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THE DANGERS OF DECENTRALIZATION

THE DANGERS OF DECENTRALIZATION Abstract Demand for decentralization is strong throughout the world. But the benefits of decentralization are not as obvious as the standard theory of fiscal federalism suggests, and there are serious drawbacks that should be considered in designing any decentralization program. An analysis of these dangers makes it easier to understand some of the real choices. These choices are not so much whether to decentralize in general, but rather what functions to decentralize, in which sectors, and in which regions. In many cases the problem is not so much whether a certain service should be provided by a central, regional, or local government, but rather how to organize the joint production of the service by the various levels. In many—if not most—cases, such measures have an enormous potential and could, if properly designed and implemented, significantly improve the efficiency of the public sector. Decentralization measures are like some potent drugs, however: when prescribed for the relevant illness, at the appropriate moment and in the correct dose, they can have the desired salutary effect; but in the wrong circumstances, they can harm rather than heal. This article looks at some of the negative effects of decentralization in the hope that a better understanding of its dangers will contribute to a wiser application of potentially desirable decentralization programs. This content is only available as a PDF. © 1995 The International Bank for Reconstruction and Development/THE WORLD BANK http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png The World Bank Research Observer Oxford University Press

THE DANGERS OF DECENTRALIZATION

Prud'homme,, Rémy
The World Bank Research Observer , Volume 10 (2) – Aug 1, 1995
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References (10)

Publisher
Oxford University Press
Copyright
© 1995 The International Bank for Reconstruction and Development/THE WORLD BANK
ISSN
0257-3032
eISSN
1564-6971
DOI
10.1093/wbro/10.2.201
Publisher site
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Abstract

Abstract Demand for decentralization is strong throughout the world. But the benefits of decentralization are not as obvious as the standard theory of fiscal federalism suggests, and there are serious drawbacks that should be considered in designing any decentralization program. An analysis of these dangers makes it easier to understand some of the real choices. These choices are not so much whether to decentralize in general, but rather what functions to decentralize, in which sectors, and in which regions. In many cases the problem is not so much whether a certain service should be provided by a central, regional, or local government, but rather how to organize the joint production of the service by the various levels. In many—if not most—cases, such measures have an enormous potential and could, if properly designed and implemented, significantly improve the efficiency of the public sector. Decentralization measures are like some potent drugs, however: when prescribed for the relevant illness, at the appropriate moment and in the correct dose, they can have the desired salutary effect; but in the wrong circumstances, they can harm rather than heal. This article looks at some of the negative effects of decentralization in the hope that a better understanding of its dangers will contribute to a wiser application of potentially desirable decentralization programs. This content is only available as a PDF. © 1995 The International Bank for Reconstruction and Development/THE WORLD BANK

Journal

The World Bank Research Observer – Oxford University Press

Published: Aug 1, 1995

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