Does decentralization improve public service delivery? Using a combination of quantitative and qualitative methods this study is examining varying outcomes of decentralization policy in Indonesia and shows - both theoretically and empirically - that the performance of newly empowered local governments is deeply rooted in local politics. If local political processes are distorted, political and bureaucratic agents face incentives to use the greater fiscal and political independence that comes with decentralization to draw private 'rents' and consequently often fail to deliver basic services. Conversely, higher accountability increases the political costs of inefficient and inadequate public decisions and public service performance is likely to improve. This requires the interaction of local political institutions, the electoral regime and a well informed and a politically active community able to broadly participate directly and indirectly in exacting accountability. Economists, political scientists and practitioners of decentralization and public sector reform in emerging markets will take great interest in this book. The author is an Economist with an international development institution working on public sector reform and fiscal affairs.