Decentralization and
the Organizational
Architecture of
Subnational Government
INTRODUCTION
Below the central (national) government in all countries are the subnational
government entities, with varying legal and administrative powers and
resources.
The powers of subnational government depend mainly on whether the
country is a federal or unitary state.
In most unitary systems of government, the intermediate government
entities (the regions or provinces) exercise authority under the intra vires
(“within the powers”) principle: their powers are only those specifically
delegated to them by the central government, which can override
their decisions.
THE WEIGHT OF HISTORY ON THE
STRUCTURE OF THE STATE
The extent of the powers of subnational government entities depends on
history, customary forms of local administration, and the nature of post-
independence leadership.
Developed countries have a long history of gradual evolution of internal
spatial change along with economic development.
By contrast, ex-colonial developing countries have spatial divisions that were
defined largely based on the economic interests of the former colonizing
power.
APPROACHES TO DIVIDING THE
NATIONAL SPACE
To structure the powers of the state in a newly independent country, the
extremes are obviously impractical – either to run the government entirely
from the capital city, or to assign all powers to local entities.
APPROACHES TO DIVIDING THE
NATIONAL SPACE
There seemed to be an exception to the latter extreme.
After the Bolshevik revolution in Russia in 1917, the guiding principle for the
new system was “all powers to the Soviets”, i.e., the local councils (from
which the name of Union of Soviet Socialist Republics, or Soviet Union in
brief).
The exception was only apparent, however, as the principle turned out to be
just a slogan, with reality being precisely the opposite – “all powers to the
center”.
APPROACHES TO DIVIDING THE
NATIONAL SPACE
Those extremes aside, the management of government must be parceled out
between central and subnational government, and among the different
subnational government entities.
For this, the literature identifies several approaches – mostly complementary
rather than mutually exclusive.
PHYSICAL APPROACH
Intuitively, state powers can be distributed in accordance with the features of
regions within the country, and administrative boundaries are often drawn on
the basis of physical geography – especially when dealing with natural
resources such as water supply, irrigation, soil erosion, forest development,
etc.
PHYSICAL APPROACH
Physical geography can also offer a good basis for administrative division
when the lives of the inhabitants are tied closely to natural resources – for
example, tribal people living in a specific forest area (deBlij and Muller,
2005).
However, space is a continuum, and any division is inherently arbitrary.
Therefore, the physical approach must be complemented by other criteria.
MANAGEMENT APPROACH
In assigning responsibilities to subnational government entities, management
constraints are as important as geographic and technical considerations.
The aim of the management approach is to divide state territory into areas
that are “manageable” – by drawing area boundaries according to how the
flow of government work can best be handled.
COMMUNITY APPROACH
By the community approach, internal government boundaries correspond to the
areas whose inhabitants have common needs. The most common example of such
community of interdependence is an urban center with its “natural” surrounding
area – its hinterland.
The interdependence between city and hinterland can be measured by the number
of area inhabitants employed in the city’s banks, shops, schools, hospitals,
newspapers, and so on.
Also known as the “central town” concept, the approach has been applied in
countries such as Belgium, Germany, and France.
COMMUNITY APPROACH
The community approach can be useful when it grows organically from the
bottom up and is limited to recognizing and supporting current realities.
When instead it is misapplied as a top-down government attempt at creating
regional “growth poles” from scratch it is likely to lead only to substantial
waste.
The policy message is simple: do build on the existing interdependence
between city and surrounding area, but do not try to fabricate it.
SOCIAL/ETHNIC APPROACH
The country may encompass distinct regions based not on physical
geography but on history, ethnicity, culture, religion, language, or a
combination of these.
The social/ethnic approach is especially important when some areas have a
sense of separate identity that must be recognized in the constitutional and
administrative system.
FUNCTIONAL/EFFICIENCY APPROACH
This approach matches area to function by identifying the government
functions and associated institutions, and on that basis defining the
geographic boundaries within which the different government functions are
to be performed.
A variant of the functional approach is the “efficiency approach”, which aims
at achieving the highest efficiency in government service provision.
Government functions would be assigned according to the scale of operations
necessary for the optimum performance of the governmental function, e.g.,
small towns responsible for elementary schools, large cities running high
schools, and provinces in charge of universities.
