The purpose of this paper is to resolve what determines the success or failure of innovations in participatory government; and, more precisely what are the dynamics of institution-building by which the ideas of participation and decentralization are implemented and enduring neighborhood institutions are established. To answer these questions, a number of decentralization experiments were examined to determine which organization structures, social conditions, and political arrangements are most conducive to successful innovation and institution -building. This inquiry has several theoretical implications: (1) it examines the nature and utility of political resources available to ordinary citizens seeking to influence their government; (2) it comments on the process of innovation (3) the inquiry addresses the problem of political development, at least as it exists in urban neighborhoods; and (4) it seeks to lay the groundwork for a theory of neighborhood problem-solving and a strategy of neighborhood development. (Author/JM)