Rethinking Decentralization: Assessing Challenges to a Popular Public Sector Reform
| Date | 01 May 2015 |
| Published date | 01 May 2015 |
| Author | Paul Smoke |
| DOI | http://doi.org/10.1002/pad.1703 |
RETHINKING DECENTRALIZATION: ASSESSING CHALLENGES TO A
POPULAR PUBLIC SECTOR REFORM
PAUL SMOKE*
New York University, USA
SUMMARY
Decentralization is among the most globally ubiquitous public sector reforms. In the past few decades, many countries have
taken formal steps to empower local governments, typically with a mix of stated developmental and governance goals. Although
decentralization receives much attention, our systematic practical knowledge about it remains limited, and it is fair to say that it
often does not meet expectations. Even supporters have begun to express frustration, and references to stalled decentralization or
even recentralization have emerged in both policy debates and in practice. This paper briefly recaps what decentralization was
expected to achieve, broadly summarizes what we know about performance, and highlights factors that support and impede re-
form. It also discusses weaknesses and challenges in how decentralization has been conceived, analyzed, designed, and imple-
mented. The core argument is that this type of reform is more diverse and complex than has conventionally been acknowledged
and that more careful analysis and strategic action tailored to a specific country are needed to help to realize more effective and
sustainable decentralization. The paper closes with thoughts about future directions for how we conceptualize and pragmatically
approach this diverse and consequential reform. Copyright © 2015 John Wiley & Sons, Ltd.
key words—decentralization; local governance; public sector reform; linking theory and practice
INTRODUCTION
Public sector decentralization has become a prominent global phenomenon. In recent years, many developing and
middle income countries have decentralized with a mix of stated objectives(s), such as to deliver better public ser-
vices; to enhance public management, governance, and accountability; to bolster economic development; to im-
prove equity in service delivery and development outcomes; and/or to promote a more stable and peaceful state,
among others. The goals and nature of reform in a particular country reflect its specific context.
Although decentralization has been widespread and conspicuous, its performance has been uneven, and our sys-
tematic practical knowledge of how it works is relatively modest.
1
Much early literature documented unsatisfactory
performance, with the more encouraging assessments often based on anecdotal instances of success or enthusiastic
confidence about expected benefits.
Despite the relatively limited empirical evidence of generally beneficial outcomes and the “best”ways to ap-
proach productive reform, many countries continue to pursue decentralization, at least officially. This raises a num-
ber of questions. Why do countries continue to support such reform if broadly achieving its official goals is difficult
and/or elusive? Why is the evidence on decentralization not more robust? How can policymakers and practitioners
better design and implement decentralization so as to reap potential benefits and limit potential problems?
*Correspondence to:P. Smoke, Wagner Graduate School of Public Service, New York University, The Puck Building 295 Lafayette Street,
New York, NY 10012, USA. E-mail: paul.smoke@nyu.edu
1
Examples of some of the many and diverse reviews of decentralization include Bird and Vaillancourt (1998), Litvack et al. (1998), Burki et al.
(1999), Smoke (2001), Ahmad and Tanzi (2002), Ndegwa and Levy (2003), Wunsch and Olowu (2003), Shah et al. (2004), Ahmad et al.
(2005), World Bank (2005), Bardhan and Mookherjee (2006), Smoke et al. (2006), Cheema and Rondinelli (2007), Slack (2007), Crawford
and Hartmann (2008), Ichimura and Bahl (2009), United Cities and Local Governments (2007, 2010), Connerley et al. (2010), Martinez-
Vazquez and Vaillancourt (2011), Faguet (2014), and Dickovick and Wunsch (2014).
public administration and development
Public Admin. Dev. 35,97–112 (2015)
Published online in Wiley Online Library
(wileyonlinelibrary.com) DOI: 10.1002/pad.1703
Copyright © 2015 John Wiley & Sons, Ltd.
Before considering these questions, it is first useful to review some basics about decentralization that underlie
key challenges to making it work. The core of the paper then focuses on fundamental decentralization-related is-
sues that are often neglected, explaining how they are relevant and arguing that they merit more attention. This
is followed by a succinct review of the empirical evidence on the impacts of decentralization and a review of
the factors that hinder more definitive analysis. Finally, the closing section presents some thoughts about how
policymakers and practitioners might think about decentralization going forward.
REVIEW OF DECENTRALIZATION BASICS
Overview
Decentralization is generally understood as the assignment of public functions to subnational governments along
with structures, systems, resources, and processes and that support implementing these functions to meet specific
public sector goals.
2
It takes multiple forms—deconcentration (establishing local units of higher level govern-
ments), devolution (creating elected local governments with autonomous powers), and delegation (essentially
contracting a central function to a public or private entity)—and has multiple dimensions—administrative, fiscal,
and political. These basic concepts are well known and will not be defined in detail here, but their importance in
assessing decentralization is selectively discussed in the succeeding text.
3
Decentralization can be undertaken in unitary systems in which the central government determines local powers
or in federal/quasi-federal systems in which an intermediate government (state or province) has powers to deter-
mine functions of lower tiers of government. In strong federal systems, states often play a dominant role in defining
the relationship between themselves and the federal government, and different states may have different
approaches.
Decentralized service provision—especially under devolution in which elected local governments are directly
accountable to citizens—is expected to enhance the coverage, quality, and efficiency of service provision through
better governance and resource allocation. Theory posits that the closeness of local governments to citizens gives
the latter more influence over local officials, promotes competition among local governments, and alleviates cor-
ruption through improved transparency and accountability relative to centralized systems. At the same time, decen-
tralization may have a negative impact because of the nature of local politics or because local governments do not
have the capacity or incentives to act as the theory predicts.
Does a coherent decentralization analytical framework exist?
4
There have been many attempts from by academics and international development agencies to characterize decen-
tralization methodically and create a diagnostic for analyzing it.
5
A simplified version of one possible framework is
shown in Figure 1.
6
Experts could contest this figure and the terminology used, but the current purpose is to ground
the discussion in a systematic way, not to be definitive. The figure outlines a set of interrelated system outputs and
processes, intermediate outcomes and primary outcomes that are often targets of decentralization reform. It also
provides a selective sense of contextual factors that influence the shape of reform and a set of illustrative inputs
and support mechanisms.
2
Recent overviews include Boex and Yilmaz (2010) and Connerley et al. (2010).
3
One of the earliest synthetic elaborations of these basics is Rondinelli et al. (1983).
4
This section is substantially based on Local Development International (2013).
5
Selected examples include United Nations Centre for Human Settlements/UNCHS HABITAT (2002), United Nations Development
Programme/UNDP (2004), United Nations Department for Economic and Social Affairs/UNDESA (2005), United Nations Capital Develop-
ment Fund/UNCDF (2006), European Commission (2007), Newsum (2008), UNCHS (2009), World Bank (2004, 2005, 2008), and United
States Agency for International Development/USAID (2009).
6
This figure was prepared for a UK Department for International Development study on the impacts of decentralization: Local Development
International (2013).
98 P. SMOKE
Copyright © 2015 John Wiley & Sons, Ltd. Public Admin. Dev. 35,97–112 (2015)
DOI: 10.1002/pad
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