The poor quality of service provision in many countries (as illustrated by high provider absenteeism) and a perceived lack of responsiveness of bureaucracies to the many problems (for example, in monitoring nurses' attendance) has led many to place their faith in community oversight. The poor, after all, are the ones who suffer if services are bad.  This argument is set out in detail in the 2004 World Development Report which states that “when publicly financed services are subject to capture… the best thing to do is to increase the client’s power as much as possible. ”

Community participation is attractive because it offers solutions to many problems commonly associated with centrally administered services and projects. Local communities may have better information on what good and services are needed than outsiders, and are in a better position to recognize and quickly respond to inefficiency or corruption in implementation. Citizens who actually stand to benefit from services have better incentives to make sure they are implemented correctly, so locals may do a better job of monitoring and taking action when services are poor or corruption occurs. And if services are run or projects implemented by local workers and officials, then their peers may have a better chance of ensuring honesty through social sanctions.

There are however, concerns about whether community participation is the answer to poor infrastructure and service quality. Community members may not have sufficient power to achieve change. Teachers and health workers and those organizing infrastructure projects are often some of the best paid and most educated people in a community and it may be hard for the poor to complain about them. Even when there are more powerful people in a community who could take action, they often opt out of government services—sending their children to private schools for example. In addition, communities face a classic coordination problem—it takes a lot of work to monitor the quality of services and complain and advocate for change if they are not working well. While the community benefits from such action, the benefit to any individual is small relative to the effort involved and the risk that the service worker may retaliate against them.

There are many ways to incorporate the local participation into development work. By allocating funds at a local level, or allowing citizens themselves to select the programs and services which they value most, it is argued that resources will be spent on the highest priority needs. Many also argue that having been involved in designing a project, local communities will help keep corruption on the project down and be more actively involved in maintaining it. Currently there is little evidence on whether this holds, although several studies are underway to test these hypotheses.

A second form of community participation is in the implementation of programs and infrastructure projects, for example when local contractors are hired to build roads, or local teachers are hired to supplement civil service teachers. The argument is that local providers are more likely to understand local needs, be more subject to social sanctions if they perform poorly, and care more about the quality of services and infrastructure.

A third form of community participation is the oversight of centrally administered projects and services. By making contractors and service providers accountable to the people they are supposed to be serving, it is assumed that oversight will be more rigorous, especially if a project is also being implemented by the community. However, unless there is credible authority and incentives tied to local accountability, it is unclear whether community oversight by itself will improve the provision of development services. This last form of community participation has been the subject of a number of rigorous impact evaluations and is thus the focus of this section.

In all forms of community participation there is a risk of elite capture. Local elites may use their influence to ensure that local projects benefit them while central government may care more about the poor. Local providers of infrastructure and services may come from the elite and not be subject to social sanction by the poor. We will discuss alternative ways to improve the voice of minorities and women in the provision of local services in a forthcoming policy lessons page.