greater flexibility
than the Regional Health Authority (the Region) over a significant
portion of their budgets. While complaints are common from these
organizations about difficulties in motivating and reprimanding
tenured health staff and recurring delays in receiving their con-
tracted payments from the Honduran government, they do
nonetheless have funds in their budgets that they can allocate as
they see fit to hire additional staff, purchase medications, or make
other locally-specific expenditures. Third, the performance targets
within their contracts mean that these organizations also have
incentives to expend resources in monitoring, evaluating, and sup-
porting the local health centers to a greater degree than what the
centrally-administered health centers are likely to experience. Fur-
thermore, this monitoring is itself supervised by staff from the
Region, which has influence over the imposition of financial penal-
ties. And forth, the Region is positively incentivized to dedicate
time and resources in supporting the managing organizations as
that can help ingratiate politically-motivated regional staff to their
own principals within the central MOH. In addition to supervision,
they occasionally participate in local campaigns led by the decen-
tralized managing organizations and the Region holds joint meet-
ings with all of the managing organizations each trimester
following their evaluations to review challenges and share best
practices. Changes in the structure of accountability relationships
under the reform provide the managing organizations substantial
access to key policymakers and support staff at the Region, access
that should contribute to marshaling limited resources, gaining rel-
evant information, and obtaining assistance in solving difficult
local problems in ways that are not generally possible for staff
within centrally-administered health centers.
Skeptics of decentralization focus on weak local institutions and
the associated risks of elite capture. This concern, while relevant in
many contexts, is less applicable to decentralized health service
delivery models in Intibucá. This is primarily because the
performance-based contracts are signed between the state and
community-based or non-governmental organizations. While it is
possible that these groups might lack certain competencies with
respect to health system administration, it is less obvious that they
would be subject to the type of weakness and elite capture envi-
sioned by opponents of decentralization. These local organizations
are involved in municipal politics, but they are not directly sub-
jected to the same electoral incentives as mayors, and thus may
be better able to push back on local elites or deflect common cli-
entlist or patronage-politics arrangements (Loevinsohn &
Harding, 2005). Furthermore, the one overtly political organization
that administers a decentralized health service delivery model in
Intibucá, an association of municipalities (or regional governing
council), has its influence and susceptibility to capture curtailed
because its formal powers are limited, its standing budget is based
on voluntary contributions from the participating municipalities,
its authorities span multiple political boundaries, and it faces
potentially-competing local and regional interests (Gerber &
Gibson, 2009).
Based on these two sets of factors – positive changes in
accountability and associated access to information, as well as
reduced risk for elite capture of local institutions – this discussion
suggests that health sector decentralization is likely to be associ-
ated with improvements in local health system performance
within the state of Intibucá. Specifically, this improved perfor-
mance will be reflected in higher numbers of health services out-
puts being produced by the decentralized health centers relative
4 A. Zarychta / World Development 133 (2020) 104996
Fig. 1. Intibucá, Honduras.
to their centrally-administered counterparts. Furthermore, in line
with the design of decentralized health service delivery models
in Honduras, the primary mechanism through which decentraliza-
tion has its beneficial effects is likely to be improvement in
local-level accountability, namely greater levels of supervision
and support for staff in the decentralized health centers.
4. Empirical strategy
I utilize a three-part empirical strategy to examine the effects of
decentralized governance on local health services. First, sub-
regional variation in the implementation of decentralized health
service delivery models in Intibucá, Honduras, constitutes a unique
natural experiment (Veenendaal & Corbett, 2015). Accordingly, I
leverage the partial implementation of this reform in a rural,
underserved, and largely homogenous state – a setting that is sim-
ilar to many areas targeted for health sector governance reforms
throughout Latin America – to evaluate the effectiveness of decen-
tralization using a difference-in-difference (DD) research design.
Second, I collaborated with the Regional Health Authority in Inti-
bucá to compile an original dataset on monthly health services,
socio-economic characteristics, and institutional conditions from
2005 to 2012, as well as collecting original survey data for health
providers and conducting interviews with regional health adminis-
trators. Third, I implement a comprehensive series of analyses,
including several falsification tests and robustness checks, using
these multiple streams of information to assess the effects of
decentralization on local health services and examine plausible
mechanisms linking decentralization reform to health system
performance.
4.1. Natural experiment in decentralization
Toward that goal of assessing the effects of decentralization, I
take advantage of the fact that the central Ministry of Health and
Regional Health Authority 10 share the explicit goal of decentraliz-
ing all health centers in this state, but at the time of this study had
only been able to implement the reform in about half of those pri-
mary care health centers due to the country’s 2009 coup and ensu-
ing political crisis during 2010 (Ruhl, 2010).3 This circumstance
leaves the balance of health centers under centralized administra-
tion and therefore available to serve as a natural and credible coun-
terfactual against which to analyze the effects of the reform using a
difference-in-differences approach (Dunning, 2012). In the following
paragraphs I summarize the preponderance of evidence that sup-
ports both this case being a natural experiment in decentralization
and the use of a difference-in-difference approach for the empirical
analysis.
Beyond the common identification assumptions that hold in
any setting, the difference-in-differences approach relies on two
major assumptions: (1) control and treatment groups have parallel
trends in outcomes, and (2) treatment is unrelated to outcomes in
the pre-intervention period (Angrist & Pischke, 2008; Bertrand,
Duflo, & Mullainathan, 2004). For the first assumption I examine
parallel trends descriptively in section 5.1, as well as more formally
using placebo tests in appendix section 1.3, and for the second
assumption I assess balance in section 5.2. Overall, the evidence
presented in those sections suggests the two major assumptions
of difference-in-differences are not clearly violated and that the
subsequent empirical analysis of decentralization’s effects is
credible.
In addition to these quantitative analyses, I also engaged key
policymakers from the central Ministry of Health and Regional
Health Authority #10 in qualitative interviews on a number of
topics, including if and how reform rollout was targeted. Adminis-
trators at the central level reported that the entire state of Intibucá
qualified as priority area for decentralization on account of its high
degree of poverty and remote location. In terms of intentional tar-
3
As of late-2016, all health centers in Intibucá have been decentralized, supporting
the claim by officials during interviews in 2012 that they intended to implement the
reform in the entire state.
 A. Zarychta / World Development 133 (2020) 104996
geting within Intibucá, four of six key regional administrators
interviewed reported that there was no systematic process for
selecting early reform units based on their characteristics, support-
ing the idea that this case constitutes a natural experiment, while
two others said the reform began in somewhat needier and more
remote areas. If this latter circumstance were true, it is reasonably
debatable whether needier and more remote areas are relatively
difficult to administer, making positive effects of decentralization
less likely, or whether these types of areas would more readily
respond to any kind of external intervention, making positive
effects of decentralization more likely. In terms of the second
major assumption of the difference-in-differences approach, it is
critical that any targeting that may have occurred not be tied to
the outcomes of interest, namely health services outputs, and no
policymakers at either level reported that this was the case. In
short, the preponderance of evidence suggests that the partial
decentralization of the largely homogenous state of Intibucá pro-
vides a unique and well-suited venue for assessing the influence
of decentralized governance on local health services.
4.2. Data collection
Scholars commonly criticize the decentralization literature for
its reliance on weak, low-quality data, or its inability to empirically
test claims because data do not exist or are too difficult to obtain
(Bardhan, 2002; Bossert, 1998).4 One major contribution of this
study is the creation of an original, longitudinal dataset linking
health services and health outcome indicators with demographic,
socio-economic, and institutional data for the state of Intibucá
between 2005 and 2012. I compiled and collected four broad cate-
gories of information during fieldwork in 2012: (1) monthly data
on numbers of health services provided and health outcomes in each
of about fifty primary care health centers (about 5000 health center-
year-months); (2) demographic, socio-economic, and institutional
context data for the population associated with each health center
or in each municipality5; (3) original survey data for the main provi-
ders in these health centers (166 total respondents); and (4) formal
semi-structured interviews with six regional health administrators,
numerous informal conversations with health providers and other
key actors, and documentation of the decentralization contracts
signed between the MOH and the three managing organizations in
Intibucá. This volume of local-level quantitative and qualitative data
remains rare in studies of decentralization and is the best informa-
tion available for evaluating the effects of this reform in Honduras.
4.3. Dependent variables
Community health is a product of complex interactions among
socioeconomic, cultural, attitudinal, political, and health system
factors, and generally changes slowly over relatively long periods
of time (Huicho et al., 2010; Murray & Frenk, 2000). Despite this,
policy-makers and evaluators want to know if health interventions
produce incremental changes over the short-run in order to target
resources to strategies that work and abandon those that do not.
These two dynamics create a tension between focusing on popula-
tion health outcomes (e.g., incidence of water-borne illness, pro-
portion of children with normal growth), or instead utilizing
4
Malesky et al., 2014 and Grossman and Lewis (2014) are notable recent
exceptions that implement rigorous subnational research designs to evaluate the
effects of recentralization in Vietnam and administrative unit proliferation in Uganda
respectively.
5
I obtained demographic data from Regional Health Authority 10 and the National
Statistics Institute, human development data from the United Nations Development
