In the past decades, decentralization has become increasingly important in both developing and developed countries. Based on the standard decentralization theorem, policy makers believe that local governments are closer to citizens and know more about local contexts and needs than the national governments. Consequently, they can design policies leading to a more efficient allocation of public goods. Moreover, when accompanied by empowerment of local decision-makers, decentralization is supposed to make local politicians more accountable to voters in a way that national politicians are not. Yet, the effective implementation of decentralization policies may heavily rely on local institutions. This thesis contributes to a rising literature analyzing the political economics of decentralization, that is the extent to which local political dynamics may reinforce or jeopardies decentralization reforms, ultimately affecting the citizens' well-being. I consider three countries that have devolved power to local politicians to a different extent, and tackle three obstacles that may undermine the beneficial effects of decentralization reforms: first, strong political competition at the local level; second, the need for coordinating the provision of a local public good; the interaction between political competition and coordination needs on accountability and eventually the quality of a local public good. Political competition may hinder the beneficial effects of decentralization on stability in a post-war country like Burundi. After a long-lasting and devastating civil war, in 2010 Burundi organized the first local elections, with the hope of establishing political stability through democratic means. However, together with two co-authors, I show that such political decentralization partly failed. We use a unique dataset and geographic fixed effects to show that violence was higher in municipalities characterized by fierce political competition and acute polarization between demobilized rebel groups. The former protagonists ...