FUNCTIONAL/EFFICIENCY APPROACH
However, judging in part from the experience of many European countries
(notably Denmark, Germany, Sweden) in merging small municipalities, there
is no conclusive evidence that operating in large jurisdictions is always more
efficient than operating in small ones.
Also, exploiting scale economies can also be achieved by joint service
agreements between smaller entities, instead of creating a large
organization.
Complemented by the other considerations, as appropriate, the functional
approach is the main one followed in most countries.
WHAT BELONGS WHERE? THE
ASSIGNMENT OF GOVERNMENT
FUNCTIONS
WHAT BELONGS WHERE? THE
ASSIGNMENT OF GOVERNMENT
FUNCTIONS
While the classification is associated with actual experience in most
countries, it should be interpreted as only indicative.
However, defense, foreign affairs, monetary policy, and external trade and
finance are performed almost exclusively at central government level; other
functions, such as water supply, waste management, firefighting, etc. almost
exclusively at local level; and responsibility for all other state functions is
normally shared in some fashion among the central, intermediate, and local
levels of government.
WHAT BELONGS WHERE? THE
ASSIGNMENT OF GOVERNMENT
FUNCTIONS
The dictionary definition of decentralization is “the removal of certain
centralized powers or control to various areas, usually the area where
operations take place”, but the term has a variety of meanings.
Also, “decentralization” has been abused to apply to very different actions,
e.g., outsourcing functions to non-governmental organizations, forms of
alternative service delivery, and even privatization.
Here we define decentralization as the distribution of functions and powers
along the formal structure of government.
WHAT BELONGS WHERE? THE
ASSIGNMENT OF GOVERNMENT
FUNCTIONS
Decentralization to subnational entities can be important for political stability,
effective service delivery, and equity.
However, when rushed or inappropriate to country circumstances,
decentralization carries risks, especially in developing countries with their
comparatively recent independence – whereas in developed countries it has
been an organic outcome of long social evolution over centuries.
DEGREES OF DECENTRALIZATION
A federal constitution by definition entails more decentralization than a
unitary system.
The correspondence is not perfect, however. It is possible for a unitary state
to assign substantial powers to provincial governments, as in Papua New
Guinea. Conversely, some federal constitutions provide for the exercise of
significant central power over subnational governments.
DEGREES OF DECENTRALIZATION
In the U.S., the growth in federal spending on grant-aided programs means
that state and local governments must abide by certain conditions under
close federal supervision, and thus lose some de facto autonomy.
The degree of decentralization can be measured by the extent of autonomy
from the central government, which increases from “deconcentration”
through “delegation” to full “devolution”.
DEGREES OF DECENTRALIZATION
In the U.S., the growth in federal spending on grant-aided programs means
that state and local governments must abide by certain conditions under
close federal supervision, and thus lose some de facto autonomy.
The degree of decentralization can be measured by the extent of autonomy
from the central government, which increases from “deconcentration”
through “delegation” to full “devolution”.
DECONCENTRATION
Deconcentration reallocates the administrative workload from central
government offices to subordinate field staff in the regions and provinces –
for example, when a central ministry of public works sets up a field office for
road maintenance in a local area.
Deconcentration is mainly an efficiency measure and does not involve a
downward transfer of decision-making authority and autonomy.
DELEGATION
More extensive than deconcentration is delegation.
The subnational government entities to which authority is delegated must be
capable of performing the functions in question; may be exempt from central
rules on personnel; may be able to charge users directly for services; and
have broad authority to plan and implement decisions without the direct
supervision of central ministries.
DELEGATION
A major advantage of delegation is to help insulate the implementation of
high-priority programs from political interference and bureaucratic conflicts.
It also prevents revenues gained from income-earning ventures from being
swallowed up by the regular government budgets.
Most importantly, as implicit in the term, delegation is revocable.
DEVOLUTION
Devolution carries the highest degree of decision-making independence and
involves total relinquishment of certain functions to subnational
governments.
It entails creating autonomous subnational governments that recruit their
own staff; occupy clear and legally recognized geographic boundaries; raise
their own revenues to finance their functions; and can interact reciprocally
with other units in the government of which they are a part.
Devolution must therefore be enshrined in laws.
