Decentralization in Asia-Pacific Week 4

What is Decentralization? Definition: Decentralization is the process of redistributing or dispersing functions, powers, people or things away from a central government or location to lower or dispersed levels (various authors) Includes creating/strengthening lower levels jurisdictions. Decentralization means different things to different people, and it is primarily a function of the practice.

Why Decentralization? Many reasons in Asia: Increase quantity and quality of local services Increase economic development (e.g., out of the capitals) Increased social development (incl. poverty reduction, environmental pollution) Increase political development/grass roots democracy Increased protection of human rights

Types of decentralization Deconcentration -  redistributes decision making authority and financial and management responsibilities among different levels of the central government (e.g., geographically dispersed field offices: e.g., tax collection, environmental protection, immigration). Delegation -  transfer responsibility for decision- making and administration of public functions to semi-autonomous organizations not wholly controlled by the central government, but accountable to it (e.g., universities, health care boards, special authorities). 

Types of decentralization -2 Devolution.  Transfer of authority for decision-making, finance, and management to (quasi-) autonomous units of local government with corporate status. In a devolved system, local governments have clear and legally recognized geographical boundaries, they exercise authority, have  independent authority to make investment decisions, have accountability to citizens. (e.g., provinces, cities.) Divestment . i.e., privatization (transfer of role to private sector. E.g., garbage collection, aviation safety, meat inspection, space transport).

A quote… Lan and Chen, “Interngovermental Relations in China.” (2010), ch.4: “Mao paid attention to the decentralization practice in Europe as well as in the U.S., and thought the division of power was their secret of good economic development. He admitted that central government had centralized too much power and it was too much for him to handle. China should learn from the U.S.’ decentralizing its power into 50 States.”

How many Governments in the U.S.?

Special Districts in the US 2012:

What is Decentralized? Political Functions - giving power to local citizens (may require constitutional reforms, development of new political parties, increased power for legislatures, creation of local jurisdictions, encouragement of civil society). Administrative Functions – fulfillment of administrative roles; decision-making, finance and implementation and accountability Fiscal Functions -  revenue raising and/or expenditure of moneys, accountability and intergovernmental transfers. (“Money lies at the heart of IGR”) 

What Roles at What Levels? E.g., Australia: Note: many countries have counties, responsible for infrastructure. Note: many counties have a list of functions reserved for national governments, requiring delegation for lower levels.

What Roles at What Levels?

Decentralization Results…

How to Decentralize? Many authors illustrate steps of decentralisation, for example, Bahl and Vazquez (2006) see six steps in sequencing decentralisation. However, prior to the first step, a platform for deconcentration, rule of law and other supporting regulatory frameworks need to be created. The six steps include: (i) organising a national debate on the issues relevant to decentralisation policy, (ii) preparing the policy design and develop a White Paper, (iii) passing the decentralisation law, (iv) creating the implementing regulations, (v) implementing the decentralisation programme, and (vi) monitoring and evaluating the programme…….but not so easy  Bahl, R. and J. Martinez-Vazquez (2006a) “Sequencing Fiscal Decentralization,” World Bank Policy Research Working Paper 3914, May.

Factors affecting decentralization Five key factors affecting decentralization are: (i) a policy and legal framework, (ii) financial resources, (iii) human resources, (iv) local accountability mechanism and (v) support from central institutional arrangements (and political will). Building capacity first! (elections rule of law, competence, etc) Careful implementation Decentralised system of service delivery Legal framework- assignment of function Structure of political accountability Financing of local government Human resources in local government Institutional arrangements for coordination of reforms

Our Framework…..

Some Asian experiences… Malaysia – limited local government development Cambodia – forming communes at local level Indonesia – developing islands beyond Java; ensuring leadership and avoiding corruption Taiwan – developing capacity beyond central government control Vietnam- fiscal decentralization

Two further issues….

A concluding paradox: Decentralization requires a strong central government and will to decentralize! Fritzen: