Decentralization Flashcards
What are the different types of state model?
Unitary system: One in which sovereignty rests with the national government, and regional or local units have no independent powers.
Federal system: One in which sovereignty is shared between two or more levels of government, each with independent powers and responsibilities.
How can unitary states share responsibility with lower tiers of government?
Deconcentration: Central government tasks are shifted from employees working in the capital to those working in the regions or local districts. E.g. move of ONS from London to Cardiff
Delegation: Central government responsibilities are shifted to semi-autonomous bodies accountable to central government. E.g. local government administration of welfare programmes in Scandinavia.
Devolution: Central government transfers some decision-making autonomy to lower levels. E.g. regional governments in France, Italy, Spain and the UK.
What are the different types of federalism?
Asymmetric federalism: The phenomenon of states within a federation having unequal levels of power and influence due to size, wealth, and other factors. E.g. differences in size of Indian states and influence of Quebec in Canada.
Dual federalism: National and local levels of government function independently from one another, with separate responsibilities. E.g. USA
Cooperative federalism: The layers are intermingled and it is difficult always to see who has ultimate responsibility.
What is subsidiarity?
Subsidiarity: The principle that no task should be performed by a larger and more complex organization if it can be executed as well by a smaller, simpler body.
What are the three dimensions of decentralization?
Fiscal
Political
Administrative
Political Decentralization
Political decentralisation sets the legal basis of decentralisation. It involves a new distribution of powers according to the subsidiarity principle, between different tiers of government, with different objectives, but often with the aim to strengthen democracy. Thus, it refers to the way in which subnational administrators are selected – i.e. by appointment or by election.
Administrative decentralization
Administrative decentralisation involves a reorganisation and clear assignment of tasks and functions between territorial levels in order to improve the effectiveness, efficiency and transparency of national territorial administration. It generally relates to the transfer of planning, financing and management decisions on some public functions to lower levels of government.
Fiscal decentralization
Fiscal decentralisation involves delegating taxing and spending responsibilities to subnational tiers of government. In this case, the degree of decentralisation depends on both the amount of resources delegated and the autonomy in managing such resources. For instance, autonomy is greater if local governments can decide on tax bases, tax rates and the allocation of spending.
Political, administrative and fiscal decentralization
What are the main approaches to decentralization?
- Big bang vs more incremental approaches
- Top down or bottom up approaches
“Big bang” approach
A “big bang” approach has two defining characteristics; (a) it entails a holistic (comprehensive) and integrated approach of the three main components of decentralisation (political, administrative and fiscal) (b) it is rapidly implemented over a short-term period. This ensures that major measures implementing political, administrative and fiscal decentralisation will be adopted as a single package, without missing components, ensuring that the desired balance in autonomy and accountability is achieved while providing incentives for cost efficiency. A “lightening speed” reduces the ability of losers from decentralization reform take advantage of a long period to get organised and build coalitions to circumvent or block the reform.
However, it can be perceived as imposed from the centre in a too rapid manner, at the risk of being rejected as a transplant which has not been successful. Several countries have step back because of the process of decentralisation was too rapid and strong, with some decentralisation laws have never been implemented, or very partially, because the agenda was too ambitious and unrealistic.
Incremental Approach
The incremental approach involves the introduction by stages of different decentralization dimensions. This assists with smooth implementation and allows a progressive upgrade of subnational government capacities, ensuring that they are more capable to handle newly assigned responsibilities and effectively manage their resources. A gradual reform process also gives more opportunities to convince and engage citizens in the process, to gain support and build more consensus, through consultations, information, public debates, etc. Finally, each step can create an impetus for further reforms from the central government, local authorities and the civil society.
An incremental approach also allows the piloting of decentralization measures such as experimental regionalisation in Finland, Sweden and France, to demonstrate the effectiveness of reforms and pave the way for further change on a larger scale.
Top-down Approach
Top-down decentralization has been the dominant driver of decentralization. It is driven by central government which initiates, leads and controls the process. Its primary objective is often to to shift fiscal constraints to the local level, rather than to devolve real and effective powers. In this context, the centre tends to prefer systems of
‘decentralised public finances’ where it strictly earmarks transfers and sets out minimal standards.
During the financial crisis some social tasks were decentralised without real fiscal compensation, forcing local governments to play a “social buffer” role (“decentralisation of the crisis”). Most of the time, this type of approach results in incomplete decentralisation process, with either the political or the fiscal dimensions missing.
Decentralisation reforms have been strongly pushed, or even imposed, by the international community to national governments (South Korea and Greece; IMF and in Africa and Asia by many other multilateral banks, international agencies and donors).
Bottom-up Decentralization
Bottom-up decentralization is driven by local preferences and places local government autonomy at the heart of the process. The primary objective is to encourage local innovation and a diversity of local public goods.
Bottom-up decentralisation implies a preference for ‘fiscal federalist systems’ whereby subnational authorities transfer part their powers to the centre and have considerable discretion over local taxation. In terms of central-local relations, the aim is to protect local governments from central interferences and maximise local decisions. In this
context, central-local relations are characterised by negotiation and consensus rather than by confrontation.
What are the two views on the sequencing of decentralization?
- ‘Finance follows function’
- Political and fiscal dimension first
‘Finance follows function’
‘Finance follow function’ advocates claim that pursuing fiscal decentralisation before administrative decentralisation is likely to result in weak local accountability and capacity along with possible elite capture.. They also claim that without clear functional assignments, governments cannot assess and channel to local governments the necessary resources to carry out their functions. Seen from this perspective, administrative decentralisation and enhancing local capacities should come before fiscal decentralisation.
However, if policy makers waited until all the required capacities were in place, there would be barely any decentralised country in the world. In addition, the risk is that central governments use the argument of weak local capacities to keep postponing fiscal reforms. In these cases, fiscal decentralisation may never materialise, leading to major deadlocks, incomplete decentralisation processes and unfunded mandates. In these conditions, the out cried ‘failure of decentralisation’ becomes a self-fulfillingprophecy that cannot but undermine public action.
Political and fiscal dimensions first
Political and fiscal dimensions first advocates forward three main advantages:
- Political decentralisation provides local governments with the necessary decision-making power and autonomy to realise ‘allocative efficiency’.
- Subnational authorities become more responsive and accountable to local population which enables the political benefits of a decentralised system
- It allows local government to ‘learn by doing’.
Relations between tiers
There are two types of ways that states can use to organise relations between tiers of government: hierarchical and bifurcated.
Under a hierarchical system subnational governments are ‘creatures’ of and accountable to their immediate higher level of government.
Under a bifurcated system subnational governments at every level are directly accountable to central government.