THE RATIONALE OF DECENTRALIZATION
Let’s start with three fundamental points.
First, the manner in which decisions are made is critical to their likelihood of
success. Arbitrary and top-down decentralization initiatives usually fail.
Second, decentralization is not a panacea. Decentralization cannot fix
deepseated governance and corruption problems nor quickly improve
economic efficiency.
Third, both the advantages and risks depend on the degree of
decentralization.
THE POTENTIAL ADVANTAGES OF
DECENTRALIZATION
The potential advantages of decentralization derive mainly from the
presumably closer contact of local government institutions with residents:
THE POTENTIAL ADVANTAGES OF
DECENTRALIZATION
Decentralization may create opportunities for more accountable government.
Residents can more easily monitor and evaluate the local government’s
compliance with the decisions made, demand speedier response, and push local
institutions to enhance their capabilities.
(Citizen participation was viewed by Plato and Aristotle as a cornerstone of
civilized society.)
THE POTENTIAL ADVANTAGES OF
DECENTRALIZATION
Decentralization may be a step to greater transparency in government.
Planning, policy-making, and project implementation can be made accessible
even to the remotest residents.
Decentralizing fiscal powers to local leaders can ease the financial strain on
the central government since subnational governments can more readily
mobilize funds by collecting fees and charges for the services they provide.
THE POTENTIAL ADVANTAGES OF
DECENTRALIZATION
Decentralization may lead to more flexible administration, since the
government can tailor its services to the needs of the various groups; more
effective administration, as local leaders can better locate services and
facilities within communities; and legitimacy and political stability, as civil
society organizations are given a stake in maintaining the political system.
THE POTENTIAL ADVANTAGES OF
DECENTRALIZATION
Finally, decentralization can improve the political inclusion of ethnic and
other minority groups.
Merely increasing representation, however, is not sufficient unless supportive
institutional arrangements are put in place and resources are provided.
It is not inclusiveness to add to a local government council one or two
minority “representatives” who are expectedto show their brown faces and
smile for the cameras, but not say or propose anything.
THE POTENTIAL COSTS OF
DECENTRALIZATION
Decentralization can entail the loss of scale economies, generate duplication
and underemployment of staff and equipment, and raise rather than reduce
government spending.
Decentralization can create coordination problems where none existed,
subvert overall resource distribution and macroeconomic objectives, and
worsen the fiscal situation.
THE POTENTIAL COSTS OF
DECENTRALIZATION
Decentralization can jeopardize the civil and social rights of certain
minorities, and, in time contribute to national disintegration. For example, the
argument of “states’ rights” was used in the southern states of the United
States to preclude federal interference with their “Jim Crow” discrimination
policies against African Americans.
Where resource endowments and capacities are uneven, decentralization
may deepen regional inequalities, unless a national mechanism to transfer
resources to the poorer regions is put in place.
MANAGING THE CITIES
The Weight of Place and History
A country’s attitude toward the city is largely determined by its history and
geography. The stereotypical American mistrust of “city slickers” is related to
the vastness of the country and the accepted mythology of the self-reliant
rural pioneer
MANAGING THE CITIES
Urbanization and Fragmentation
City administration has gained importance along with the magnitude of
urbanization. Over half the world’s population – almost four billion people –
live in cities. Developing countries have the vast majority of the 500 cities
with more than one million inhabitants, and 24 of the 31 megacities with
more than ten million inhabitants.
MANAGING THE CITIES
Notwithstanding the large differences in size of cities in different countries, urban
government generally provides the following public services:
garbage collection/waste management/street cleaning;
water supply/sewerage;
primary education;
recreation services (street lighting, parks);
home social welfare (e.g., homeless shelters, neighborhood clinics);
local transport;
zoning, city planning, and regulatory enforcement;
local public works and housing;
firefighting and other emergency services;
and traffic regulation.
MANAGING THE CITIES
Pg. 177, of the main book.
ADMINISTERING RURAL AREAS
The legal framework of rural administration varies in different countries.
Administrative systems in rural areas are strongly influenced by cultural
factors and traditions.
DEBATE
Pick one of the following two statements, and make a credible argument for
it:
“Decentralization is a dangerous fad.”
“Decentralization is an overdue necessity.”
