Money for our people? Decentralisation and corruption in Romania: the cases of the equalisation,infrastructure and pre‐university education funds

In spite of the attempts, in the most recent years, to introduce simple, accountable and rule‐based mechanisms governing the flows of funds for Romanian local governments (LGs) there is evidence showing that deviations from the norms are still widespread and undermine the stated goals of many policies. This article aims to explore to what extent the political factor (party affiliation, i.e. local informal power networks) interferes with the allocation of public funds as far as three main areas of decentralised policy are concerned: (i) the general purpose equalisation transfers; (ii) the Roads Fund grants and (iii) the transfers for financing the pre‐university education. These components represent a relatively large share of the local budgets and are illustrative for two important attributions Romanian LGs perform today: maintaining the local infrastructure and providing essential social services. Through a set of variables—measuring, on the one hand, the real pattern of resource allocation and on the other hand, the intensity of politicisation in the three areas—we tested the hypothesis that intergovernmental financial flows in Romania are to a large extent captured by rent‐seeking groups. It turns out that this is indeed the case with the funds for infrastructure, and much less so with the transfers financing pre‐university education. Some conclusions from these contrasting situations are drawn which reflect on the broader discussion, the link between decentralisation and corruption. Copyright © 2005 John Wiley & Sons, Ltd.