Program, data on numbers of community organizations from the Unit for the Registry
of Civil Society, electoral data from the National Electoral Tribunal, and data on cash
transfer beneficiaries from the Family Allocation Program.
5
indicators consisting of health services outputs (e.g., number of
prenatal consultations, number of well-child visits).
Given the relatively short post-treatment period available for
this study, I focus my analysis on health services outputs that are
responsive to the behavior and motivation of health staff, and that
may plausibly be able to change within one to three years of a gov-
ernance reform like decentralization. Naturally, there is hope that
improvements in the production of health services outputs will
translate into progress on population health outcomes with suffi-
cient time, though this point will need to be taken up in future
research and is addressed as a limitation of the present analysis
in Section 8. I utilize six health services outputs as the primary
dependent variables in the following analysis; one is a general
indicator, four are centered on women’s health, and one captures
preventive care for children. These health services outputs are:
total consultations, family planning consultations6, first prenatal
consultations, follow-up prenatal consultations, postpartum consul-
tations, and children screened for growth.7 Specifically, I construct
yearly counts of the six types of consultations by health unit
between 2005 and 2012 from monthly administrative records;
increases in the counts of these six normalized indicators correspond
to improvements in health services delivery.
I choose to focus on women’s health disproportionately in this
analysis for two reasons. First, women’s health has been identified
as a general priority area by the central Ministry of Health and
specifically for Intibucá by Regional Health Authority 10. For exam-
ple, the 2010–2014 National Health Plan of Honduras includes six
specific health goals, half of which focus on maternal and child
health and the document makes repeated references to using the
health sector decentralization reform as a way to make progress
on those particular goals (MOH, 2010). As such, maternal and child
health both receive greater emphasis than other areas. And second,
a growing body of research emphasizes differences in decision-
making and intra-household resource allocation between men
and women, highlighting the impact that targeting resources to
women in developing countries may have for the health of children
and the overall well-being of the household (Banerjee & Duflo,
2011; Duflo, 2003; Lundberg, Pollak, & Wales, 1997).
4.4. Decentralization as treatment
The key independent variable in this analysis is a dichotomous
indicator of whether or not a particular health center is decentral-
ized, namely whether it is administered by a decentralized manag-
ing organization with additional oversight of the Regional Health
Authority, or under the traditional, centralized administrative
structure. The single decentralization policy of the MOH and the
common template for decentralization contracts across the coun-
try justify treating decentralization as a binary indicator, but this
does mean that potential variation across organizational forms of
the decentralized managing organization is not capture by this
analysis, another limitation discussed in section 8. I am explicitly
analyzing decentralization as a treatment that was applied to some
health centers and not to others at specific points in time, and com-
paring average outcomes between the treated and control health
centers before and after the treatment was implemented
(Andersson & Ostrom, 2008; Dunning, 2012). Twenty-two of the
fifty primary care health centers in the state of Intibucá were
decentralized at the time of my data collection, and they comprise
6
I use Depo-Provera consultations as a measure of family planning because
anecdotally it is the preferred method in this region.
7
Total consultations are normalized to the total population for each health center,
the four women’s health services are normalized to the under-1 population (the best
available measure of the number of pregnant women), and children screened for
growth is normalized to the under-5 population.
6 A. Zarychta / World Development 133 (2020) 104996
the treatment group in this analysis, while the other twenty-eight
health centers remained under centralized administration and
form the control group.
Decentralization in Intibucá is not the clean, unambiguous
treatment that would be ideal for using quasi-experimental meth-
ods to identify causal effects. This intervention was not imple-
mented in all twenty-two treated health centers simultaneously;
instead, most of the twenty-two decentralization contracts were
first signed in late 2007, with a few additional health centers enter-
ing existing decentralized systems in 2008 and 2009. To best
account for this, I exclude the decentralization rollout years,
2007–2009, in calculating the pre- and post-period averages for
the main analyses presented here.8
4.5. Control variables
The practice of including time-varying covariates in DD regres-
sion models has both advantages and disadvantages. The main
argument for including such independent variables is that they
help explain trends in the dependent variable across periods or
between groups that would otherwise be incorrectly attributed
to the treatment. However, to the extent that time-varying inde-
pendent variables are potentially related to the assignment of the
treatment, their inclusion in DD regression models can introduce
endogeneity that compromises the causal interpretation of the
estimates of the average treatment effect on the treated (ATT). In
light of this, I present both base models consisting of only ATT,
treatment, and period indicators, as well as full models that
include time-varying covariates related to the performance of local
health centers in providing services for their populations.
Specifically, I include the following municipal-level control vari-
ables: human development index (2005, 2009) to account for
changes in economic conditions and overall well-being that would
potentially improve or stifle the performance of local health cen-
ters irrespective of decentralization, as well as picking up on
potential differences in resources available to health centers; mar-
gin of victory for the mayor, electoral participation, and their inter-
action (2005, 2009; proportion) as a set of variables to account for
the effects of political competition on social spending and the pro-
duction of services (Boulding & Brown, 2013); number of civil soci-
ety groups (2007, 2011; per 100 individuals) to address the effects
that changing activity levels by community organizations could
have on the provision of services; and the number of elderly indi-
viduals receiving cash transfers (2007, 2011; per 100 individuals)
as a proxy for other interventions and associated external attention
that localities receive and which could in turn influence health sys-
tem performance.
5. Effects of decentralization on local health services
In this section I present the difference-in-difference (DD) esti-
mates of the average treatment effect of decentralization on the
production of local health services in the state of Intibucá, Hon-
duras, assessing my argument that decentralization is likely to
improve local health services in this context. Given the relatively
short panel that results from dropping the rollout years in this
analysis, I choose to follow the recommendation of Bertrand
et al. (2004) and collapse the longitudinal data into pre- and
post-treatment averages for the decentralized (treated) health cen-
ters and the centrally-administered (control) health centers (p.
267–269). As a result, the data set includes pre-treatment and
8
Alternative approaches for analyzing the data are presented in the supporting
information, including the common panel data specification for the ATT, and all
results are consistent with the main findings reported here.
post-treatment average values for the relevant dependent vari-
ables for each of about 50 health centers, or a total of about 100
observations.9 My base models follow the specification, Y = l + c
D + d T + a (D T) + e, where D is a binary indicator of treatment (de-
centralized = 1, centrally-administered = 0) and T is a binary indica-
tor of period (post = 1, pre = 0), and with the full model specification
adding in a series of municipal-level covariates. The coefficient on
the interaction term, a, in all models estimates the difference in
the differences, or the average effect of decentralization on the
decentralized health centers (ATT).
5.1. Parallel dynamics
The primary identifying assumption for DD is parallel dynamics
in the treated and control groups absent the intervention
(Bertrand et al., 2004). Namely, DD assumes that the two groups
have parallel trends prior to treatment and that each group would
continue on its pre-treatment trajectory if there were no interven-
tion. Here, I review time-series plots to assess the plausibility of
the parallel trends assumption prior to implementing the DD esti-
mator using linear regression analysis. Fig. 2 below presents
monthly data on the six dependent variables analyzed in this study;
each indicator is expressed as a count normalized to the relevant
health center population and averaged for centrally-administered
and decentralized health centers in each month between 2005 and
2012. Month 25 corresponds to January of 2007 in all six plots, the
first month of the first year in which decentralization was imple-
mented as discussed in section 4.4, and month 60, December of
2009, bounds the period over which treated health centers were
decentralized under the staggered rollout of the reform. Prior to
the treatment, the average values for all six variables track very clo-
sely for decentralized and centrally-administered health centers,
maintaining generally parallel pre-intervention trends. Importantly,
in no case do we see a systematic and persistent pretreatment diver-
gence where the soon-to-be decentralized health centers outper-
form their centrally-administered counterparts. In five out six
cases the two groups maintain parallel or nearly identical levels
and trends over the pre-treatment period. For postpartum consulta-
tions, there is a brief spike in services among centrally-administered
health centers before 2007, but the average quickly returns to be
level with the decentralized group over the early months of 2007
before the first wave of implementation was complete.
Overall, visual interpretation of Fig. 2 does not invalidate the
parallel trends assumption in the case of these six outcomes and
thus allows for the possibility of using the difference-in-
differences approach for estimating the effects of decentralization.
For additional support, I also implement two sets of placebo treat-
ment models, presented in section 1.3 of the appendix, where I
recode the data as if 2006 (before the actual intervention) and
2011 (after the actual intervention) were the treatment years
and re-run the base models from section 5.3 here. The coefficients
on the ATT for all outcomes in both placebo tests are insignificant.
The first of these placebo tests provides additional support for hav-
ing met the parallel trends assumption and together they show
that the identification of the effects of decentralization is closely
tied to the real timing of reform implementation.
5.2. Balance
In this study I am using sub-regional variation due to partial
implementation of a governance reform as a strategy for causal
9
Compositional differences in the groups over the two periods results in there
being 95–96 observations in the final models presented here. In the supporting
information, I re-estimate these models removing compositional differences and the
findings are unaffected.
 A. Zarychta / World Development 133 (2020) 104996 7

