Decentralization and the Provision of Public Services : Framework and Implementation

Abstract

This paper discusses decentralization
 (administrative, fiscal and political) of government in
 public service provision. It aims to facilitate
 understanding among practitioners, policy makers, and
 scholars about what decentralization entails in practice
 compared to theory. A review of the empirical literature
 and experience of decentralization is presented. The paper
 highlights issues that policy makers in developing and
 transitional countries should be aware of when reforming
 government, considering their unique political and economic
 environment. The author argues that decentralization
 produces efficiency gains stemming from inter-jurisdictional
 competition, enhanced checks and balances over the
 government through voting at the subnational level, and
 informational advantages due to proximity to citizens. By
 contrast, arguments against decentralization include the
 risk of an increased level of corruption, coordination
 problems stemming from multiple layers of government, low
 capacity of subnational government, and unproductive
 inter-jurisdictional competition. Decentralization itself
 does not render increased government effectiveness in public
 service provision. Instead, the effectiveness of government
 largely depends on the quality of human capital and institutions.