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Administrative Decentralization in Peru

Alejandro Toledo’s election as Peru’s first indigenous president, in 2001, symbolized increased political participation to people who were also “from the provinces” or the rural countryside. Immediately following his election, Toledo’s administration passed a constitutional reform that gave sub-state authorities more power in public decision-making. Regional elections were scheduled for November 2002, and the newly elected Regional Presidents (Presidentes Regionales) and Regional Councils (Consejos Regionales) assumed office on January 1, 2003. This case explores the challenges of implementing administrative decentralization, centered on a decision made by Nelson Shack, Peruvian national director of the public budget. It encourages students to consider the difficulties of using decentralization as a mechanism for encouraging sub-state economic growth and the technical, human capital, and budgetary constraints of decentralizing a public budget.

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