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Political Decentralization

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Political decentralization aims to give citizens or their elected representatives more power in public decision-making. It is often associated with pluralistic politics and representative government, but it can also support democratization by giving citizens, or their representatives, more influence in the formulation and implementation of policies. Advocates of political decentralization assume that decisions made with greater participation will be better informed and more relevant to diverse interests in society than those made only by national political authorities. The concept implies that the selection of representatives from local electoral jurisdictions allows citizens to know better their political representatives and allows elected officials to know better the needs and desires of their constituents.

Political decentralization often requires constitutional or statutory reforms, the development of pluralistic political parties, the strengthening of legislatures, creation of local political units, and the encouragement of effective public interest groups.

Constitutional, Legal and Regulatory Framework

Constitution, laws and regulations codify the formal rules of the game by which a decentralized system is supposed to function. Structurally, the desirable architecture of these rules is quite straightforward:

the constitutions should be used to enshrine the broad principles on which decentralization is to operate, including the rights and responsibilities of all levels of government; the description and role of key institutions at central and local levels; and, the basis on which detailed rules may be established or changed.

one or more laws should define the specific parameters of the intergovernmental fiscal system and the institutional details of the local government structure, including, key structures, procedures (including elections), accountabilities and remedies; and,

a series of regulations associated with each law should interpret and describe in detail the practices and measures by which the related law will operate. Laws that deal with tasks that are shared between national and subnational governments should include sections on intergovernmental relations.
Substantially greater detail and specificity is provided in moving down this three platform architecture from the Constitution to Regulations. Conversely, greater difficulty and a higher degree of authority (e.g., Minister, Parliament and Constitutional Assembly) is required to change the provisions when moving up from Regulations to the Constitution.

These aspects of degree of difficulty and locus of authority to effect changes are important factors in determining where in the architecture particular aspects of the decentralization system are defined and the relative specificity of those definitions. The rigidities and flexibility established in this structure have important implications for the management of a decentralized system.

The placement of an item may be the result of a consensus, but often is the outcome of sometimes difficult negotiations between competing interests. Those concerned with macro stability, for example, may wish to have intergovernmental fiscal rules be a matter for regulation under the Minister of Finance, so as to give that ministry maximum flexibility in public expenditure management. Local government advocates, in contrast, may argue (as they did, successfully, in Brazil) for these fiscal distributional rules to be enshrined in the Constitution. In Uganda, the purposes and mechanisms for transfers are specified in the Constitution along with a formula for determining the minimum size of the pool from which block grants are to be distributed; the details of the distributional formulae are the subject of regulations.

As decentralization is a complex social experiment a good case may be made for there to be more flexibility in the ability to change the specificity of implementation instruments, while enshrining the political and philosophical principles in the Constitution and the operating structures in the laws.

In addition to "substantive" law mentioned above, a country’s "procedural" laws can have profound impacts on the success of decentralization efforts. For example, when local expenditures must be "pre-audited" by a central authority, rigidities are introduced which make the benefits of decentralization more difficult to achieve. When reviewing the legal framework for decentralization, it is not sufficient to examine decentralization specific laws -- other laws which mandate aspects of service delivery, civil service, budgeting and so one must also be considered to ensure a consistent approach.

Treatment of key issues in the legal and regulatory framework will be shaped by whether the governmental system is unitary or federal. Under some federal systems, for example, India and Canada, local governments are completely under the authority of the State/Provincial level governments. The Federal government is thereby limited in the relationships it may establish with the local level and must seek to affect local behavior and outcomes through the states/provinces. A decentralization policy such as India is trying to establish is significantly complicated by this factor.

Some unitary systems may exercise extremely centralized control over local governments. In Indonesia, the Ministry of Home Affairs has had the authority to appoint (and remove) mayors and even village heads. The structural impediments in designing a decentralized system in this context are few, but that does not mean that the process of instituting such a system is without critical hurdles. Indonesia has had decentralization legislation on its books since 1974; the process there remains far from completion.

