The past several decades of development funding (e.g., World Bank in Africa) has demonstrated the failures of top-down approaches to development. Not only does the provision of public goods remain low in developing nations, most projects suffer from a lack of sustainability. A possible reason for these failures is attributed to the lack of local participation. Since the 1980s the new development slogan has been “participatory or community-led development” and there has been a rush to jump on the participatory bandwagon. Such community-based approaches to development “are among the fastest growing mechanisms for channeling development assistance (and) according to conservative calculations, the World Bank’s lending for CDD (community-driven development) projects has gone up from $325 million in 1996, to $2 billion in 2003” (Mansuri and Rao 2003). This trend is supported by anecdotal and empirical evidence suggesting community participation is an unqualified good in terms of project outcomes and sustainability. However, despite such interest there is much less understanding of, and even lesser agreement on, what community participation means and entails, and under what conditions is it necessary. There is a real danger that like most slogans, participation too will be misunderstood, misapplied and eventually discarded.
This paper draws on some of my recent work (Khwaja 2003a, 2003b) to make the following two contributions: First, it offers a theoretical framework to model aspects of participation. While this is by no means the only such formalization, it provides a simple benchmark to consider the effects of com-
munity participation on development project outcomes. In particular, I obtain the result that community participation may in fact not always be desirable, at least in terms of project sustainability. Second, this paper presents empirical evidence that illustrates the ambiguous effect of community participation. Specifically, these findings show that while increased community participation is beneficial in decisions that require relatively more local inputs/knowledge, it is detrimental to project success in decisions requiring investments that the community is at a disadvantage at providing. While this sounds intuitive, it is far from obvious, as one may expect a community could remedy its lack expertise in a decision by contracting out to an expert. The paper is structured as follows: Section 2 develops a theoretical framework to formalize this intuition. Section 3 presents the empirical results and Section 4 concludes.