Decentralization InDecentralization InDeveloping NationsDeveloping Nations

What is decentralization?What is decentralization?

Transfer of authority from central to Transfer of authority from central to locallocal

Encompasses a variety of concepts Encompasses a variety of concepts which must be carefully analyzed in any which must be carefully analyzed in any particular country before application. particular country before application.

Each country has its own “rhythm” of Each country has its own “rhythm” of changechange

This analysis should include the various This analysis should include the various types of decentralizationtypes of decentralization

What types of What types of decentralization? decentralization?

OrOrIn what ways does In what ways does

decentralization occur?decentralization occur?

??

Types of DecentralizationTypes of Decentralization

Political:Political:

Aims to give citizens or their elected Aims to give citizens or their elected representatives more power in public representatives more power in public decision-making. Advocates assume decision-making. Advocates assume that decisions made with greater that decisions made with greater participation will be better informed participation will be better informed and more relevant to diverse and more relevant to diverse interests in society than those made interests in society than those made only by national political authorities.only by national political authorities.

Types continued..Types continued..

Administrative DecentralizationAdministrative Decentralization – –

Seeks to redistribute authority and Seeks to redistribute authority and financial resources among different financial resources among different levels of government. The 3 forms levels of government. The 3 forms are: Deconcentration, Delegation, are: Deconcentration, Delegation, and Devolutionand Devolution

Types continued..Types continued..

Fiscal Decentralization –Fiscal Decentralization –

Giving local governments and Giving local governments and private organizations revenues to private organizations revenues to carry out service effectively. Forms carry out service effectively. Forms include: a) self-financing; b) include: a) self-financing; b) expansion of local revenues; c) expansion of local revenues; c) intergovernmental transfers; d) intergovernmental transfers; d) authorization of municipal authorization of municipal borrowingborrowing

Types continued..Types continued..

Privatization –Privatization – Government and private sector Government and private sector cooperate to provide services or cooperate to provide services or infrastructureinfrastructure

Deregulation –Deregulation – Reduces legal constraints on private Reduces legal constraints on private participation or allows competition participation or allows competition among private suppliers for services among private suppliers for services that in the past were provided by the that in the past were provided by the government or regulated monopoliesgovernment or regulated monopolies

What are some What are some drawbacks or potential drawbacks or potential

dangers of dangers of decentralization?decentralization?

??

Argument Argument againstagainst decentralizationdecentralization

Makes Makes stabilizationstabilization policies more policies more difficultdifficult to implement, or even to implement, or even destabilization of public expenditures destabilization of public expenditures and debt and debt

Offloading of Offloading of fiscal imbalancesfiscal imbalances by by central governments to local central governments to local governments. Strong association governments. Strong association between decentralization and fiscal between decentralization and fiscal imbalances at lower levels imbalances at lower levels

Possibility that decentralization Possibility that decentralization retards retards economic growth economic growth

Argument Argument forfor decentralizationdecentralization

Efficiency:Efficiency:

Decisions about public expenditure Decisions about public expenditure on a closer level of government are on a closer level of government are more responsive and reflect local more responsive and reflect local demand more so than remote gov’t. demand more so than remote gov’t. Also, improvement of Also, improvement of competitiveness of gov’t and competitiveness of gov’t and enhances innovation – more likely to enhances innovation – more likely to act to satisfy the wishes of citizens.act to satisfy the wishes of citizens.

Argument Argument forfor decentralizationdecentralization

Political –Political –

Decentralization an essential part Decentralization an essential part of democratization as autocratic of democratization as autocratic central regimes are replaced by central regimes are replaced by elected governmentselected governments

Rationale for “balanced” Rationale for “balanced” Decentralization – not Decentralization – not

“either-or”“either-or” Not all functionsNot all functions can or should be financed and can or should be financed and

managed in decentralized way managed in decentralized way If national gov’t delegates responsibilities, they If national gov’t delegates responsibilities, they

usually need to retain usually need to retain policypolicy and and supervisory supervisory rolesroles

National gov’t creates and maintains National gov’t creates and maintains “enabling “enabling conditions”conditions” that allow local responsibility that allow local responsibility

Decentralization depends on Decentralization depends on trainingtraining and and coordination coordination of local gov’t, private enterprises, of local gov’t, private enterprises, and local NGO’s in planning, financing, and and local NGO’s in planning, financing, and management management