As with other key aspects of decentralization, the legal and regulatory framework will be tailored to country circumstances. Nevertheless, there are a set of issues this framework may be expected to address. Those of particular interest to the work of the Bank include potentially, the classification of local governments within the tiers established under the Constitution; the broad organizational structures and their roles and responsibilities; terms of office, operating powers, procedures and limitations of the political leadership, distinct from the civil service; the degree of autonomy of personnel policies and administration of local governments; the taxing and fiscal administration authority of local governments; the borrowing authority and capacities of local authorities; the budgeting, expenditure management, accounting, auditing and reporting requirements; service provision and delivery authority; and, the mechanisms for citizen participation and voice.

The legal and regulatory framework should also be designed to recognize differences in management capacity. Assignment of functional responsibilities – for example provincial capital, designated growth center, etc. often implicitly recognizes varying capabilities of municipalities, but a more dynamic framework which recognized "capacity" based on performance over time would be more desirable in the long run. Matching degree of autonomy and privileges to a set of performance indicators – which might include total expenditure, degree of self-sufficiency (i.e., proportion of own revenues to total), budget management performance (i.e., absence of deficits), and service delivery performance (i.e., client surveys) – would allow the legal and regulatory framework to adjust for changes in local capacity. The appropriate time period for reassessments and indicators would need to be linked to country circumstances as well as the specific details of the decentralization framework.

Among these several issues, five warning flags (selected from a potentially long list on the basis of downside risks) may deserve special attention.

The disconnect between the formal rules and actual practice regularly observed in many countries is itself cautionary about the design and implementation of legal and regulatory systems. Ambiguity and complexity create openings for conflicting interpretation and resulting confusion. One agreed source of interpretation is essential. Particular efforts to prepare and disseminate popularized versions of the legal and regulatory system, as has been done in Uganda, must be a key part of the decentralization strategy. Complexity is often unavoidable especially at the level of instruments for implementation, however, it helps if one instrument is not asked to do too much. This facilitates communication and implementation of the policy that the instrument is intended to support as well as monitoring of the effectiveness of the instrument in that role. Adjustment to the instrument and/or the policy also may be facilitated.

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Participation & Decentralization

Participation and decentralization have a symbiotic relationship. On the one hand, successful decentralization requires some degree of local participation. Subnational governments’ proximity to their constituents will only enable them to respond better to local needs and efficiently match public spending to private needs if some sort of information flow between citizens and the local governments exist. On the other hand, the process of decentralization can itself enhance the opportunities for participation by placing more power and resources at a closer, more familiar, more easily influenced level of government. In environments with poor traditions of citizen participation, decentralization can be an important first step in creating regular, predictable opportunities for citizen-state interaction.

The symbiotic relationship between decentralization and participation leads to somewhat contradictory policy guidelines. On one hand, mechanisms for citizen participation could be considered a helpful pre-condition when evaluating the prospects for successful decentralization. Accordingly, the design of decentralization should take into account the opportunities and limitations imposed by existing channels of local participation. On the other hand, lack of participatory mechanisms could be considered a motivation for decentralization and can help create local demand for more participatory channels to voice local preferences. This note discusses each of these dimensions -- participation as a means to successful decentralization and as a goal of decentralization.

The first section concentrates on the broad mechanisms for citizen input that are best seen as parameters of decentralization policy. These types of institutional structures, embedded in the national political environment and developed over a long period of time, cannot be altered quickly by a simple regulation. The second part shifts to the smaller, more specific avenues for citizen participation that can be created in the process of decentralization. These incremental changes can eventually evolve toward broader opportunities for citizen participation and democratic governance.

Section 1: Participation as a Pre-condition: Broad Decision-Making Influence

Section 2: Participation as a Goal: The More Attainable Beginning Reforms

Conclusion

Citizen participation in some form is an essential part of successful decentralization. It is becoming a more common element in developing country political environments - 13,000 units of local government in Latin America are now elected, compared to 3,000 in 1973 - but the flow of information is by no means undistorted. Planning decentralization policies should take these informational imperfections into account and attempt to improve the depth and degree of citizen participation in local government action. Local government responsiveness, one of the main rationales for decentralizing can not be realized when there are no mechanisms for transferring information between the local government and its constituents.

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