strategy

Decentralizing government activities

Synonyms:
Decentralizing public responsibilities
Strengthening local government finance
Decentralizing fiscal responsibilities
Decentralizing responsibility for public expenditure
Decentralizing public accountability
Description:
The need for coordination is reduced when government managers transfer those functions they cannot manage efficiently to other levels of government, public enterprises, local communities, or the private sector. Decentralization is conventionally defined as one of three things: (a) "deconcentration", transferring resources and decisionmaking from headquarters to other branches of central government; (b) "devolution", to autonomous units of government such as municipalities and local governments; and (c) "delegation", to organizations outside the regular bureaucratic structure, such as public corporations and regional development authorities, or even to nongovernmental bodies such as farmer cooperatives, credit associations, and trade unions. In practice, the three forms are often combined: responsibilities for executing development projects might be given to provincial officers of central government (deconcentration) to work with local government (devolution) and with community groups (delegation).
Context:
Many developing countries would benefit from an increase in the responsibility of state and local governments for certain public functions. Decentralization is advisable for goods and services that are regional or local, rather than national, in character, such as water supply and sanitation, transport and some health and education services. In such cases it can increase public accountability and responsiveness to local preferences. The scope for decentralizing is greatest in urban areas, but broadening the involvement of rural communities in water supply, irrigation and rural roads can also improve the quality of public services. Decentralization means greater flexibility in responding both to local demands and to tightening financial constraints. Incentives for fee collection and efficiency should also improve, since users are more willing to pay when they can hold the providers accountable for the cost.
Implementation:
The most common form of decentralization in developing countries has been deconcentration. Delegation has also been used extensively in developing countries-especially by creating state-owned enterprises. And governments have resorted to special agencies to tackle specific problems, though this may do little more than encourage bureaucratic proliferation. Another characteristic form of delegation is the regional development authority.

Recent trends have not favoured devolution as a decentralization technique. Although governments have started to devolve responsibilities to reformed local government institutions. The change may reflect two developments: first, the growing desire to find new ways of mobilizing local resources; and second, the recognition that local government employees could be used more efficiently than they have been. By itself, however, devolution can do little to compensate for a general shortage of technical and administrative skills. If other tiers of government have difficulty obtaining qualified staff, local government will find it even harder: in developing countries, its salaries are typically only half those paid by central government. Nor can local government enjoy genuine autonomy when, as usually happens, it depends on central grants for the bulk of its budget. The revival of local government therefore depends on vigorous action to raise more local revenues.

Decentralizing has also taken the form either of privatization or of involving communities in the execution of projects.

User charges in public services can improve efficiency if local public institutions such as clinics or schools are given greater responsibility for collecting them and choosing how to spend the proceeds. Equity can be maintained by public transfers given directly to individuals according to need (and, for education, on merit) to spend at the public or private facility of their choice. A more modest approach is to distribute subsidies according to the economic need of localities or neighbourhood groups. But funding should be such as to maintain the local community's incentive to collect its own revenue.

Claim:
Shifting more administrative and financial responsibilities to local authorities that are more in touch with local conditions and needs may both improve efficiency and raise revenue.
Counter Claim:
Central government must retain an important role in areas such as training policy, overall facilities planning (particularly of large institutions, such as hospitals and universities), research funding, setting national education standards and providing information about benefits and costs of services.
Subjects:
Action
Finance
Taxation
Government
Municipalities
Public
Resource utilization
Type Classification:
C: Cross-sectoral strategies