Fig. 2. Health Services Outputs, Smoothed Averages for Centrally-Administered vs. Decentralized Health Centers, 2005–2012.

identification. While it is the Region’s goal to decentralize all pri-
mary care health centers in the state, in interviews administrators
provided mixed reports on whether there was systematic targeting
of particular areas for decentralization prior to the 2009 coup. As
discussed, the key identifying assumption for DD is parallel
dynamics and the estimation strategy is robust to confounders as
long as they do not result in a violation of this assumption. In
the previous section I used time-series plots with several years of
pre-treatment data for all units, and referenced placebo test pre-
sented in the supplemental appendix, to argue that the parallel
trends assumption was not violated in this case. To further assess
selection into the decentralization treatment, I implement a simple
comparison of pre-treatment means between the two groups, pre-
sented in Table 1 below. Aside from decentralized health centers
8 A. Zarychta / World Development 133 (2020) 104996

Table 1
Difference in Means between Centrally-Administered and Decentralized Health Centers before the Rollout of Decentralization.

Mean Central Admin. Mean Decent. Difference P-value Significance

Population 5821.42 2832.40 2989.02 0.03 **
Proportion Nurse-Only Health Centers 0.34 0.27 0.07 0.53
Total Consults 0.52 0.57 0.05 0.60
Family Planning Consults 0.42 0.38 0.04 0.74
First Prenatal Consults 0.74 0.65 0.09 0.54
Follow-up Prenatal Consults 1.59 1.17 0.41 0.14
Postpartum Consults 0.54 0.41 0.13 0.18
Prop. Children with Normal Growth 0.30 0.29 0.01 0.80
HDI (Human Development Index) 0.60 0.60 0.00 0.92
IDG (Gender-Adjusted HDI) 0.55 0.57 0.02 0.58
IPG (Gender Opportunity Index) 0.38 0.40 0.02 0.77
IPH (Human Poverty Index) 22.62 21.84 0.78 0.82
Elderly Cash Transfer Beneficiaries 194.38 258.91 64.53 0.69
Margin of Victory in Mayoral Election 0.11 0.10 0.01 0.75
Participation in Mayoral Election 0.68 0.65 0.03 0.48
Participation-weighted Margin of Victory 0.07 0.06 0.01 0.71
Civil Society Groups 17.14 21.50 4.36 0.52

***p < 0.01, **p < 0.05, *p < 0.1; difference in means tests implemented via OLS regression with standard errors clustered by municipality.

