The Dilemma of Participation with Endogenous Community Imperfe

New strategies based on the idea of decentralized or participatory development have gained increasing currency among international organizations and bilateral aid institutions. Optimism about their chances of success arises from the belief that rural communities can be an effective channel of development if genuine delegation of powers and responsibilities takes place on a sufficient scale. However, as we argue in this paper, communities may be subject to several imperfections that become more costly when new economic opportunities arise as a result of modern market development and increasing levels of education. To keep down these costs, it is tempting to channel resources through local leaders or dubious intermediaries and, as a consequence, there is a serious risk that development efforts are hijacked by unaccountable members of the elite. This is a serious dilemma plaguing the decentralized approach to development.