Pros and Cons of Public Decentralization

ByIon Ilasco

Pros and Cons of Public Decentralization

Multiple development aid projects carried out across poor countries support the reorganization of administrative, financial, or service delivery systems. However, before determining if these should be supported, donors such as the World Bank, IFC, and others carefully analyze the concepts that come under the umbrella of the term “decentralization”.

What is decentralization?

Decentralization is the process of restructuring and reorganizing public power so that the authority, responsibility, and socio-economic resources are transferred from the national to regional or local levels to improve the quality and the effectiveness of public services. It is usually guided by the principle of subsidiarity which states that decisions related to public affairs have to be taken as closely as possible to the citizen. Decentralization is often viewed as a two-way practice in which local authorities are given the power to autonomously regulate and manage certain functions and services (e.g., education, healthcare) but are also invited to participate in national law-making through the capacity for local representatives to hold a number of seats in national legislatures.

Levels of governance

With regard to the theory of public administration, the following levels of governance are often used when discussing decentralization:

  • International level: refers to international organizations empowered by member countries to develop and implement specific policy measures (e.g., United Nations)
  • Supranational level: refers to multinational unions or associations in which member countries cede some parts of their authority and sovereignty towards supranational institutions in specified policy areas (e.g., European Union)
  • National level: refers to the central government of unitary states or the federal government in federal systems
  • Regional level: refers to the states in a federal system or the regions or provinces in a unitary state
  • Local level: refers to one of the lowest tiers of public administration within a sovereign state such as a village, town, or city
  • Sub-district level: refers to a part of a city or town with delimited administrative boundaries and some aspects of autonomy in decision making.

Forms of decentralization

The process of decentralization is a complex, multidimensional process involving the transfer of responsibilities and resources across different socio-economic dimensions such as political, administrative, and fiscal spheres.

  • Political decentralization: involves the transfer of political autonomy to citizens or their elected representatives to provide more autonomy in the formulation and implementation of policies and plans at the local level
  •  Administrative decentralization: aims to redistribute authority, responsibility, and financial resources when providing public services among different levels of government. It can take the following forms:

Deconcentration: considered the weakest form of decentralization, this is mostly used within unitary states and it refers to the redistribution of the decision-making authority among different levels of the central government

Delegation: refers to the transfer of decision-making and administrative authority from the national government towards semi-autonomous organizations that are not controlled by the government but are still accountable to it

Devolution: refers to the transfer of decision-making and administrative authority from the national government towards local governments that have clear and legally recognized geographical and administrative boundaries over which they exercise authority

  • Fiscal decentralization: aims to provide local authorities with selective autonomy in developing and managing local fiscal policies as a means to raise adequate levels of revenues.

Pros of decentralization

  • Decentralization can strengthen citizen participation by bringing the government closer to its citizens and involving them more actively in the local decision-making processes. Moreover, citizen participation enables decision-makers to formulate policies that reflect their preferences.
  • Decentralization can foster policy innovation by providing local authorities with more freedom in elaborating plans for socio-economic development. This in turn can increase the effectiveness of local policies.
  • Decentralization can enhance economic growth by stimulating local authorities to elaborate policies that aim at developing the local tax-base to ultimately grow their own-source revenues.
  • Decentralization may diminish the incidence of corruption by involving more stakeholders in the processes of decision-making and making residents more involved and thus more attentive at the local political activity.

Cons of decentralization

  • Flaws in the design of the decentralization can hinder the positive effects expected from it. Policymakers should avoid ambiguous rules, objectives, and expectations when designing strategies for decentralization.
  • Issues of authority and accountability may arise through the unclear assignment of responsibilities between national and local governments which in turn can lead to costlier delivery of public services and a democratic deficit.
  • Resistance from local elites to maintain the status quo may have a negative impact on local communities. Moreover, in some cases, the benefits of decentralization may primarily go to local elites.
  • Financial issues caused as a result of inadequate levels of the financial resources necessary to fulfill the responsibilities transferred from the central government may lead to a decline in the quality and speed of delivering public services.

A comprehensive overview of what the experts have to say in relation to the advantages and disadvantages of decentralization can be found here.

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