Assessing Heterogeneity in Governance Outcome: Evidence from Local Government Institutional Capacity Self-Assessment (LISA) in Nepal

Local Government Institutional Capacity Self-Assessment (LISA) as a self-evaluation tool that assess the workflows and performance by identifying the pros and cons for governance enrichment and development delivery. It analyzes periodic plans, financial management, and governance delivery while developing quantifiable indicators and strengthening local government capacity on a larger landscape. The LISA assessment covers ten dimensions with a total of 100 indicators and sub-indicators, broadly addressing accomplishments and evaluation methods through the Totalitarian Approach, Procedural Order, and Quantitative Results. This study includes evaluation approaches, multi-dimensional scope of LISA and scores of 749 local governments (who submitted their assessment scores for the Fiscal Year 2022/23) published by the ministry after quality assurance. The study method employed is Structural Equation Modeling (SEM) with regression analysis. This study aims to divulge the significance, effectiveness, and diversity of local governance outcomes, exploring their implications and variations across different contexts. These comprehensive understandings will thereby contribute to informed policy-making (improvement recommendations in the guideline, directives and working procedure), efficient service delivery and enhanced outcomes (structural and institutional change in local governments, allocation and expenditure efficiency and capacity enhancement) of the local governments. The findings of the study reveal that ten categorized dimensions each contribute differently to governance outcomes. These variations highlight how each dimension's unique impact can influence overall performance. The direction and strength of their relationships can predict how changes in one area might impact another. The newly institutionalized assessment technique promotes regional balanced development and improved local governance by integrating diverse needs, fostering yardstick competition, and advancing whole-of-government collaboration. Thus, moving beyond a blanket approach, governing policies in Nepal must adopt targeted and tailored strategies that account for the diverse realities and local governance heterogeneity.