What is decentralization?

Jun 10

Decentralisation is the transfer of powers and functions from the central government/central authority or government to lower levels, local self-governments (local communities), which operate independently and autonomously, serving the needs and interests of residents in their localities.

The best form of decentralisation is the clear functional separation and distribution of public administration powers between central authorities and local self-government bodies (LSGs), using the principle of complementarity or coordination, according to which the higher levels of the public administration system should not be tasked with responsibilities that lower levels could perform better.

Decentralisation is one of the phenomena in organizing public administration and the overall relationship between the state and society, on which numerous studies have been conducted, discussing its goals, advantages, and risks. Based on these discussions, alongside other fundamental principles, modern states and nations are organized and continue to develop. It has been one of the key reforms in both developed and developing countries over the past few decades, influencing the economic, democratic, demographic, and political future of these countries.

In any country, the success of democracy as a form of political power depends on long-standing traditions of local self-governance. The concept of municipal (local, community, regional) democracy, widely used in professional literature, allows citizens to participate in solving political, economic, and social issues that are important to them. It is here that the local self-government system is considered developing and viable if it exercises certain powers and functions delegated by the central authority.

If we consider decentralisation as a continuum (a spectrum) based on the degree of decentralisation, the following main forms can be distinguished:

Devolution is the deepest and most characteristic form of decentralisation, where powers and responsibilities are transferred to lower-level autonomous/elected units such as regions, communities, etc., which are legally considered separate and independent governing bodies. This form is the most complete and characteristic form of decentralisation.

Delegation is a weaker form of decentralisation, where decision-making and administrative powers are transferred to lower units under the indirect control of the government and are accountable to it. Essentially, it involves local (or non-governmental) units, such as state enterprises, providing services that are formally reserved for the center and fall within its responsibility. In this case, the service provider always acts on behalf of the central authority. It is lower than devolution but significantly widespread in practice.

De-concentration involves local or territorial units under the central government providing services. In this case, decentralisation is very limited, and responsibilities are transferred within the same system, forming a hierarchy or tiered structure. That is, the execution of duties is delegated to territorial units of ministries and other central agencies. These units do not have political power or decision-making authority. 

This is the weakest form of decentralisation, yet it is quite widespread in developing countries. Of course, these forms have their own specific characteristics, which lead to their particular manifestations in different countries.

For example, devolution has the following characteristics:
Local governing units are autonomous/independent and considered a separate level of governance, with limited or no direct control by the central government.
They have clearly defined geographical boundaries as set by law.
They are legal entities and have the authority to raise resources for their operations.

It highlights the need for the development of local government bodies as institutions, as these bodies are perceived by citizens both as service providers and as authorities, over which they have some influence.
Devolution assumes interaction and mutually beneficial and effective coordination relations.
By implementing these criteria to varying degrees, Armenia has built its decentralized governance system, which may significantly differ from other countries (for example, in the UK, devolution refers to relationships with Scotland, the creation of the Scottish Parliament, the expansion of powers, etc.).

Based on functional orientation, decentralisation is commonly categorized into the following main types:

a) Political Decentralisation
The transfer of political power, authority, and resources to local governance levels, which represent local populations and are accountable to them. Political decentralisation involves the transfer of political power to local authorities, expanding their accountability to citizens.

b) Administrative Decentralisation
This involves transferring certain public functions and planning responsibilities from central government or authority to its territorial administrative units or local governments. However, the central government maintains accountability for these functions. It relates to systems, processes, and policies where public functions are delegated to LSGs (local self-government bodies).

c) Fiscal or Budgetary Decentralisation
Refers to the redistribution of resources from the central government to local levels and the decision-making powers required for their use, aimed at developing efficient and transparent financial management.

It involves the transfer of responsibilities for expenditures and revenue (such as tax and non-tax income) to local authorities. It may not include formal mechanisms for accountability to citizens.
Fiscal decentralisation considers the effectiveness of the distribution of powers (expenses) and financial tools (income) between governance levels, highlighting the importance of the central government’s financial transfers and the accessibility of financial markets and instruments at regional levels.

In other words, decentralisation is viewed mainly within three separate but highly interconnected domains: economics (public finance, production and consumption of public goods and services, expenditure optimization, etc.), political science (democratic governance, elections, accountability, etc.), and public administration (functions, structures, organization, administration, etc.).

Today, considering the trends of public administration transformation, decentralisation itself, as a multifaceted phenomenon, serves as an effective way to democratize and humanize (human-centered) centralized state power-thereby dispersing the responsibility of power from the center to regions, communities, and peripheries, making governance more people-centered, just, and accountable.