serving somewhat smaller populations than their centrally-
administered counterparts, the two groups of health centers were
broadly similar across a range of health services, socio-economic,
and electoral characteristics before the rollout of decentralization
reform. Most critically, centrally-administered and decentralized
health centers do not exhibit statistically-significant differences
prior to treatment on the six key outcomes analyzed here. This is
evidence against a situation where reform rollout was targeted
based on the outcomes of interest, which would have violated a
key assumption of the difference-in-differences approach, and thus
supports the credibility of the subsequent analysis.
5.3. Base and full models for the ATT
Fig. 3 presents the estimates of the average treatment effect of
decentralization on the production of local health services for the
decentralized health centers, with full results following in Tables
2 and 3. Each dependent variable in the coefficient plot has two
point estimates for the ATT, one from the base model and one from
the full model, along with their associated 95% confidence inter-
vals.10 As anticipated from the monthly time-series plots from
Fig. 2, decentralization has a positive and significant effect on three
of the six indicators: family planning consultations, follow-up prena-
tal consultations, and postpartum consultations. The average treat-
ment effect of decentralization on total consultations, first prenatal
consultations, and children screened for growth are all about zero.11
5.4. Substantive effects of decentralization
The analysis presented in the previous sections indicates that
decentralization is associated with significant increases of preven-
tive care for women in the form of family planning, follow-up pre-
natal, and postpartum consultations. The decentralized health
centers in Intibucá served an average population of about 1902
under-one-year-olds during the post-decentralization period,
2010–2012. This population is used to normalize services across
10
The base models are estimated using OLS regression with cluster-robust standard
errors, while the full models are estimated as random-intercept hierarchical linear
models via maximum likelihood.
11
These results are robust to a wide range of specifications, including a standard
panel approach using health center-year as the unit of analysis, and they pass several
falsification tests which are all fully presented in the supporting information for the
article. The panel analysis suggests positive effects for total and first prenatal
consultations as well, and I have chosen to present the more conservative approach in
the main text of the article.
health centers as it is the best available measure for the number
of pregnant women. Using this population, the ATT on family plan-
ning consultations estimated in the base model, 0.857, represents
about 1631 additional consultations across the decentralized
health centers over the course of a year, which is a 33% increase
above the anticipated number of such consultations based on the
trend in the control health centers. For follow-up prenatal consul-
tations, this same calculation shows that decentralization resulted
in an additional 2384 consultations relative to the centrally-
administered health centers, an increase of about 63%. And finally,
decentralization is associated with a yearly increase of about 635
postpartum consultations across all decentralized health centers,
an improvement of 68% over the expected production in those
health centers. These substantive effects of decentralization are
presented in Table 4 below.
6. Mechanisms underlying decentralization’s effects
I now turn to an investigation of the causal mechanisms linking
governance reform to the production of local health services. Con-
sidering both the nature of decentralized health service delivery
models in Honduras and the particular context of Intibucá, I hypoth-
esized that the primary mechanism through which decentralization
has its beneficial effects would be improvements in local-level
accountability, namely greater levels of supervision and support
for staff in decentralized health centers. I utilize data from surveys
and qualitative interviews to assess this hypothesis and identify
additional factors underlying the relationship between decentral-
ization and the provision of preventive care for women.
6.1. Survey and interview data
I surveyed 166 individuals across 55 of the 56 public health
units in the state of Intibucá between June and August of 2012. This
was a systematic sample targeting three key staff members in each
health center: the senior doctor, the senior nurse, and the senior
community health worker and/or lead community health volun-
teer. Of the total respondents, 135 were health center staff – doc-
tors, nurses, or community health workers – with the balance
being health volunteers or community leaders. Almost no individ-
ual approached for a survey refused, and while we generally pub-
licized the study, we avoided notifying the staff of a particular
health center that we would be visiting until the afternoon of the
day prior to our arrival in order to minimize the possibility of
 A. Zarychta / World Development 133 (2020) 104996 9

Fig. 3. Effects of Decentralization on Local Health Services.

Table 2
Effects of Decentralization on Local Health Services, Base Models Excluding Rollout Years.

Total Consults Family Planning First Prenatal Follow-up Prenatal Postpartum Children Screened for Growth
ATT (Period*Decentralized) 0.12 0.86** 0.11 1.25*** 0.33*** 0.09
(0.15) (0.35) (0.14) (0.27) (0.10) (0.60)
Decentralized (control = 0, treated = 1) 0.18 0.00 0.03 0.37 0.08 0.31
(0.13) (0.16) (0.15) (0.24) (0.08) (0.49)
Period (pre = 0, post = 1) 0.26*** 2.20*** 0.02 0.54*** 0.05 0.06
(0.08) (0.22) (0.05) (0.19) (0.06) (0.31)
Constant 0.93*** 0.40*** 0.80*** 1.82*** 0.53*** 2.55***
(0.06) (0.08) (0.06) (0.20) (0.05) (0.30)
R 0.21 0.72 0.02 0.37 0.21 0.02
Num. Obs. 96 96 96 96 96 95

***p < 0.01, **p < 0.05, *p < 0.1.

strategic absences. All surveys were conducted through an in- with health staff, and had numerous conversations with health sec-
person interview in Spanish.12 tor employees, community leaders, and regular citizens, all of
These survey data characterize social and institutional factors which inform and shape my interpretations of the data analyzed
for a single point in time following the rollout of decentralization here.
reform in Intibucá. Unlike the difference-indifferences research
design, comparable pre-treatment survey data are not available.
6.2. Accountability, Information, and attitudes as mechanisms for
As a result, the analysis presented in the next section provides evi-
decentralization’s effects
dence suggestive of mechanisms related to accountability as
underlying the effectiveness of decentralized health service deliv-
Decentralization reform aims to change the relationships
ery models, and to highlights areas for future research. While the
between national and local governments, civil society organiza-
survey data are limited in this way, they nonetheless provide a
tions, and citizens in the provision and production of local public
view into the experiences and opinions of the staff charged with
services. Despite disagreements among proponents, skeptics, and
providing care under the decentralization reform and in compara-
conditionalists in the decentralization debate, scholars in all three
ble centrally-administered health centers.
groups generally acknowledge two major points: (1) there is signif-
I also draw on two additional sources of qualitative data in the
icant and meaningful subnational variation in outcomes within
next section and throughout the subsequent discussion: formal,
countries that have implemented national decentralization
semi-structured interviews conducted with six health administra-
reforms, and (2) there is limited consensus about which factors
tors and extensive informal conversations and participant obser-
explain this variation (Andersson & Ostrom, 2008, p. 88;
vation during six weeks of field research. My goal in the formal
Nagendra & Ostrom, 2012, p. 117; Treisman, 2007).
interviews was to collect nuanced and contextualized data on
In the context of decentralized health service delivery models in
health sector decentralization from lead administrators in the
Intibucá, I focus on monitoring because it is a key tool by which
Region and directors of the decentralized managing organizations
administrators may be able to incentivize local service providers
– allowing them to speak at length about health sector gover-
to improve their performance. Monitoring can be thought of as
nance, decentralization, and public sector reform.13 Furthermore,
both vigilance and support, actions taken by one party to observe
I spent about six weeks working in the Region’s statistics depart-
and influence the behavior of another within a collective situation
ment and traveling to health centers throughout Intibucá. During
(Lancaster, 2014). One primary goal of monitoring is to enforce
this time I observed meetings of administrators, went on site visits
pre-established agreements between two parties, and sanctions
can be imposed in response to deviations from the pre-arranged
12
The full survey instrument, with English translation, is included in the supporting
agreement (Lancaster, 2014, p. 250-251). This is the accountability
information. conceptualization of monitoring. Additionally, monitoring can be
13
The protocol for these interviews is also included in the supporting information. used to gather information about local conditions that ultimately
10 A. Zarychta / World Development 133 (2020) 104996

Table 3
Effects of Decentralization on Local Health Services, Full Models Excluding Rollout Years.

