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Decentralization is accepted as one of the defining features of the third wave of democratic transitions in Latin America and commonly understood as an index and an agent of democratization. This rather optimistic perspective is inherent in the literature which is dominated by two theories. The liberal-individualist approach, especially as advocated by the World Bank, promotes decentralization policies on the premise of their efficiency, equity, and responsiveness to local demands. Similarly, the statist approach claims that decentralization can be the route to greater accountability, transparency and participation in governance; they add that this path should be guided by political elites and institutions. These dominant views nevertheless understate the extent to which certain decentralization policies have been implemented in lockstep with neoliberalization. This book examines the relationship between global economic processes and decentralization. It argues that through decentralization policies, the imperatives of neoliberal rules of competitiveness have been diffused into local governments and economies, generating different local development models. Whether decentralization produces democratic opening at the local level is contingent on how the local economy is integrated into global economic processes, and which social and economic groups are empowered, and disempowered, in that transition.