Implementing Decentralized Local Governance: A Treacherous Road with Potholes, Detours, and Road Closures

Abstract

During the past two decades, a silent
 revolution in public sector governance has swept across the
 globe aiming to move decision making for local public
 services closer to the people. The countries embracing and
 adapting to this silent revolution have had diverse motives
 and followed even more diverse approaches. This paper
 attempts to present a stylized view of the motivations and
 approaches used to strengthen local governance. The quest
 for the right balance, i.e. appropriate division of powers
 among different levels of government, is not always the
 primary reason for decentralizing. There is evidence that
 the decentralization decision may have more to do with
 short-term political considerations than the long-run
 benefits of decentralization. To take stock of progress
 worldwide, we take a comparative look at developments in
 political, fiscal and administrative decentralization for a
 selected group of countries. Most of the decentralization
 literature deals with normative issues regarding the
 assignment of responsibilities among different levels of
 government and the design of fiscal transfers. The process
 of decentralization has not received the attention it
 deserves as the best laid plans can fail due to
 implementation difficulties. We revisit major controversies
 regarding preferred approaches to obtaining a successful
 outcome. Key approaches examined are big push versus small
 steps; bottom up vs. top down; and uniform vs. asymmetric
 decentralization. Finally, Indonesia's 1999 big bang
 decentralization program is evaluated. The program should be
 commended for its achievements over a short period of time,
 however incentives are lacking for local governments to be
 accountable and responsive to their residents.