Total Family First Follow-up Post- Children Screened for Growth

Consults Planning Prenatal Prenatal partum
ATT (Period*Decentralized) 0.06 0.74** 0.09 1.25*** 0.29*** 0.34
(0.15) (0.35) (0.13) (0.29) (0.10) (0.57)
Decentralized (control = 0, treated = 1) 0.21 0.18 0.03 0.05 0.08 0.54
(0.18) (0.28) (0.12) (0.38) (0.10) (0.68)
Period (pre = 0, post = 1) 0.30** 2.25*** 0.05 0.76*** 0.02 0.09
(0.13) (0.28) (0.11) (0.25) (0.08) (0.49)
Human Development Index (Muni.) 0.80 4.47* 0.81 5.98 0.44 6.91
(1.79) (2.50) (1.10) (3.80) (0.95) (6.84)
Margin of Victory for Mayor (Muni.) 0.22 4.56** 0.18 2.89 0.24 4.25
(0.96) (1.98) (0.78) (1.88) (0.62) (3.65)
Electoral Participation (Muni.) 0.61 0.31 0.32 0.61 0.62 2.37
(0.78) (1.35) (0.58) (1.61) (0.47) (2.97)
Margin Vic. for Mayor * Participation (Muni.) 0.07 10.02** 0.53 7.58** 0.76 8.56
(1.95) (4.04) (1.59) (3.84) (1.27) (7.55)
Num. of Civil Society Orgs. (Muni.) 0.10 1.99* 0.32 2.31 0.02 1.09
(0.82) (1.20) (0.53) (1.72) (0.45) (3.12)
Num. Elderly Receiving Cash Transfers (Muni.) 0.01 0.005 0.002 0.02 0.01 0.04
(0.01) (0.02) (0.01) (0.02) (0.01) (0.05)
Constant 0.99 3.24* 1.01 5.04* 0.31 4.72
(1.32) (1.97) (0.84) (2.77) (0.72) (5.04)
Log Likelihood 48.05 110.77 38.54 109.62 14.27 153.15
Akaike Inf. Crit. 122.10 247.55 103.08 245.24 54.53 332.29
Num. Obs. 96 96 96 96 96 95

***p < 0.01, **p < 0.05, *p < 0.1.

Table 4
Substantive Effects of Decentralization on Women’s Preventive Care.

Family Planning Follow-up Prenatal Postpartum

Consults Consults Consults
Central Admin. (control) Pre 0.402 1.821 0.529
Post 2.605 2.364 0.578
Decentralized (treatment) Pre 0.398 1.450 0.444
Post 3.458 3.246 0.828
Anticipated Production in Decentralized Units (based on central admin. trend) 2.601 1.993 0.494
Avg. Treatment Effect on Treated 0.857 1.253 0.334
Percent Above Anticipated Production 33% 63% 68%
Consults attributed to Decentralization 1631 2384 635

allows one party to support or assist in the actions of the other
within the collective situation; this is the informational conceptu-
alization of monitoring. Monitoring is thus fundamental to the
exact types of relationships that are augmented under decentral-
ization, and has been appropriately emphasized in both the theo-
retical and empirical literatures on governance (e.g., Ostrom,
2005; Gibson, Williams, & Ostrom, 2005; Grossman & Hanlon,
2014; Escobar-Lemmon & Ross, 2014). All of that said, efforts for
establishing accountability, whether through monitoring or other
means, can also have unintended positive or negative conse-
quences on how local bureaucrats deliver services (Brodkin,
2008; May & Winter, 2009). Health worker attitudes provide an
important indication of motivation and even effort in terms of
the day-to-day tasks necessary for producing health services, and
thus are an important behavioral complement to the focus on
accountability here.
Table 5 below presents a series of two-sample difference in
means tests between centrally-administered and decentralized
health centers in Intibucá for three categories of variables: health
staff, monitoring, and attitudes. The first category, health staff, pre-
sents basic characteristics of the individuals responding to the sur-
vey. For monitoring, evaluation visits reflect the accountability
conceptualization while support visits correspond to the informa-
tional conceptualization. Finally, I also consider the attitudes of
health staff as these are likely be shaped by experiences with eval-
uational or supportive monitoring.
Several important observations emerge from the differences
between centrally-administered and decentralized health centers
in Table 5. First, health staff in decentralized units are more than
five years younger, had three fewer years of experience working
in the health sector, and two fewer years in residence at their cur-
rent locations compared to respondents in the control health cen-
ters. Interviews and participant observation shed light on these
differences. The managing organizations for the decentralized sys-
tems have resources and flexibility to hire supplemental staff for
their health systems, resources they typically use to contract
employees on a yearly-basis and to add community health work-
ers, roles which tend to be filled by recent graduates.
Second, the oversight practices of the Regional Health Authority
(the Region) are very similar and generally low for both centrally-
administered and decentralized health units. There are no signifi-
cant differences in the frequency or total number of evaluational
site visits conducted by the Region; on average, staff in both types
of units report between two and three evaluation visits over the
previous year. Absent decentralization, health center staff can
expect to be evaluated once every four to six months. Following
the reform, however, staff in decentralized health centers are eval-
uated once every other month, or about four more times over a
year as compared to their colleagues in centrally-administered
health centers.
Third, the decentralization reform appears to have real impacts
on the experiences and attitudes of staff in the health centers. With
 A. Zarychta / World Development 133 (2020) 104996 11

Table 5
Reported Post-Treatment Differences between Centrally-Administered and Decentralized Health Centers in Staff Characteristics, Monitoring, and Attitudes.

Mean Central Mean Difference P- Notes

Admin. Decentralized Value
Health Staff
Age 41.67 36.09 5.59 0.00*** Years, 20–65
Female 0.44 0.54 0.11 0.20 Proportion
Years Worked in Health Sector 8.76 5.41 3.36 0.00*** Years, 0–32
Years Worked at Current Health Center 5.76 3.59 2.18 0.02** Years, 0–31
Monitoring
Frequency of Evaluation Visits by Region 3.36 3.29 0.06 0.66 1–5, never to very frequently
Number of Evaluation Visits by Region in Last Year 2.56 2.03 0.53 0.16 Count, 0–15
Total Number of Evaluation Visits in Last Year 2.56 6.19 3.64 0.00*** Count, 0–24
Frequency of Support Visits by Region 3.33 3.29 0.04 0.77 1–5, never to very frequently
Number of Support Visits by Region in Last Year 2.47 1.75 0.72 0.11 Count, 0–24
Total Number of Support Visits in Last Year 2.47 12.66 10.19 0.00*** Count, 0–62
Attitudes
Level of Decentralization in Admin. of Health Center 2.4 3.41 1.01 0.00*** 1–5, very central. to very
decentralized
Approp. Form of Control btwn. Muni. and Central in 2.23 2.73 0.50 0.00*** 1–5, very central. to very
Admin. decentralized
Opinion of Decentralization in Health Sector Admin. 1.82 2.94 1.12 0.00*** 1–5, bad reform to good reform

***p < 0.01, **p < 0.05, *p < 0.1; t-tests adjusted for clustering by municipality.

respect to the appropriate location of control over health center Table 6

administration, individuals in decentralized units favor balanced Influence of Decentralization on Monitoring.

