This paper proposes a new perspective for studying decentralization by considering it as the unbundling of public goods provision. We define centralization as the bundled provision of public goods from different tiers (national, sub-national or local) by one single provider held accountable by the voters via elections. We define decentralization as the unbundled provision of public goods of different tiers by a different provider for each tier, each of them accountable to the voters via elections. This novel perspective allows us to identify two new effects of decentralization. The first effect provides an efficiency advantage to centralization because the central provider can reallocate resources among the different tiers of public goods after shocks to the prices of these public goods occur. The second effect shows that unbundling the provision of public goods increases electoral control. Finally, we compare both effects and find that centralization will dominate over decentralization when public goods prices are more volatile and the option of transferring resources among tiers of public goods acts as an insurance device. Decentralization dominates when the environment is more stable and voters can monitor the providers of public goods more tightly.
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.
. . . fascinating and thought provoking. Jan-Erik Lane, Public Management Review The central purpose of this book is to analyse the optimal allocation of local public goods or services (for example garbage collection, police, fire brigades and medical services) in large urban agglomerations and the allocation consequences of increasing competition in the provision of them. Competition in the Provision of Local Public Goods uses two innovative aspects present in the concept of Functional Overlapping Competing Jurisdictions, which are de-localized membership and uni-functionality of jurisdictions. The book analyses the effect of these two aspects on competition among jurisdictions and the impact this probable increase in competition may have on the achievement of the optimal allocation of local public goods. The primary audience for this work is academics and researchers in the fields of urban and regional economics, location theory and public policy. An important secondary audience will be scholars of industrial organization, who can use the framework developed here for analyzing other problems related with the location of individuals in space.
Indonesia is the world's largest archipelagic state. In 2001 it embarked on a "big bang" decentralization involving a major transfer of administrative, political and financial authority to its districts, now numbering more than 500. Together with the rapid transition from authoritarian to democratic rule in the late 1990s, this initiative has transformed the country's political, social and business life. While national government is the major area of contestation, power has shifted irreversibly away from the centre. How this significantly increased regional autonomy works will have a crucial bearing on the future of the Indonesian nation-state. This volume features contributions by over 40 writers with deep expertise on Indonesia. The book provides a timely, comprehensive and analytical assessment of the country's regional development dynamics in the post-decentralization environment. It explores historical, political and development patterns at the regional level; the relationship between decentralization and governance; local-level perspectives; migration, cities and connectivity; and the challenges confronting the peripheral regions of Aceh and Papua.
The papers in Governance, Decentralization and Reform in China, India and Russia, which were presented at a ZEF conference in May 1999, deal with three critical aspects of governance in China, India, and Russia: political reforms at the local level; fiscal reforms in intergovernmental relations; and legal reforms. The volume collects contributions from 24 outstanding economists, political scientists and legal specialists including Vito Tanzi, Daniel Treisman, Pranab Bardham, Jean Drèze, Katharina Pistor and Kathryn Hendley. Distorted economic and political incentive structures, capture of the state by powerful élites and inoperative legal systems are factors that have greatly complicated the political economy of reform in these three large countries with heterogeneous populations. Addressing these political and institutional issues is essential to designing good policies. One particular goal of this volume is to bring together new analytical insights and empirical evidence on governance, a new and growing field of research. The volume is divided into three parts: fiscal federalism; decentralization and provision of local public goods; and legal reforms. Part I discusses the role of incentives in fiscal federalism. The papers analyze the effects of different revenue-sharing mechanisms between different levels of government, in particular the effects on regional growth and inequality and the incentives that local politicians may have to provide public goods depending on fiscal arrangements with the central government. In adapting their governance structures, all three countries have been striving for increased decentralization. But the theoretical literature suggests that, in a decentralized setting, second-best solutions must prevail: it is not possible to ensure incentive compatibility simultaneously with optimal allocation of resources and a balanced budget in providing public goods. Part II discusses taxation and public expenditure management both as a political and as a budgetary process. Two questions which the papers address are: Does participation of stakeholders and accountability of public authorities improve economic and social outcomes? Does better governance in the provision of basic goods such as health care and education improve equity? While decentralization is often seen as a way to improve the quality of public services, rule-based governance is viewed as a safeguard against the arbitrariness of public officials and weaknesses in law enforcement. The five papers in Part III focus on the rule of law; the role of the judicial system in establishing a rule-based economy; and the effectiveness of legal institutions during the transition from socialism to a market economy. They present overviews of current legal reform issues in the three countries and discuss various conceptual approaches to addressing legal reform issues.
Panarchy is a normative political meta-theory that advocates non-territorial states founded on actual social contracts that are explicitly negotiated and signed between states and their prospective citizens. The explicit social contract, or a constitution, sets the terms under which a state may use coercion against its citizens and the conditions under which the contract may be annulled, revised, rescinded, or otherwise exited from. Panarchy does not advocate any particular model of the state or social justice, but intends to encourage political variety, innovation, experimentation, and choice. With its emphasis on explicit social contracts, Panarchy offers an interesting variation on traditional social contract theories. Today, Panarchist political thought is particularly relevant and interesting in the context of globalization, increased international migration, the weakening of national sovereignty, the rise of the internet "cloud" as a non-territorial locus of political and protopolitical social networks that are not geographic, the invention of cryptocurrencies that may replace national currencies, and the rise of urban centers where people of many different political identities live and work together. This is the first volume to bring together key philosophically and politically interesting yet often overlooked Panarchist texts. From the first published translation of de Puydt seminal 1860 article to contemporary Silicon Valley political theory, the volume includes Panarchist texts from different eras, cultures and geographical regions. The amassed wealth of theoretical insight enables readers to compare different texts in this tradition of political thought and distinguish different streams and varieties within this political tradition, in comparison with Cosmopolitanism, Contractarianism, and Anarchism.
The book offers a comprehensive empirical analysis of the determinants of changes in the distribution of expenditure and revenue-raising powers among fiscal tiers in OECD countries. Using a new indicator of fiscal decentralisation which accounts for subnational decision-making autonomy, common decentralisation trends are investigated. Then, empirical evidence from panel analyses is provided for the role of costs, preferences and institutions in explaining fiscal federal structures, and for the impact of economic and political integration on the degree of government decentralisation, particularly among EU countries. Finally, the historical experience of Germany is used to explore long-term developments in the public sector.
"Using empirical evidence from Costa Rica and El Salvador, outlines alternative principles underlying water and electricity provision, including social rights, accountability, and environmental sustainability. Argues that an excessive market orientation marginalized these principles while weakening state structures and accountability mechanisms and benefiting a small group of elites" --Provided by publisher.