or equal control between local and central authorities. Those indi- Evaluation Support
viduals in centrally-administered centers, however, prefer a high Visits Visits
level of central control with only some local discretion. Notably, Decentralized (control = 0, treated = 1) 0.74*** 1.39***
neither group believes that high levels of local control are appro- (0.17) (0.28)
priate. These views are consistent with respondents’ opinions of Support Visits 0.01*
(0.01)
the decentralization reform. Individuals within decentralized
Evaluation Visits 0.08**
health centers are agnostic, responding that it is neither a good (0.02)
nor a bad reform, while staff members in centrally-administered Level of Resources 0.06 0.05
health centers believe decentralization is a bad reform that might (0.07) (0.08)
Level of Use 0.02 0.35***
only work in some particular cases.
(0.12) (0.15)
To further examine the roles of accountability and information Level of Corruption 0.00 0.09
as mechanisms through which decentralization can positively (0.06) (0.12)
influence the production of local health services, I implement Level of Activity by NGOs 0.04 0.07
two additional analyses: first, I analyze responses on monitoring (0.07) (0.14)
Level of Activity by Community 0.11 0.00
and attitudes to assess the influence decentralization has on both,
Organizations
and second, I concurrently assess the effects of decentralization (0.07) (0.08)
and these mechanisms on the three significant health services indi- Level of Community Participation 0.08 0.02
cators from the DD analysis. Tables 6 and 7 below present the first (0.09) (0.08)
Constant 0.37 1.67**
analysis. In Table 6, I use negative binomial regression to model the
(0.63) (0.56)
reported count of evaluation and support visits as a function of
AIC 674.49 803.35
decentralization, the other type of monitoring, and several vari-
Num. Obs. 143 143
ables related to supervision in Intibucá: reported levels of
resources, use, corruption, activity by non-governmental organiza- ***p < 0.01, **p < 0.05, *p < 0.1; negative binomial regression with SEs clustered by
tions, activity by community organizations, and community partic- health center.

ipation. Results of this analysis confirm the conclusions from the

simple comparison of means: decentralized health center receive
significantly higher numbers of both evaluation and support visits
than their centrally-administered counterparts.
In Table 7, I present the results of two linear regression models
of health worker attitudes, their opinions of decentralization and
their views on the appropriate form of governance within the
health sector, as a function of decentralization, health center pop-
ulation, and several individual characteristics. As seen in the table,
health workers in decentralized health centers report more favor-
able attitudes towards the decentralization reform and also,
though weakly, more favorable attitudes for decentralized gover-
nance within the health sector.
I next assess the substantive magnitudes of these relationships
using quantity-of-interest simulation (Carsey & Harden, 2013).
Fig. 4 below presents expected numbers of monitoring visits and
expected attitudes among staff from centrally-administered versus
decentralized health centers holding all other variables in the pre-
vious models at their means or medians. The most dramatic differ-
ences between the two types of governance are seen in terms of
monitoring, with over three additional evaluation visits and over
eight additional support visits expected during the course of a year
in a typical decentralized health center. These substantive differ-
ences are less pronounced, but still present, for attitudes; the opin-
ions of health workers about decentralization reform are expected
to be about a point more favorable in decentralized health centers
relative to centrally-administered ones, and about a half-point
more favorable toward decentralization when considering the
appropriate form of governance in the health sector (both on
five-point scales). In all cases health workers’ attitudes remain in
the unfavorable range of the scale (below 3), a common reaction
to change among existing bureaucrats and others. Two important
12 A. Zarychta / World Development 133 (2020) 104996

Table 7 tralization alone or decentralization plus each of the four

Influence of Decentralization on Health Worker Attitudes. indicators of accountability and informational mechanisms
Opinion of Approp. Form of described in this section: evaluation visits, support visits, opinion
Decentralization Governance of decentralization, and view on the appropriate form of gover-
Decentralized (control = 0, 0.71*** 0.42* nance in the health sector. The numbers of each type of health ser-
treated = 1) vice are calculated using the average production for each health
(0.24) (0.23) center over the post-rollout period. Estimates of coefficients, stan-
Respondent Position (excluded
category is medical doctor)
dard errors, and t-statistics for all key variables in this analysis are
Nurse 2.03*** 0.38 based on a non-parametric bootstrapping procedure: 10,000 re-
(0.34) (0.34) samples of the original data are used, municipalities are re-
Community Health Worker 1.39*** 0.42 sampled with replacement, health centers are re-sampled without
(0.38) (0.43)
replacement, coefficient and t-statistic estimates are taken as aver-
Community Health Volunteer 2.63*** 0.46
(0.40) (0.36) ages over the resamples, and standard errors are estimated as the
Other Community Leader 2.40*** 0.67* standard deviation over the re-samples (Ren et al., 2010).
(0.40) (0.37) As seen in Table 8, there is tentative and suggestive evidence for
Female 0.09 0.23 monitoring, evaluation visits specifically, being an important
(0.23) (0.20)
mechanism through which decentralization increases the produc-
Age 0.04*** 0.00
(0.01) (0.01) tion of women’s preventive care in Intibucá. In spite of the low
Health Center Population (logged) 0.15 0.06 overall power for this analysis, the noise common in survey data,
(0.14) (0.17) and the conservative bootstrapping approach utilized, evaluation
Constant 6.48*** 2.18
visits do appear to have a positive and significant influence on
(1.35) (1.61)
follow-up prenatal consultations and postpartum consultations
R2 0.41 0.08
when modeled along with decentralization. The results do not pro-
Num. Obs. 149 148
vide similar evidence in favor of support visits or either indicator of
***p < 0.01, **p < 0.05, *p < 0.1; OLS regression with SEs clustered by health center. health worker attitudes as mechanisms for decentralization’s
effects in this context. Overall, this final analysis provides support
questions that remain for future research are whether these atti- for an accountability mechanism, suggesting that decentralization
tudes influence motivation or effort in terms of service delivery, changes the amount of evaluational monitoring health centers
and what abilities decentralized managing organizations have to receive, and that this in turn improves the production of local
shape those attitudes over time. health services.
Lastly, I assess the effects of decentralization alongside account-
ability and informational mechanisms on the three significant
health services indicators from the DD analysis: family planning, 7. Discussion
follow-up prenatal, and postpartum consultations. As already dis-
cussed, the survey data collected and analyzed here are limited Decentralization reform is associated with improvements in the
to a single time point after the rollout of decentralization reform performance of local health systems providing preventive care ser-
in Intibucá and the state has a moderate number of units in the vices for women within the state of Intibucá. Decentralized health
intervention and treatment groups. This means that the best avail- centers increased their production of family planning consultations
able data unfortunately fall short of meeting assumptions and hav- by 33% over comparable centrally-administered health centers, by
ing sufficient power necessary to implement causal mediation 63% for follow-up prenatal consultations, and by 68% for postpar-
analysis (Baron & Kenny, 1986; Imai, Keele, Tingley, & tum consultations. This set of results suggests that the combina-
Yamamoto, 2011). As a result, the analysis presented here is sug- tion of deconcentration to a regional government organization
gestive of mediation, but additional data are necessary to fully test and contracted delegation to local governmental or non-
the hypothesis that changes in accountability and information governmental organizations can achieve the accountability bene-
stemming from decentralization produced the positive effects on fits of decentralized governance while minimizing elite capture
women’s preventive care seen in Intibucá. stemming from weak local political institutions.
Table 8 below presents the results from a series of linear regres- The specificity of the data collected for this study allows me to
sion models with municipality fixed effects and including decen- highlight important heterogeneity in the effects of decentralized

Fig. 4. Substantive Influence of Decentralization on Monitoring and Attitudes.

 A. Zarychta / World Development 133 (2020) 104996 13

Table 8
Influence of Decentralization, Accountability, and Information on Local Health Services.

Coefficient Standard Error T-Statistic Significance

Family Planning Consults
Decentralized + FEs 2.16 1.23 1.76 *
Decentralized + Evaluation Visits + FEs 2.18 1.24 1.76 *
Decentralized + Evaluation Visits + FEs 0.01 0.04 0.30
Decentralized + Support Visits + FEs 2.19 1.19 1.85 *
Decentralized + Support Visits + FEs 0.01 0.01 0.60
Follow-up Prenatal Consults
Decentralized + FEs 2.38 1.08 2.22 **
Decentralized + Evaluation Visits + FEs 2.38 1.03 2.31 **
Decentralized + Evaluation Visits + FEs 0.06 0.03 1.80 *
Decentralized + Support Visits + FEs 2.52 1.17 2.15 **
Decentralized + Support Visits + FEs 0.02 0.02 0.84
Postpartum Consults
Decentralized + FEs 0.37 0.33 1.11
Decentralized + Evaluation Visits + FEs 0.38 0.32 1.20
Decentralized + Evaluation Visits + FEs 0.03 0.01 3.58 ***
Decentralized + Support Visits + FEs 0.41 0.31 1.33
Decentralized + Support Visits + FEs 0.00 0.00 0.34

***p < 0.01, **p < 0.05, *p < 0.1; bootstrap estimates using OLS regression with municipal-level fixed effects based on 10,000 re-samples; estimates in each row apply to the
boldface variable.

governance across different services as well. Specifically, decen-
tralization does not appear to have strong effects on first prenatal
consultations, total consultations, or the number of children
screened for growth – health services outputs that I have argued
should be responsive to such reform in Intibucá́. Original survey
data, combined with qualitative interviews and fieldwork, help
shed light on the reasons for this heterogeneity, as well as identi-
fying important mechanisms underlying the relationship between
decentralization and health system performance.
With respect to first pre-natal consultations, health providers
emphasized both the importance the Regional Health Authority
places on this and the difficulty of providing the first prenatal visit
to newly pregnant women. The first prenatal visit is critical
because it sets the expectation for a pattern of care for the entire
pregnancy, and difficult because some women will actively avoid
this first consultation. Potential reasons for avoidance include
norms about traditional versus institutionalized healthcare, trans-
portation and access issues, intra-household dynamics, and educa-
tion. While providers in the decentralized health centers have
implemented strategies utilizing community health workers and
local health volunteers to extend outreach and education to preg-
nant women, as of yet decentralization alone appears to fall short
of solving this complex problem.
The absence of an effect for total consultations and children
screened for growth is explained as least partially by the actions
of the Regional Health Authority vis-a-vis the decentralized
managing organizations; these relationships emerge as critical in
understanding the differential effectiveness of decentralization
reform.14 Throughout the Honduran health system, and as substan-
tiated in the country’s 2010–2014 National Health Plan, administra-
tors are emphasizing preventive care for women as a top priority
above and beyond most other types of services and populations
(MOH, 2010). For all six health services outputs analyzed here, there
is a clear improvement among decentralized health centers during
the rollout period, but this improvement only persists for three
tractable services reflecting the aforementioned priorities: family
planning, follow-up prenatal, and postpartum consultations
14
The child growth monitoring indicator used here is related to the parallel
Community-based Integrated Child Care Program (AIN-C by its Spanish initials). This
is a traditionally- or vertically-organized program that was active during the study
period, a fact which may help explain decentralization’s limited ability to influence
and sustain positive impacts in this area (Fiedler et al., 2008; Rodriguez & Peterson,
2016).
(see Fig. 2). In Intibucá, it appears that the decentralization reform
has served as a tool by which the Regional Health Authority was
able to meet its own goals. Key administrators acknowledged in
interviews that decentralization gives them an additional policy
lever which they use to exert pressure on the local managing orga-
nizations. The managing organizations for the decentralized health
centers had direct and frequent access to staff within the Region,
they received regular evaluations and site visits, and each trimester
they participated in a joint meeting to address challenges, share
experiences, and develop tailored solutions to ongoing problems.
These activities appear to have generated lasting improved perfor-
mance in the areas emphasized most by the Region. The Regional
Health Authority was unwilling or unable to exert similar pressure
or provide similar support to staff in the centrally-administered
health centers due to the potential for negative political conse-
quences from the unions representing doctors and nurses, as well
as the mayors of the municipalities. In the decentralized health
centers, these consequences were borne by the local managing
organizations, insulating the Regional Health Authority even if it is
a primary actor asserting its influence and pushing for change.
Whether the managing organizations can successfully navigate these
local political arrangements over the long-term, and what factors
enable some organizations to do this better than others, remain open
research questions.
This finding also highlights the importance of considering the
interplay between the de jure features of the institutional reform,
as formalized in the contracts between the national Ministry of
Health and the decentralized managing organizations here, and
the de facto institutional arrangements that are informally negoti-
ated and developed at the subnational level between the regional
health authorities and their local managing organizations
(Andersson, 2006; Andersson, Benavides, & Len, 2014). Some might
view the experience of governance reform in Intibucá as ultimately
enabling the re-assertion of power and control by the Regional
Health Authority, the state-level manifestation of the national gov-
ernment, in a way similar to strategies used by other national gov-
ernment actors across Latin America (Dickovick & Eaton, 2013;
Eaton, 2014). Conversely, scholars across the spectrum of
approaches and viewpoints concerning institutional analysis often
find themselves agreeing that designers of institutional reforms
have limited ability to control the re-negotiation, and at times even
re-formation, of local institutional arrangements (Pierson, 2004;
Shepsle, 2008; Andrews, 2013). As such, labeling the Intibucá expe-
rience as a completed case of recentralization may be premature,
14 A. Zarychta / World Development 133 (2020) 104996
and the relevant questions for future investigation are: what
explains the different ways in which regional health authorities
use or shape local governance reforms; how do existing polycentric
governance structures, relationships among multiple centers of
authority with overlapping jurisdictions (Ostrom, Tiebout, &
Warren, 1961; Andersson & Ostrom, 2008), moderate the effects
of decentralization; are those structures influenced by the reform
itself; and finally, what are tangible impacts of these reforms on
local autonomy in decision-making (Bossert, 1998)?
Furthermore, survey data for a systematic sample of health
workers in Intibucá point to a key mechanism by which decentral-
ization has worked to improve the production of health services:
increased accountability through evaluational monitoring. Staff
members in decentralized health centers receive significantly and
substantially higher numbers of evaluation and support visits each
year than their centrally-administered colleagues. And as the
amount of supervision by the Region does not differ between the
two types of health centers, the entire increase in monitoring is
attributed to the decentralized governance reform. The combined
evidence of the difference-in-differences analysis and the survey
data analysis suggests that this monitoring, especially the evalua-
tional variety, makes a difference in increasing the quantity of ser-
vices provided. More tentative, but still important, is the attitude
change in health workers related to decentralization. As a group,
individuals working in decentralized health centers report more
favorable attitudes towards decentralized governance within the
health sector. These results signal the possibility of an additional
mechanism related to the attitudes and behaviors of local bureau-
crats – either through change within existing personnel or with
particularly opposed staff members leaving a health center – by
which decentralized governance may also be able to augment the
production and quality of local services.
Finally, one additional and notable mechanism emerged from
qualitative interviews and informal conversations with health
administrators: resilience to shocks. On June 28, 2009, President
Manuel Zelaya was removed from office and an interim govern-
ment presided over Honduras until elections were held on Novem-
ber 29, 2009 (Ruhl, 2010). During this constitutional crisis, donor
countries withheld aid to Honduras (Emmott, 2009; ‘‘US halts aid
over Honduras coup,” 2009), and as a result the MOH was habitu-
ally late in contractually-obligated transfers of funds to the decen-
tralized managing organizations. My interviews indicate that the
decentralized managing organizations, none of which are solely
health providers, routinely shuffled their own internal funds to
keep health centers running in a way that the Regional Health
Authority could not or would not do for the centrally-
administered health centers. Evidence from Intibuća suggests that
creating some institutional distance between health centers and
the MOH through decentralization imbued these local health sys-
tems with a degree of resilience and flexibility to adapt in the face
of a major political and economic shock.15 Resilience thus emerges
as an ancillary benefit of governance reform in this case, and is an
area where additional research is warranted to better understand
the institutional structures and dynamics producing flexibility and
adaptation of this kind, as well as its limits.
8. Limitations
The empirical analysis presented in the preceding sections,
while credibly estimating the association between decentralization
reform and the production of health services outputs, as well as
highlighting accountability and resilience mechanisms underlying
15
See Janssen & Ostrom, 2006, and Folke, 2006, for a fuller discussion of the concept
of resilience.
this association, has a number of limitations that are important to
acknowledge. First, a focus on health services alone tells only part
of the story: whether improvements in health services translate
into better population health is a critical question to be answered
as additional time passes since reform implementation. Second,
the limited sample size utilized here meant that addressing hetero-
geneity in treatment, principally the organizational form of the
decentralized managing organization, was outside the scope of
the present analysis. Third, existing data limitations also precluded
this analysis from modeling health facility characteristics (e.g.,
number or types of staff, availability of critical supplies, other
resources, etc.) as inputs to the health services production func-
tion, or analyzing these factors as potential mechanisms relating
decentralization to increases in service outputs themselves. These
are also important points for future research. Finally, while focus-
ing on a relatively small and homogenous state carried substantial
benefits in terms of identification in this case, as well as minimiz-
ing the potential for biases related to selection or omitted vari-
ables, these benefits do come at the cost of constrained external
validity. Examining additional cases with greater variation on a
range of municipal and health center characteristics is a necessary
next step in order to better understanding the applicability and
scope conditions of the current study’s findings.
9. Conclusions
Disparities in health outcomes between developed and devel-
oping countries, as well as between socio-economic classes within
developing countries, are well documented. These disparities
imply significant human suffering, work to depreciate human cap-
ital, and result in negative consequences for well-being and eco-
nomic development. Over the past thirty years, international
organizations have responded by promoting different types of
decentralized governance reforms in an effort to improve public
services generally, and with a particular emphasis on the health
sector. Despite notable recent advances in terms of study design
and methods, persistent limitations relating to data availability,
identification, and mechanisms nonetheless continue to hamper
the accumulation of high-quality empirical evidence on the effec-
tiveness of these reforms. As a result, policy-makers interested in
knowing if decentralization can improve public health services,
and under what conditions, have mixed guidance. In this paper I
have developed context-sensitive hypotheses concerning decen-
tralization’s effects on local health services, and implemented a
systematic and comprehensive test of those hypotheses using mul-
tiple sources of information on local health systems within the
state of Intibucá, Honduras, representing a unique natural experi-
ment in decentralized governance.
The extensive original data collection for this study enables me
to leverage the partial decentralization of health centers in the
state of Intibucá to assess whether decentralization is in fact effec-
tive in increasing the quantity of local health services produced in
this state, and to better understand the dynamics by which exter-
nal reforms can improve local governance. My analysis shows that
the average effect of decentralization across the decentralized
health centers is to increase the production of family planning ser-
vices by approximately 1600 consultations (an improvement of
about 33%), follow-up prenatal services by 2300 consultations
(about 63%), and postpartum services by 600 consultations (about
68%). These results are robust to specifications including covari-
ates, excluding compositional differences, and using weighted esti-
mation; and they stand up to falsification tests using placebo
treatments, placebo dependent variables, and outcome randomiza-
tion as discussed in the paper and elaborated in the supporting
information.
 A. Zarychta / World Development 133 (2020) 104996
At the same time, however, decentralization does not appear to
strongly affect first prenatal consultations, total consultations, or
well-child screenings. This heterogeneity in effectiveness across
services is attributed to two different factors. For first prenatal con-
sultations, prohibitive cultural and educational factors make
reaching and motivating a particular subset of the population espe-
cially difficult, and decentralization alone is unable to overcome
these obstacles. With respect to general and well-child consulta-
tions, I show that the Regional Health Authority plays a pivotal role
in incentivizing and monitoring towards its priorities through the
decentralized governance reform. In Intibucá, the Regional Health
Authority has focused on preventive care for women, and that is
where the gains from decentralization have mostly accrued. Unlike
the constrained and limited relationship it has with its own
centrally-administered health centers, decentralization provides
the Region with a set of flexible tools which it actively uses to
motivate local organizations – through inducement, support, or
punishment. In turn, those decentralized managing organizations
engage in more evaluational monitoring of the staff in their health
centers, while at the same time having the institutional distance
from the Ministry of Health that has allowed them the flexibility
to adapt in the face of external shocks. More supervision and better
resilience stemming from decentralized governance reform appear
to improve the performance of local health systems. Importantly,
decentralization allows the Region to pressure for improvement
while gaining insulation from negative political consequences on
the part of health sector unions and mayors; these consequences
are largely borne by the decentralized managing organizations.
Decentralization reform, which in some ways might appear to
diminish the authorities and responsibilities of the Regional Health
Authority, has actually increased its available policy tools and
served to empower this critical organization situated between
the national Ministry of Health and local health centers. This find-
ing opens the door for additional research on how governance
reforms affect relationships between organizations situated at dif-
ferent levels of government, how differently-situated organiza-
tions adapt to these new possibilities and constraints, the
conditions under which decentralized governance reforms might
enable central government actors to reassert their own power,
and ultimately why some institutional features of these diverse
governance arrangements produce better local outcomes than
others.
Declaration of Competing Interest
The authors declare that they have no known competing finan-
cial interests or personal relationships that could have appeared
to influence the work reported in this paper.
Acknowledgments
This project was completed with financial support from the
National Science Foundation, United States (award numbers DGE-
1144083 and SMA-1328688), as well as the Center to Advance
Research and Teaching in the Social Sciences (CARTSS), the Gradu-
ate School, and the Political Science Department at the University
of Colorado Boulder, United States. I am thankful for the support
and assistance I received from staff at the Ministry of Health in
Honduras and the Regional Health Authority of Intibuc\’{a}, espe-
cially Dr. Israel Giron. Numerous individuals were instrumental
in the success of the data collection effort, including Denise Rodri-
guez, Rodvin Romero, Walter Cardona, Ceferino Hernandez, and
Melbin Marquez. Finally, I am especially grateful for comments
and suggestions on the paper I received from Krister Andersson,
Andy Baker, Anand Sokhey, Jale Tosun, Jonathan Hanson, and sev-
15
eral audience members during panels at MPSA, APSA, and the RSA
Winter Conference. All errors and omissions are my own.
Appendix A. Supplementary data
Supplementary data to this article can be found online at
https://doi.org/10.1016/j.worlddev.2020.104996.
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